IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308

SOLAR ENERGY INSTALLATION AND TARIFF OPTIONS IN INDIA:

CENTRAL VS STATE GOVERNMENT

Gaurav Gupta1, G. D. Agrawal2

1
B Tech Electrical Engineering, M Tech IInd year Renewable Energy, CEE Department, MNIT Jaipur.
2
Associate Professor, Department of Mechanical Engineering, MNIT Jaipur,

Abstract
India has a huge potential of solar energy, which can fulfill the gap of electricity demand and supply of the country. Presently
harnessing the solar energy through solar PV technology is more popular than solar thermal technology in India because of
easier installation and less maintenance. As solar PV technology is expensive and under developed, it requires special support by
the administration body or government through its dedicated policies intending to promote it. Similarly in India also there are
various schemes launched by government to promote solar energy installation and these can be divided in two parts under central
government and under state government. Each of them has their own targets, policy, action plan and their installations. This
paper describes and analyses the progress of both schemes (Central and State government) for solar installation in a comparative
manner, and also find the required changes in policy for improvement. This paper also describes various tariff schemes adopted
by the government (Central and State) like reverse bidding, FIT etc. and installations under them, again in comparative manner,
also shows the best tariff option. Ultimately this paper figures out the loose points of solar policies in India, and suggests the
improvement options in the policy side including better tariff scheme.
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1. INTRODUCTION solar power. It is a fully central government owned scheme
in which certain states were chosen for establishing the solar
India is solar rich country as of its geographical location. power plants but funding and all operational mechanism was
India has a potential of producing 5000 trillion units under control of central government. On the other hand
(kWh)[1] of clean energy. If we talk about the government individual state like Gujarat was the first state to start its
solar policies in India it can be divided broadly in two types, own solar policy to develop on grid MW scale solar power
first is central government solar policy, second is state nodal plants. After that, some other states also came with their
agency’s solar policies under control of their respective state state solar policy for adding solar capacity parallelly, which
governments. Solar installation development in India started were Karnataka (Feb – 2011) and Rajasthan (April – 2011).
rapidly after launching the Indian NAPCC plan on June 30, The solar installation growth from year 2010 march 2014 is
2008. In this there 8 national missions were launched, in shown in figure 1, which also describes the breakups for
which Jawahar Lal Nehru National Solar Mission various responsible policies.
(JNNSM)[1] also launched in year 2010, to harness India’s

Fig 1: Solar Installation timeline in India (policy wise)

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IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308

2. PRESENT INSTALLATION 3. DEVELOPMENT UNDER STATE

Current scenario of solar installation status on pan India GOVERNMENTS (STATE NODAL AGENCIES)
basis is 2631.9 MW[2] by the march 2014. Here we can
segregate this installation of solar in four main categories In India Mega Watt (MW) size installation of solar energy
which is Central Level (MNRE), State level (All State started with the state level policies only, which was Gujarat
renewable agencies), under Renewable purchase obligation Solar Policy 2009[3]. Under this policy first time Feed in
(RPO), and under Renewable Energy Certification(REC). Tariff (FIT) was offered to the plant developers to
encourage them and attract to this solar industry which was
In this the major portion is covered by first two categories very expensive one at that time. After Gujarat, Karnataka
which is Central level and state level development i.e. 687.8 and Rajasthan came with its first solar policies. Currently
MW and 1322.6 MW respectively, and remaining capacity about 15 states has its solar energy programs in which 10
is about 580.6 under RPO and REC Schemes. The other states have its programs with bidded capacity of 4360 MW,
miscellaneous installation of 41 MW has done under on other hand about 710 MW capacity of solar PV is under
programs like private initiative and CPSUs. pipeline of the state policy of which RFP has released but
the bidding is in under process (UP 300 MW, Haryana 50
MW, Bihar 250 MW, Assam 60 MW, Rajasthan 50 MW).
Others
NSM the target and achievements of state solar policies is shown
RPO 2%
26% below
3%
REC
19%
State
policies
50%
Fig 2: breakup of Installed solar capacity till March 2014[2]

1200

1000

800
Solar capacity in MW

600

400

200

0
Maha Chhat Karn
Gujar Karn Rajas Orris Punja MP- Assa Hary
MP -I rasthr AP TN UP Bihar tisaga ataka
at ataka than a b II m ana
a rh - II
Uncommissioned 109.6 193 52.9 25 55 914.9 997 200 25 300 250 100 100 50 60 50
Commissioned till march 2014 860.4 17 22.1 175 150 85.09 3 0 5 0 0 0 0 0 0 0

