‘Faith is the bird that feels the light when the dawn is still dark.’

Is the Faith in Renewable Hopeful with Budget 2021-22?

With a lot of Hope to look further in 2021 and leave behind the 2020 blues, FM Sitharam proposed the Budget 2021-22. The BSE & NSE boosts portrayed the happiness of the investors and the acceptance of the proposed budget.

Here is a quick overview of the Budget fueling growth in the Energy Sector of India with focus on renewables.

  • Uplift DISCOMS & DE license Electricity Distribution
  • The PLI scheme for AtmaNirbhar Bharat
  • Basic Custom Duty Increase on Imports
  • Solar inverters from 5% to 20%
  • Solar lanterns from 5% to 15%
  • Additional capital infusion of
  • Rs.1,000 Cr to Solar Energy Corporation of India (SECI)
  • Rs.1,500 Cr to Indian Renewable Energy Development Agency (IREDA)

Uplift DISCOMS & DE license Electricity Distribution

Government has massively funded DISCOMs to uplift their loss-making status and upgrade the entire eco-system.

The government has dropped proposal on direct benefit transfer (DBT) of subsidy to electricity consumers and instead would first de-license the Electricity Distribution.

The consumers can select their own distribution company. However, it will not disrupt the existing licenses.

This move is intended to induce competition in electricity distribution and empower consumers to switch networks but will not disrupt the existing licenses.

In all, it will also induce fair competition and address monopoly concerns.

It will also assist DISCOMs for infrastructure creation tied to financial improvements, including prepaid smart metering, feeder separation, and up-gradation of systems.

The PLI Scheme for AtmaNirbhar Bharat

PLI stands for Production Linked Incentive Scheme that is devised to enhance the AtmaNirbhar Bharat drive.

The motto is to promote the growth of manufacturing industries to become an integral part of the global supply chain.

The government has committed Rs.1.97 lakh crores in 13 sectors and the PLI is launched to create the manufacturing global champions.

The energy sector has been dedicated with 24%, Rs.4,500 crores for ‘High Efficiency Solar PV Modules’ which will be implemented by MNRE (Ministry of New & Renewable Energy).

Considering the current scenario of solar industry, the domestic manufacturing industry has limited annual capacity of around 2,500 MW for solar PV cells and about 10,000 MW for solar PV modules.

The manufacturing too moreover depends upon imported solar PV cells, PV modules and other raw materials.

Thus, the scheme is proposed to boost the domestic manufacturing needs and further create demand for locally produced balance of raw materials like EVA, Solar Glass, Backsheet, Junction Box, etc. to augment the entire Solar Manufacturing Eco-system.

NIP Projects by sector

Basic Custom Duty Increase on Imports

  • Solar inverters from 5% to 20%
  • Solar lanterns from 5% to 15%

The custom duties are increased to combat the imports and promote the domestic manufacturing focusing on the AtmaNirbhar Bharat mission.

This did not meet the expectations of more elaborate support for RE industry and especially solar industry.

SECI & IREDA Funding

The budget has Additional capital infusion of:

  • Rs.1,000 Cr to Solar Energy Corporation of India (SECI)
  • Rs.1,500 Cr to Indian Renewable Energy Development Agency (IREDA)

As part of Intended Nationally Determined Contributions (INDC), India targets to reduce carbon emissions intensity of its GD by 33-35% as against 2005 level.

It targets to install at least 40% of its electricity generation capacity through non-fossil sources by 2030.

The budget infusion would help the SECI & IREDA’s – the apex bodies for Indian renewables in contributing initiatives to fulfill the set ambitious targets.

SECI Funding PurposeIREDA Funding Purpose
Considering the outlay of 2020 budget, SECI has floated about 47,000 MW of capacity with an investment of Rs.2.14 lakh crore (approximately). About 8,300 MW of capacity has been commissioned and the numerous projects are under various stages of implementation.The average installation is expected to be in the range of 30-50 GW per annum, which would require annual debt capital of about one lakh crore.
It will enable SECI to float 15,000 MW of tenders on yearly basis. It will attract investment of more than Rs.60,000 crore, generate employment of 45,000 job years and reduce emissions of 28.5 million tons of CO2 per year.It will also help in financing of around 4,500 MW of RE projects worth Rs.18,000 to 19,000 crore. It will generate employment of 13,500 job years and reduce emissions of 8.55 million tons of CO2.

