Renewable Energy (Solar) Policy of Rajasthan State – Investment Potential and Incentives
Rajasthan brought into effect its revised policy on Solar Energy w.e.f. 18th December 2019 called Rajasthan Solar Energy Policy, 2019 (“Solar Policy 2019”). With the stated goal of reducing carbon emission and pollution mitigation, the policy envisages facilitation of stakeholders for promoting solar energy while safeguarding interests of end consumer.
With vast and largely untapped potential in terms of intense solar radiation, one of the highest number of sunny days in a year and availability of vast barren/uncultivable unutilised government/private land, Rajasthan is seeking to be a major contributing state to support achievement of the national target of 100 GW capacity of solar energy out of 175 GW Renewable Energy by the year 2022.
Bhadla Solar Park located at Bhadla village in the Jodhpur district of Rajasthan has become the world’s largest solar park with 2,245 MW of solar projects commissioned. The solar park, spread across more than 14,000 acres, has been developed by multiple entities.
The seriousness of the state of Rajasthan state in pursuing its objective and attracting investment is apparent from the Solar Policy 2019 itself. The policy identifies different avenues to promote Solar Energy and provides clarity too, gives definitions to the terms used to prevent ambiguity, seeks to promote transparency in requirements, establishes various authorities with their roles defined and lays down timelines for compliance and execution.
This article is an attempt to highlight key points and present extracts of the Solar Policy 2019.
Benefits
Renewable energy brings enormous benefits in the form of zero fuel cost resulting in electricity prices free from volatility and external influence, reduced water usage, low import bill and pollution mitigation. By promoting non-conventional sources of energy dependence on conventional sources of energy is reduced. The increased focus on electric vehicles rather than fossil-fuel based vehicles will require charging by renewable energy-based systems.
Solar energy can be deployed in a decentralised manner which brings benefit of reduced transmission & distribution losses and savings in cost of establishing additional transmission infrastructure because of generation of power at load centres. Decentralised generation through solar rooftop systems, off-grid applications and small solar power plants at consumers end are efficient ways of utilisation of solar energy.
Drawbacks
Renewable Energy requires deployment of technologies and implementation models for ancillary services to enable seamless integration of renewable power with grid to ensure grid stability. With unpredictability and variability of Renewable Energy generation, its large-scale integration to the grid is a challenging task. It requires upgradation of transmission and distribution infrastructure. This leads to increase in system level cost of Renewable Energy.
Avenues to Promotion of Solar Energy
Solar Policy 2019 has identified the below avenues for promotion of Solar Energy
- Rooftop Solar Projects on Gross Metering or Net Metering
- Decentralized Grid Connected Solar Power Projects (small) at load centres
- Off-Grid Solar Applications
- Utility Grid Power Projects
- Solar Power Projects with Storage Systems
- Solar Parks
- Promotion of setting up of Renewable Energy based Electric Vehicle Charging Stations
- Industries to manufacture solar energy equipment and storage systems
Support & Incentives
- Rajasthan Renewable Energy Corporation Limited (“RREC”) is to act as the nodal agency
- Generation of electricity from Solar Power Plant shall be treated as eligible industry under the schemes administered by the State’s Industries Department and for incentives available to industrial units under the Rajasthan Investment Promotion Scheme (RIPS).
- No registration will be required for solar power projects connected to low tension grid under Net/Gross Metering Scheme.
- Maximum time period for execution of various activities in respect of Solar Rooftop Systems under Net Metering by Distribution Licensee’s has been stipulated
- The time period to complete processing of applications by RREC for development of Solar Parks by private sector is 30 days.
- Developer shall be permitted to set-up Solar Power Project/Solar Farm on private agriculture land without the requirement of land conversion in accordance with applicable provisions. Solar Power Producers shall also be allowed to acquire/hold private land from the title holders for setting up of Solar Power Plant in excess of ceiling limit applicable to agricultural holdings.
- Government land will be allotted to Solar Park /Solar Power Projects as per applicable provisions with maximum land area which can be allotted for different technologies clearly stated. The land can be sub-leased in accordance with rules and additional land allotted for projects with storage systems.
- Rates of stamp duty levied on the land used for setting up of solar power plant/solar park shall be equal to twice the rates of stamp duty leviable on agriculture land of that area
- To promote development of Solar Parks in Joint Venture with private developers Rajasthan state may invest up to 50% equity or any other percentage of equity participation as decided.
- To promote use of renewable energy for charging of EVs, Government land will be allotted at 50% concessional rate for first 500 renewable energy based EV charging stations installed within 5 years from the date of commencement of this Solar Policy 2019.
- Rooftop consumers will be provided subsidies/incentives as per the guidelines of MNRE/State Government
- Banking of energy at the drawl end within the State shall be permitted for Captive Consumption and third-party sale on yearly basis.
- Water Resources Department will allocate required quantity of water from for cleaning of solar panels and auxiliary consumption for Solar Photo Voltaic Power Plants and water requirement for Solar Thermal Power Plants (subject to the availability of water).
- Exemption/relaxation is given from Electricity Duty and Transmission and Wheeling charges subject to conditions
- For manufacturing solar energy equipment, various concessions are given:
- Investment subsidy on State GST: 90% of State GST due and deposited for 7 years
- Benefits of Rajasthan Investment Promotion Scheme (RIPS)
- Employment subsidy: Reimbursement of 90% of contribution paid for employees
for 7 years - Interest subsidy: treating solar energy equipment manufacturing as thrust sector
- Others available
- Customized package concession
- Employment subsidy: Reimbursement of 90% of contribution paid for employees
- Land allotment at 50% concessional rate in industrial area/any other area
- 100 % exemption of Stamp duty
- Full exemption in Electricity Duty for 10 years
Rajasthan truly has the potential to be a highly preferred destination for solar energy at the global level.
Rajesh Lal
Chartered Accountant
☎: +91-9971033977
✉: rajeshlal@rajeshlalandco.com
LinkedIn: https://in.linkedin.com/in/rajesh-lal