Fig 3: Target and Achievement of solar installation program of various states till Mar – 2014

The total achieved capacity under state bids is about 1168 4. CENTRAL LEVEL DEVELOPMENT
MW (by march 2014) [2], of 4360 MW bidded capacity.
Considering the non bidded capacity, the cumulative target of After the NAPCC in 2008 India launched its first National
solar capacity addition under state policies is 5225 MW. Two Mission for solar energy which was dedicated to the big scale
states of India Maharashtra and west Bengal also have (MW size) solar plants. On February 2010 Central
installed capacity of solar of about 150 Mw and 5 MW, but government started the highly ambitious solar mission for
these two has added to state without any open bidding. So the India named as Jawaharlal Nehru National Solar Mission
total installed capacity of solar in India under state policies is (JNNSM) which gave a roadmap to Indian solar industry for
about 1323 MW, of 5225 MW targeted value. its future with a target of 22000 MW installation of solar
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IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308

power by 2022 (Targets shown in table 1). JNNSM[1] were given to all the solar plant developers which had already
comprises three stages of development solar power under under construction plants under any other program. MNRE
three different categories of a) grid connected solar plants b) offered them the FIT of 17.91 Rs/ kWh[1]. After that Phase 1
Off grid solar plants and c) Solar thermal collectors. started with two batches as batch 1 and batch 2 which consist
of competitive bidding process. The targets and achievements
Under the JNNSM before the phase 1, Migration policy came of phase 1 is shown below
first on February 2010, in this Feed in Tariff (FIT) scheme

500
450
400
Solar Capacity in MW

350
300
250
200
150
100
50
0
Migration Phase1
ST (NVVN) RPSSGP Phase 1 Batch II
scheme BatchI(NVVN)
Uncommissioned 33.5 10 420 9.25 40
Commissioned till march 2014 50.5 140 50 88.8 310

Fig 4: Target and achievement of solar installation under JNNSM phase 1

In the batch 1 of Phase 1, solar thermal (ST) was also the successful to achieving the targets, but it is not correct
target of 470 MW but it was not achieved successfully (only observation as, in the state policies development of 1323
50 MW) as of complex technology and construction. Except MW, in which only Gujarat accounts for 860 MW. It means
ST, there was a target of 682 MW of solar PV of which 589.3 that only 463 MW of solar installation has done under all
MW have achieved (till march 2014). state policies except Gujarat. Here except Gujarat all other
states have a huge uncommissioned capacity. On the other
5. COMPARISON AND ANALYSIS hand capacity addition under JNNSM is much successful and
the achievements are near to targets (Except solar thermal
The state policies account for about 50% of total capacity because more complex technology and construction and less
addition till march 2014 [2], and JNNSM accounts for only resources availability).
26%. It depicts that the state policies have more capacity
installations than central level and hence states are more

uncomi commis
ssioned sioned
14% 20%

commis
sioned uncomi
86% ssioned
80%

Fig 5: Solar installation under central government scheme and state government schemes

Here it can be stated that installations under central schemes coordination in central and state level government,
are more successful than under most of the state schemes, instability of state governments, without resources or with
and for this pattern both state government policy and bidder less resources set the targets for much higher values are the
(investor) are responsible. The reasons behind this are reasons from state government side. Some other financial
aggressive bidding from bidder side (excessively lowering reasons are also affects this like delay in PPA agreements,
the tariff), and poor land acquisition process, less delay in regular and subsidy payments, poor infrastructure.
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IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308