Capital infusion will also enable SECI to set up innovative projects of with an investment of around Rs.17,000 Cr.

The International lenders are happy to channelize their funds to India’s large RE market through IREDA. Thus, it will enable IREDA attract and keep intact with the foreign investors.

Summing Up The BUDGET 2021 for Power Sector

Only 3 times in the past the budget has followed a contraction in Indian economy. This time it’s because of a global pandemic like in other countries. The government is fully prepared to support and facilitate the economic reset.

Budget 2021 has focused on growth, investment and jobs. The renewable sector, especially solar manufacturing and related services has got the keen eye from investment prospect which will help to create jobs.

The reviews of all the investors and solar industry delegators reassure that the faith for better recovery of the declined repo rate is up and high.

PIXON – a Marwadi Group Company into Solar panel manufacturing and solar EPC installation services is hosting Solar Gandhi – Dr. Chetan Singh Solanki.

About SOLAR GANDHI

Dr. Solanki is also known as the Solar Man of India. He has authored about 100+ research publications in international journals, several books on Solar and Renewable Energy and 4 US credited patents with a few more in review.

He has bagged several awards for his work. Starting his journey from a small village with no bus connectivity yet and a primary school with just 2 classrooms now, he studied in IIT-B and further in Europe to bag the title of Doctor. With knowledge across the globe, his roots are still intact to the struggles rural areas face. This is how his journey to contribute to society began. People joined and accolades followed.

Global & National Movements BY SOLAR GANDHI

Dr. Chetan led many environmental drives in the nation like: ‘Is winter fridge band kar’ He undertook a global movement – a solar yatra to 30 countries with the mission of providing 1 million students to make their own solar lamps. This agenda with a base of Gandhian principles tagged him the title of ‘Solar Gandhi’.

He has now taken a national movement on name of Energy Swaraj Yatra 2020-30. This is a 11-years stay-and-travel in a solar bus across the country to spread Solar Energy Awareness. The motto is also to promote the solar energy adoption in context of, “By Locals for Locals”.

SOLAR GANDHI powers PIXON in his ENERGY SWARAJ YATRA

PIXON bestows the name of MARWADI GROUP and the trust people lay upon it since past 27 years.

The PIXON company manufactures solar panels with state-of-the-art technology and turnkey machinery of 400 MW line capacity. The industry is spread across 65,000 sq. m of land and has EVA film (a raw material) manufacturing line as well.

The company is proud to tag ‘Make In India’ on the solar panels, while contributing to the Aatmanirbhar Bharat Abhiyan and Youth Employment post the Covid-19 blues.

Vis-à-vis, PIXON provides Solar EPC and end-to-end installation solutions. In no time, PIXON has pioneered a lot of solar projects in Gujarat. With subsidies open in all the residential, commercial and industrial sectors, the company is penetrating into the market in leaps and bounds.

As the world adheres to the solar energy revolution, PIXON envisions to globally provide efficient solar energy products & solutions. Thus, contribute and enhance the Global Climate Sustainability.

PIXON with message of “Solar is the new Green!” shall host the ENERGY SWARAJ YATRA with the message to adopt solar and “By Locals For Locals”. The Solar Gandhi himself will visit the PIXON factory, to provide his valuable insights and good wishes to the Company & its enthusiastic team.

PIXON on National Mission

After major achievement of 173 GW of renewable energy before the set target of 2022, our honorable PM Modi aims big with 450 GW target by 2030. PIXON is on the national mission to support the PM in achieving this target and addressing the climate change in an integrated, comprehensive and holistic manner.

Residential Rooftop – Active Subsidy Scheme in Gujarat

The Gujarat Government under guidance of our CM Vijaybhai Rupani launched new Gujarat Solar Policy – The SURYA Gujarat, wherein the residential rooftop solar has no bars to maximum capacity installation. Thus, opening a channel for passive income via net-metering. The subsidy scheme is also active providing upto 40% benefits for residents. The motto is to reduce the unit rate and overall cost of electricity.

