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Global Solar Investment Summit

15th 16th April, 2011, Mumbai
4/17/2011 1 1

Government Support & Policy Incentives Available to Solar Investors in India

Kanv Garg
Consultant, Low Carbon Economy Planning Commission, Government of India
Global Solar Investment Summit, Mumbai 15 April 2011

The Presentation Covers a Brief Overview of

1. Governments institutional support structure available for solar energy development in India 2. Supportive Government interventions and resulting incentives available to solar investors in India 3. An existing gap which needs to be addressed

Governments Institutional Support Structure Available for Solar Energy Development in India

The Energy Sector Institutional Structure at Centre...

Government of India

Planning Commission

Ministry of Power

Ministry of Environment & Forests Ministry of New and Renewable Energy Department of Atomic Energy

Ministry of Petroleum & Natural Gas Ministry of Coal

CERC / CEA / BEE

Utilities / NTPC / NHPC / POWERGRID / PTC / PFC / REC

Central Pollution Control Board

Indian Renewable Energy Development Agency

Upstream / Downstream Companies

India is the only country worldwide to have a dedicated ministry for promotion of renewable energy Ministry of New and Renewable Energy (MNRE)
Source: Clean Energy: An Exporters Guide to India (2008) 5

And the RE Institutional Structure at the State Level

State Government

State Electricity Regulatory Commission

Department of Environment

Department of Power

State Renewable Development Agency

State Pollution Control Board

State Utilities / GENCOs / DISCOMs / TRANSCOMs

Electrical Inspectorate

Most States have State Nodal Agencies (SNAs) to oversee their respective implementation of renewable energy programs
Source: Clean Energy: An Exporters Guide to India (2008)

Provide the Overall RE Institutional Support Structure

Planning Commission CERC / CEA Ministry of Power / REC Ministry of Finance

Ministry of New & Renewable Energy (MNRE)

Solar Energy Centre / Other R&D Institutes SERCs IREDA NVVN SDREDAs / SNAs /NGOs / Akshay Urja Shops

Banks / NBFCs / Multilaterals

Solar Cells, Modules & Systems Manufacturers

State Utilities / GENCOs / DISCOMS / TANSCOMS

End Users & Producers: : Individuals / Corporates / Government / IPPs Policy Flow R&D Flow Fund Flow Implementation Flow
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Source: Framework Adapted from India: Renewable Energy Report (APCTT-UNESCAP); Analysis

Supportive Government Interventions & Resulting Incentives Available to Solar Investors in India

Centre Governments Support for Solar Energy,

Multiple regulatory and policy interventions both before and after the National Solar Mission form a conducive policy and regulatory ecosystem for development of solar power in India:

The Electricity Act (2003) The National Tariff Policy (2006) The National Electricity Policy (2005) Integrated Energy Policy (2006) The Energy Conservation Act (2001) Special Incentive Package Scheme (2007)

Provides overall strategic direction to rapidly increase the share of renewables in energy mix and initiate necessary thrust & incentives for a competitive solar market development
Source: Policy Documents; Analysis 9

 Complemented with the State-level Response,

In response, complementary policies for development of solar energy both before and after the announcement of the Solar Mission have been announced by several Indian states:

State Solar Policies

Gujarat Rajasthan Madhya Pradesh, etc.

Manufacturing Policies and SEZ Schemes

Karnataka Semiconductor Policy Gujarat Solar SEZ Policy, etc.

Provide tactical details for overarching strategy formulated by Centre for the development of solar energy, being driven by State Nodal Agencies and overseen by the Centre
Source: Policy Documents; Analysis 10

 & Supported by Other National-level Interventions,

The Centre and State solar policies are further fostered by various Government initiatives to accelerate market development:

National Solar Mission (NSM) & subsequent guidelines issued by MNRE Remote Village Electrification scheme by MNRE Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) (2008) CERC interventions on Solar Power Tariff and Purchase Regulations Proposed modification of the National Building Code (NBC); Energy Conservation Building Code (ECBC); Green Buildings Rating Systems

Assist the private sector to assess eligibility, evaluate demand and initiate investments in the solar power and equipment space in India
Source: Policy Documents; Analysis 11