6. TARIFF OPTIONS IN INDIAN SOLAR [3]. Gujarat Solar Policy (2009): “Solar Power Policy 2009”
available at http://mnre.gov.in/file-
MARKET manager/UserFiles/guidelines_sbd_tariff_gridconnected_res
In Indian solar market there are various types of tariff /Gujarat%20Solar%20Power%20Policy%202009.pdf
schemes have adopted like feed in tariff (FIT), reverse [4]. Naveen Kumar Sharma, Prashant Kumar Tiwari, Yog
bidding process, viable gap funding (VGF) etc. Firstly Raj Sood; “Solar energy in India: Strategies, policies,
Gujarat solar policy offered Feed in Tariff first time to the perspectives and future potential”, Renewable and
MW size solar projects, the levelised tariff for the solar Sustainable Energy reviews, 2012; 16:933-941
projects in Gujarat was Rs 12.54/ kWh, after this Migration [5]. Zhi Qiang, Sun Honghang, Li Yanxi, Xu Yurui, Su Jun;
scheme under central level offered FIT to the existing or “China’s solar photovoltaic policy: An analysis based on
under construction solar projects. But then because of cost policy instruments”, Applied Energy, 2014; 129: 308-319
declining in solar panels and competitive environment in [6]. Chi-Jen Yang; “Reconsidering solar grid parity”,
solar industry the competitive bidding / reverse bidding Energy Policy, 2010; 38:3270-3273
emerged in which benchmark tariff was defined by CERC or [7]. Sufang Zhang, Yongxiu He; “Analysis on the
respective SERCs. development and policy of solar PV power in China”,
Renewable and Sustainable Energy reviews, 2013; 21: 393-
If we compare in the competitive bidding and FIT, the 401
success rate of FIT is much higher than any other [8]. Jinho Jung, Wallace E. Tyner; “Economic and Policy
methodology. If we take an example of Chhattisgarh bidding analysis for solar PV system in Indiana”, 2014; IN: 47907-
for solar project of 100 MW, the lowest bid offered was 6.3 2056
Rs/ kWh and the highest bid was 7.9 Rs/ kWh. The [9]. Raymond Hudson, Gred Heilscher; “PV Grid
weighted average of this bid is about 7.2 Rs/ kWh. Integration – System Management Issues and Utility
Government has to bear the cost of 7.2 Rs/ Unit in any case, Concerns”, Energy procedia, 2012; 25: 82-92
but there is a possibility that the lowest bidder can create [10]. Power Grid; 2013, “Desert Power India 2050”
any problem by giving reason of non bankability of project available at,
or less financial viable project, which create a problem to http://www.powergridindia.com/_layouts/PowerGrid/Write
both developer and government to achieve its target. The ReadData/file/ourBusiness/SmartGrid/desert_power_india.p
alternate of this problem is government can give a FIT, df
which applicable to all the developers equal to the average [11]. “Jawaharlal Nehru National Solar Mission : Towards
price which is 7.2 Rs/ kWh. This create an environment of Building SOLAR INDIA”; Ministry of New Renewable
equality by which less chances of arising problems in Energy (MNRE), Government of India, 2010.
development of project. [12]. P.D. Lund; “Boosting new renewable technologies
towards grid parityeEconomic and policy aspects”,
7. CONCLUSION Renewable Energy, 2011.
[13]. Paris A. Fokaidesn, Angeliki Kylili; “Towards grid
As presented above it is fact that, the success rate of parity in insular energy systems: The case of photovoltaics
installation and achieving the targets for solar capacity (PV) in Cyprus”, Energy Policy, 2014.
addition is much higher in the central government programs [14]. “Paving the Way for a Transformational Future :
(MNRE), as compared to the development under state Lessons from JNNSM Phase 1”, Energy Sector
policies (except Gujarat. Learning from the JNNSM phase 1 Management Assistance Program (ESMAP), The World
like better land acquisition policies and support, better Bank, 2013.
financing options and support of EXIM banks, providing [15]. Mevin Chandel, G.D. Agrawal, Sanjay Mathur, Anuj
FIT if required, rigid and concrete policy framework, less Mathur; “Techno-economic analysis of solar photovoltaic
time delay process of auxiliary permissions, better power power plant for garment zone of Jaipur city”, Case Studies
evacuation infrastructure provision, can work as catalyst for in Thermal Engineering, 2014.
country’s solar energy programs. In case of tariff option for
bidding, from all the available methods it is seen that FIT is
the most suitable method for successful completion of the
project (Ex. Gujarat solar program). As FIT and weighted
average tariff is approximately same for a government, so
FIT should be given to the developers than any other
alternative.

REFERENCES
[1]. “JNNSM Phase II Policy Document”, Ministry of New
Renewable Energy (MNRE), Government of India; 2012.
[2]. Ministry of New Renewable Energy(2014): “Annual
Report 2013 - 2014” document available at
http://mnre.gov.in/mission-and-vision-
2/publications/annual-report-2/
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Volume: 05 Issue: 07 | Jul-2016, Available @ http://ijret.esatjournals.org 515