Net-metering

Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid.

Understanding the Flow

Raj installs Solar PV System at his factory rooftop. He uses the energy consumed by his factory. The extra electricity is sent on grid. He is credited for it for later use.

Profit to Raj based on Net-metering

Raj installs solar power plant at his factory that generates 1000 units. He uses those 1000 units over the month.Assuming the tariff rate of Raj’s locality as Rs.7.50, he saves Rs.7,500 (1000 units* Rs.7.50/unit).

However, this would be the ideal condition. Considering the system cost, Raj will get LCOE* at Rs.1.50/unit, much less than what government sells.

Profit to DISCOM/ Government from Net-metering

On this scheme, the government just charges nominal regulatory fees to the solar consumers and installers. The Government generated electricity and DISCOMS face the reduced profit margins for same.

    Briefing the Net-metering

  • The charges are applicable on the Solar units traded between the consumer and the grid. The major government benefit is the RPO (Renewable Power Obligation).
  • Reduces the transmission losses of electricity generation and usage in the entire cycle.
  • The electricity is consumed first and extra is credited to the grid. The consumer has access to these credited units for a billing-cycle of up to a year/ based on policy.
  • It is a very profitable model for consumers.
  • The Government and DISCOMs profit margins are affected.
  • The consumer gets the project payback within 3-4 years.

Gross-metering

In gross metering, a consumer is compensated at a fixed feed-in-tariff for the total number of units of solar energy generated and fed into the grid. The consumer then pays the DISCOM at a retail supply tariff for the solar power consumed.

Understanding the Flow

Raj installs Solar PV System at his factory rooftop. The entire energy generated is sold to the grid at a predefined unit rate defined by the government. The regular electricity consumption is taken from the grid and billed as usual.

Profit to Raj based on Gross-metering

Continuing the example of Raj and considering the regular billing mechanism:On consumption of 1000 units, Raj would pay Rs.7500 (Rs.7.50/unit*1000 units) as his bill. Raj installs solar power plant at his factory that generates 1000 units. As per the gross-metering concept, the entire electricity is sold to the grid at unit rate of Rs.3.00/unit. Thus, Rs.3000 (1000 units*Rs.3.00/unit) becomes the ideal saving of the consumer excluding the project cost. However, this would be the ideal condition. Considering the system cost, Raj will get LCOE at Rs.5.50/unit.

Profit to Raj based on Banking Charges

On this scheme, the government charges regulatory fees to the solar consumers and installers. The Government also gets costing benefits on generated solar units by the consumers. But, it comes with a big question mark from the CNI perspective, considering the solar PV system adoption and installation won’t be considerable.

    Briefing the Gross-metering

  • The charges are applicable on the Solar units generate by the consumer.
  • The entire solar electricity is credited to the grid. The consumer is billed normally for electricity consumption.
  • It is a very profitable model for Government & DISCOMS.
  • The consumer gets the project payback within 8-10 years, much more as compared to 3-4 years of the net-metering.
  • The CNI industries production cost shall increase, hindering the “Made in India” initiative and drive. There are chances that the existing companies might have to shut down, leaving several people jobless.

Banking Charges – the best alternate to Gross-metering

The Disparity of Net-metering and Gross-metering to benefit the consumers and the government both is much visible and has caught the limelight.

BANKING CHARGES clause can help attain this balance. As per the clause, the consumer is entitled to pay banking charges to government instead of completely selling it to the government. The banking charges are almost half the charges of tariff-feed-in of gross metering making it a more viable option for both the consumers and DISCOM.