 Forms a Robust Solar Energy Policy Framework

Solar Energy Policy

Supply-side Policy

Pricing & Taxation Policy

Electricity Act

Demand-side Policy
Energy Conservation Act

Centre

National Electricity Policy

National Tariff Policy Integrated Energy Policy

Special Incentives Package Scheme

State

State-specific Solar Policies State Manufacturing Policies Jawaharlal Nehru National Solar Mission State-level RPOs

National

JNNSM Guidelines

CERC Tariff and Purchase Regulations Remote Village Electrification Scheme RGGVY and NBC & ECBC

Source: Framework Adapted from Chapter 4, Page 128: Policies & Institutional Mechanisms (ADB); Analysis

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 & Provides Several Incentives Across the Value Chain

Equipment Manufacturing / Solar Plant Set-up
Preference to Indigenous Production Custom & Excise Duty Concessions / Exemptions SEZ Tax Breaks Technology Access in Solar Parks Lower Interest Rates & Refinancing Options R&D Ecosystem and HRD Support Generation Based Incentives (GBI) Long-term PPAs Government Subsidies

Sale of Solar Equipment / Energy Production

Feed-in-Tariffs (FITs) Solar-specific Renewable Purchase Obligation (RPOs)

Use of Solar Energy

Solar-specific Renewable Energy Certificates (RECs) CDM Benefits

Availability of Soft Loans

Promotion of Solarization

Increased Energy Security

Strong Institutional and Regulatory Framework

Source: Policy Documents; Analysis 13

 To Achieve the Envisioned NSM Target Deployment

JNNSM Phase-III (2017-22)*
Solar Collector Area: 20 million m2 Off-grid Solar Applications: 2,000 MW

Decreasing Solar Energy Cost (towards Grid Parity)

Grid-connected Solar Power: 20,000 MW

JNNSM Phase-II (2013-17)

Solar Collector Area: 15 million m2 Off-grid Solar Applications: 1,000 MW Grid-connected Solar Power: 4,000-10,000 MW

JNNSM Phase-I (2010-13)

Solar Collector Area: 7 million m2 Off-grid Solar Applications: 200 MW Grid-connected Solar Power: 1,000-2,000 MW

Capacity Scale-up and Increasing Technological Innovation

Source: NSM Document; Concept Adapted from Internet; Grid Connected Solar also includes Rooftop *Also includes deployment of 20 million solar lighting systems by 2022 (no phase-wise targets) 14

An Existing Gap Which Needs to be Addressed

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Off-grid Solar Power Requires Immediate Attention

National Solar Mission encompasses the following areas of capturing, distributing and using solar power for India:

Grid-connected Solar Power (including rooftop solar): Large Photovoltaic

(PV) and Concentrated Solar Power (CSP) plants

Distributed Solar Power: Solar Lighting Systems for individual households Off-grid Solar Power: Mini Grids catering to a select number of rural households and applications at a time Solar Heating: Thermal Collectors for low temperature heating purposes

Off-grid solar power solutions hold the key if NSM aims to meet its objective of providing energy security to people and make electricity reach difficult-to-connect areas by grid however the least play, from both the Government and private sector, is in this area
Source: Analysis 16

. & Viable Solutions from Government & Private Sector

Off-grid solar opportunity is huge but untapped because of: Lack of institutional support presence & local supply infrastructure High cost, absence of viable business models & technology acceptance Government and private sector need to work together to form feasible hybrid business models (based on PPP, franchisee, etc.) to address issues, such as: Setting-up and providing off-grid solar (or hybrid) solutions for rural areas Distribution bundling to target overall rural energy mix combination of home lighting systems, off-grid solar (or hybrid) solutions and LPG connections to address lighting & cooking needs

There is a need to find the optimum financial & operational strategy to cover the high upfront costs through an enabling framework and appropriate Government support , coupled with active private sector participation
Source: Analysis 17

THANK YOU
Kanv Garg
Consultant, Low Carbon Economy Planning Commission
T: +91-11-23042448 E: Kanv.Garg@nic.in

Kanv Garg
MBA (Strategy & Leadership) Indian School of Business, Hyderabad
M: +91-9711060647 E: Kanv_Garg2010@pgp.isb.edu; kanvgarg@gmail.com

Disclaimer
The presentation is prepared from data sources assumed to be credible and the adaptions from the available data required considerable personal judgment and analysis. The views expressed in the presentation are those of the author and not necessarily reflect the views of the Planning Commission.

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