Rooftop solar faces tariff and policy head wind to gain momentum, says DD Agarwal

Amisha Yadav @CCMS Bureau

A very ambitious target to achieve 175 GW renewable energy capacity was set by the Centre by 2022, which included 100 GW of solar power. Out of that rooftop segment accounted for 40 GW.

RE capacity got momentum initially during 2019-20 but pandemic created negative growth. Finally it is expected 15 GW rooftop solar shall be achieved in country, against target of 40 GW, while total solar capacity achievement may be around 90 GW.

The new rooftop solar capacity additions continue to be extremely slow due to various reasons such as discouragement by discoms, continuous regulatory charges, no capex model for rooftop solar, lack of trained manpower and technical staff, low public awareness, and absence of policies that give solar sector a push or the existing policies are not efficient.

Regulators and the Centre during past 3-4 years changed payment systems for net metering. A cap of 10 KW on net metering was proposed by the Centre which created a lot of hue and cry among the stakeholders and finally 500 KW was revised.

In Rajasthan, in the previous years, rooftop solar producers were advised by regulator a tariff based on average purchase cost of power by discoms. The regulator in 2020-21 decided a rate of Rs 3.14 per unit based on bidding rates of Rs 2.50 per unit + 25% T&D losses.

Provisions of net metering and behind the metering system, and the guidelines by the Regulator made it more confusing and disadvantageous to such solar power generators.

The centre was vigorously promoting home roof top solar and giving subsidy for setting up such units, from 20% to 40% (up to 40% on 3KW and 20% beyond 3KW upto 10KW).

However, the nodal agency distributing to individual vendors to achieve targeted capacity, allowed an unfair competition and new EPC contractors with practically no experience, entered the field. That resulted in disputes with households and EPC contractors. Similarly, delay in reimbursing subsidy by nodal agency RRECL and the Centre also resulted in lot of harassment and loss to new such vendors. As such, residential rooftop solar, which could have been a big relief to discoms never got a boost, because discoms always treated rooftop solar as enemy. Discoms thought solar rooftop will take away their higher tariff customers and hence denied benefit to public, who was willing to invest their own money.

Advantage available in net metering and behind the meter was further changed, which further discouraged newer installations.

Rajasthan government in the grab of not increasing tariff for the public, decided to impose an excise duty of 60 paisa per unit on all rooftop solar generators, which invited many litigations including obtaining stay from Rajasthan High Court as state policy has a provision of no excise duty for next eight years. The matter is still in litigation.

While deciding tariff petition for solar RE generation for year 2021-22, regulators had mentioned as follows:

1. Tariff for rooftop solar shall be Rs 3.14 and shall be revised “based on lowest bidding tariff received in solar tender by SECI and states that Section 63 determination of tariff by bidding process- notwithstanding anything contained in Section 62, the appropriate commission shall adopt the tariff if such tariff has been deter- mined though transparent process of bidding with the guidelines issued by the Central government.”

Taking advantage of this clause, Rajasthan, Urja Vikas Nigam Ltd, on behalf of discoms approached the regulator to revise tariff rates of roof- top solar from Rs 3.14 per unit to Rs 2 per unit based on lowest bidding received by SECI during the year as Rs 2 per unit for a reverse tariff bid- ding tender. Though the entrepreneur who had offered Rs 2 per unit has not installed the plant. Still discoms have issued orders to make payment of net metering rates by Rs 2 per unit from 15.09.2021.

It is really surprising and not understandable, as how a small entrepreneur who sets up a rooftop solar plant would be entitled to a tariff which has been arrived at a reverse bidding method by SECI for multi- megawatt utility sector project of crores of rupees. The big investor get low interest debt, while a house- hold installer invests his own money after calculating rate of recovery (ROR) considering keeping the money in bank.

Such steps by discoms and regula- tors will further discourage any new installation of residential rooftop solar unless the state government and the policy makers rethink of the benefits to the public and make their projects financially viable.

Government of Rajasthan must look into the issues that discourages rooftop solar. The following steps should be taken to reinstill confidence:

(i)Remove excise duty of 60 paisa a unit levied on plants up to 500 KW

(ii) Permit tariff as approved in tariff petition a rate of Rs 3.14 per unit if not on rate of average purchase cost of power by Discoms.

(iii) Formulate a scheme for residential roof top solar (standalone system) for consumers whose consumption is up to 50 units a month and capex model be prepared by seeking very low interest chargeable funds (At present government of Rajasthan is subsidizing all consumers is about Rs 6.50 per unit). This will create great awareness amongst pub- lic regarding residential rooftop solar.

(iv) Stable regulatory affairs and stable solar policy for rooftop solar plants upto 500 KW.

State government must get the figures of energy generated by residential sector and how much revenue burden discoms have suffered.

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