Profit to Raj based on Banking Charges

On consumption of 1000 units, Raj would pay Rs.7500 (Rs.7.50/unit*1000 units) as his bill.Raj installs solar power plant at his factory that generates 1000 units.As per the banking charges concept, the consumers might have to pay banking charges on generated amount at rate of about Rs.1.50/unit. The net banking charge, Raj has to pay is Rs.1500(1000 units*Rs.1.50/unit).The electricity cost to Mr. Raj otherwise would have been Rs.7500(Rs.7.50*1000 units). But now he has to pay the bill with banking charges. Thus, the net saving for Raj is Rs.6000 (Rs.7500 – Rs.1500).However, this would be the ideal condition. Considering the system cost, Raj will get LCOE at Rs.3.00/unit.

Profit to DISCOM/Government from Banking Charges

The major benefit to government is of RPO & Transmission loss saving. Moreover, it gets additional amount of Rs.1.50/unit of solar as permanent source of income.

Briefing the Banking Charges Policy

Banking charges is much viable and profitable option for both the consumers and the DISCOM or government entities, over the gross metering.The flow of solar units trade and the definition of Banking charges is not provided in the policy

PIXON’s take to support the Banking Charges clause of the Gujarat Power Policy 2021

The Net-metering, applicable up to 10kW of systems has been a bang-on model accepted by the people with bumper perks and benefits. Removal of capacity restriction has opened doors for people to have a new source of income generation.

The Gross-metering, applicable above 10kW of PV system has arouse a lot of debates in the Solar Industry of India. The saving margin and project payback are reduced and lengthened to greater figures respectively.

The Banking Charges clause instead of Gross-metering has been pitched by the Gujarat State government in their power policy which seems to be a better model for both – the consumers and the DISCOMS or government entities.

PIXON supports and talks in the favor of the Gujarat Solar Power Policy that talks of Banking charges over the gross-metering implication. However, a lot of clarity is still required for smooth conduct. Probably, what everybody is looking for in the upcoming Implementation Policy (for Gujarat at least).

PARAMETERNET-METERINGBANKING CHARGESGROSS_METERING
ObjectiveSelf-consumption of electricityNot definedElectricity sale to utility
ApplicableUpton 10kWBeyond 10kWBeyond 10kW
Tariff ArrangementNo payment by utility for electricity injected into the grid, beyond a limitNot defined PPA with the utility where utility to pay a per PPA price
Financial BurdenGovernment bears the burden in form of Electricity sell/ incentive/subsidyMinimum burden to both CNI and UtilityCost borne by utility and then passed through to the consumer
Energy AccountingMetering arrangement to measure generation as well as consumptionNot definedMetering arrangement to measure the generation only
BeneficiaryAssist consumer directly to reduce its electricity billingHealthy balance of charges & duty for both CNI & UtilityAssist utility in meeting solar RPO compliance
Project SelectionFirst-cum-first basisFixed tariff Competitive bidding
Utility’s ConcernLoss of revenue for utility – reduced grid consumption by the consumersUtility sustains its financial health with Banking ChargesNot keen on signing PPA with small rooftop projects – higher FiT & administrative burden
Developer’s ConcernLess incentives may impact project viability for certain consumer segmentsLess incentives may impact project viability for certain consumer segments Grid unavailability to impact revenue
Net ideal savings based on Raj’s Example7,500 (in INR)6,000 (in INR)3,000 (in INR)
LCOE based on Raj’s ExampleRs.1.50/unit (for about 25 years)Rs.3.00/unit (for about 25 years)Rs.5.50/unit (for about 25 years)

*LCOE: Levelized Cost of Energy

The Government of Gujarat has recognized the growing impacts of the climate change at local and national levels and has formulated various policy initiatives to mitigate the impact of this rising concern.

Here, we summarize the new initiatives the government has involved in content with the existing policy until the implementation guideline is rolled out.

Summary of Policy for RESIDENTIAL CONSUMERS

As per the new policy, the Residential Consumers can now not just settle but also sell the additional solar units generated by their rooftop solar PV system. This shall benefit those owning a bigger rooftop space.

SR. NO.

PARTICULARS

EXISTING PROVISIONS

REVISED POLICY

1

Capacity Restriction

No restriction on installed capacity

 

Same as in existing policy.

