08 June 2015 | BRIDGE TO INDIA
With the formation of the new BJP-led government at the state level 3 months ago, solar power is finally gaining momentum in Maharashtra. Last week, the state government cabinet approved a renewable energy policy with a target of 14,400 MW by 2020. Out of this, 7,500 MW has been earmarked for solar power. The policy document has not yet been released in the public domain but the ambitious targets follow recent bold policy announcements in Telangana, Andhra Pradesh and Jharkhand – all in line with India’s proposed 10.5% solar RPO target by 2022. We expect several other states will follow suit and align their solar policies accordingly.
- In the past, Maharashtra was not very supportive of solar. This might change now, with a new policy
- The state has the highest power requirements and costs in India. It is ideal for solar
- It remains to be seen, if regulators will allow solar to compete freely with the established utilities
A really encouraging feature of the policy is the deemed open access status for renewable projects. This will come as a big relief for developers who are building business models around private sale of renewable power. However, there is still a need to rationalise open access charges. Maharashtra and other states should take a cue from Karnataka, which has waived off almost all open access charges for solar for at least 10 years. A similar policy in Maharashtra can bring in a lot of new investments into solar and help reduce power costs for industries in the state.
On paper, India’s most industrialised state, Maharashtra, has enormous potential for solar: it requires more power than any other Indian state, tariffs for industrial and commercial consumers are the highest in India (exceeding the cost of solar power), and there is plenty of land and sunshine. It’s power distribution companies are also relatively better off than those of most other Indian states.
So far, however, it has been a dark spot on India’s solar map. Regulators have been dragging their feet on renewable purchase obligation (RPO) targets. Capacity addition has largely been limited to state utilities (one 150 MW project stands out), with little private sector participation. There have been restrictions on granting open-access permissions in the past, power customers’ ability to buy power from private suppliers has been curtailed and conditions for banking of power, which is essential for renewable sources, have been very discouraging for IPPs. The previous government let the local distribution company protect its vested interests and block growth of renewables. This might now change.
BRIDGE TO INDIA supports the principle of fair compensation to utilities for using their infrastructure. However, using the pretext of losing customers, state utilities and regulators like those in Maharashtra and even Gujarat have blocked open access and prevented their power customers from procuring solar power using the grid. Policy makers have not yet intervened to stop this practice. It is not the job of regulators to protect utility monopolies.