2

Incentive / Subsidy

As per Government of Gujarat, scheme announced from time to time

3

Energy Accounting

As per biling cycle

4

Transmission & Wheeling Charges

None

5

Banking Charges

None

6

Electricity Duty

As per the provision of Gujarat Electricity Duty Act, 1958

7

Third-party Sale

Allowed

8

Surplus Injection Compensation

 

For self-consumption

Rs.2.25/Unit for first 5 years, thereafter  75% of lowest tariff discovered in GUVNL bid

 

 

 

Same as in existing policy

 

 

For Third-party Sale

75% of lowest tariff discovered in GUVNL bid.

9

Cross Subsidy & Additional Sub charges

Not applicable for self-consumption.

 

 

Not applicable for self-consumption.

 

Applicable in case of third-party sale.

10

Ownership,

Lease Agreement,

Power Sale Agreement

Only Ownership Allowed

Developer can set up solar plant on Rooftop and enter into lease agreement & Power Sale agreement.

Summary of Policy for CAPTIVE USE/CAPEX CONSUMERS

As per the new policy, the Industrial, Commercial, Institutional and other Consumers would be charged for additional banking charges. It indicates the prime consideration of revising the entire grid system while integrating the micro-grids that store and manage the solar generated electricity.

Just like the internet set its space in communication networking as data-network, the solar electricity seems to set its space in the existing grid system as micro-grid storages.

SR. NO.

PARTICULARS

EXISTING PROVISIONS

REVISED POLICY

 

Capacity Restriction

No restriction on installed capacity

Same as in exisiting policy

 

1

Energy Accounting

 

 

 

 

Energy set-off; Between 07.00 hours to 18.00 hours of same day

 

For HT/EHV consumers:

Energy set-off; Between 07.00 hours to 18.00 hours of same day

 

For LT demand-based consumers:

Energy set-off; Between 07.00 hours to 18.00 hours in the billing cycle basis.

 

For LT Consumer : Other than demand-based consumers:

Energy set-off shall be on billing cycle basis.

 

2

Transmission & Wheeling Charges

As decided by GERC from time to time

Same as in existing policy.

3

Banking Charges

–           

MSME units and other than Demand Based Consumers:

Rs.1.10 per unit on solar energy consumed

 

For demand-based consumers:

Rs.1.50 per unit on solar energy consumed

 

For Government Buildings:

Exempted

4

Electricity Duty

As per the provision of Gujarat Electricity Duty Act, 1958

 

Same as in existing policy.

5

Surplus Injection Compensation

 

For MSME:

Rs.2.25 for first 5 years, thereafter 75% of simple average of tariff discovered in GUVNL bid

 

For Others:

75% of simple average of tariff discovered in GUVNL bid

6

Cross Subsidy & Additional Subcharges

Exempted

7

Collective Ownership

Solar Projects Installation & Usage of Generated Power  with collective ownership of more than one consumer investing / holding 100% Equity amount shall be allowed in the ratio of their equity.

Summary of Policy for THIRD PARTY SALE

For Industrial, Commercial, Institutional & Other consumer

The state government finally initiates the third-party sale model for Gujarat. This entire clause is added to attract investors opting for regular and hassle-free passive income.

SR. NO.

PARTICULARS

ADDITIONAL PROVISIONS

1

Energy Accounting

For HT/EHV consumers:

Energy set-off; Between 07.00 hours to 18.00 hours of same day

 

For LT demand-based consumers:

Energy set-off; Between 07.00 hours to 18.00 hours in the billing cycle

 

For LT Consumer other than demand-based consumers:

Energy set-off shall be on billing cycle basis.

2

Transmission & Wheeling Charges

As decided by GERC from time to time

3

Banking Charges

For Demand-based consumers:

Rs.1.50 per unit on energy consumed

 

For Government Buildings:

Exempted

 

MSME units and other than Demand Based Consumers:

Rs.1.10 per unit on energy consumed

4

Electricity Duty

As per the provision of Gujarat Electricity Duty Act, 1958

5

Surplus Injection Compensation

 

75% of simple average of tariff discovered in GUVNL bid

6

Cross Subsidy & Additional Subcharges

As decided by GERC from time to time

SUMMING UP

The new Gujarat Solar Power Policy 2021 allows the third party sale for generated solar units for all the consumers, that is, residential, institutional, commercial and industrial. Thus, the consumers can install the solar PV system based on their investment portofolio and sell any of the excess electricity to the government. The twist for the Institutional, commercial and industrial consumers comes with the new banking charges applicable for the storage of the solar units.

As per the new policy, the government looks forward to cut down the dependency on conventional coal-based power generation and help the MSME industry in its production cost. The operative Period for the new policy is for five years, that is, upto 31.12.2025.

Acronym Full Forms

  • LT-Low Tension Lines
  • HT-High Tension Lines
  • HT/EHV – High Tension/Extra-high Voltage Lines
  • MSME – Ministry of Micro, Small & Medium Enterprises
  • GERC – Gujarat Electricty Regulatory Commission
  • GUVNL – Gujarat Urja Vikas Nigam Limited

After all the setup is ready-to-use, there comes a county inspection step in between you pulling-up your solar switch to go solar.

What do they do?

A government engineer or electrician comes for final inspection of all the wiring done with respect to your solar setup and the utility grid. Your installer shall do the scheduling and paper work for the same.

What you get to know from it?

All the installation and wiring do meet the pre-set permit standards and safety measures. Your time investment, and execution process turns out to be successful. All the patience was worth the wait.

The time this phase depends on the type of solar power installation you’ve opted for. If it’s off-grid, as in, off the electricity grid, you can pull-up your solar setup after proper wiring check. But if your setup is hybrid or on-grid, that is, if it has an electricity grid associated, the engineer inspection and permit is must and shall take time based on your locality and county. It can range from a few days to a few weeks depending on the queue.

It is advisable to initiate your solar installation process in off-season time, that is, mostly winters to avoid the permit queue or delay from service-provider’s end.

Based on all engineering assessments; the solar panel installation plan, area on rooftop, height elation if any, and other design parameters are approved.

What do they do?

Based on the design, the installer shall be able to give a final quote. The varying charge section can be defined with tentative time the setup shall take to get installed. On approval, they provide for the list of documents you would have to submit for the entire process.

What you get to know from it?

You can get your final quote and schedule of the solar installation process. You can decide to stick to your service provider, negotiate or switch it based on your experience of the process.

This entire process takes in account the experience of both, the engineer and the solar installation vendor. Thus, it can take a day to one week for your design approval and quote finalisation process.

After the site has been assessed by your Solar Service provider, an expert engineer is supposed to visit your site to get into the details and provide the installation assurance and safety measures.

What do they do?

The Engineer would’ve already considered the azimuth, direction of roof, shading on the roof and other future aspects that might affect the Solar Panel setup and its efficiency. The engineer also inspects the life and quality of your rooftop and whether it can withstand the solar setup in the long run of about 25-30 years. All minute details like shading factors, angles, increasing height and others are considered, to give a final design approval in compliance with long-term safety and efficiency.

What you get to know from it?

You get to know if your roof is strong and fit enough to go green with Solar Power installation. There is no point investing so much that it can be a trouble in the next few years for all.

This process can take about 1-2 weeks based on the engineer’s availability.

Finding a solar installer – the prime step is akin to deciding which automobile dealer you would like to buy the car from, based on the aforementioned example.

What do they do?

Solar installers are people who provide EPC services to set up solar power over your rooftop and deal with all the documents and processes involved. They shall investigate your house-roof location, the angle, and unit consumption pattern based on your previous electricity bills of the house. They shall help you decide the capacity of the solar setup your house shall need based on all electrical appliances used and provide an estimated cost.

What you get to know from it?

The first thing you get the clarity on, is the prime factor – if your location is fit for going solar or not? The other steps won’t be a concern if this fails to pass. You get to know the installation capacity to be put up on your rooftop with an estimated quote. You get clarity on the solar setup charges and other additional charges of installation and labour.

It is always good to take a viewpoint of multiple vendors, and come to a conclusion. This entire process of setting up visits and getting reviews might take you a week or even a month. It depends on vendors’ and your time availability and your choice of installer. Any referrals from friends, family or neighbours can be time savvy and cherry on the cake.