The UP state government has approved a new solar policy with a target of developing 10,700 MW of total solar capacity in the state by the year 2022. 60% of this target (6,400 MW) is proposed to be developed through utility scale projects and balance 40% is planned for rooftop solar systems.  The total target has been determined so as to achieve renewable purchase obligation of 8%. The policy has some attractive provisions on paper in line with many other states. But it lacks specifics and is very generic in nature leading us to question if it will make any material difference on-the-ground.

Key provisions are given below.

• First 2,000 MW of capacity will benefit from ‘must run’ status with all subsequent capacity to be subject to merit order desptach;
• Inter-state sale of power shall be eligible for waiver of 50% transmission/ wheeling charges and 100% electricity duty (for 10 years);
• The state shall provide single window clearance and 100% waiver of stamp duty charges on purchase of land to all solar projects;
• Rooftop solar systems can avail of net- or gross-metering connections although the policy is silent on tariff payable for power injected into the grid;
• Rooftop solar systems shall be exempted from building bye-law requirements. Plus, systems less than 10 kW in size shall not require clearance from Chief Electrical Inspector;
• Residential rooftop solar systems shall be offered state capital subsidies of up to INR 30,000 (USD 460) on top of the 30% subsidy available from central government;

It is notable that UP is one of the largest, most populous and poorest states in India. It is also the second largest power consuming state after Maharashtra. The state has a population of 200 million (16.5% of total) and a peak load requirement of around 17,000 MW (11%). It has one of the lowest per capita consumption in the country, less than half of leading states such as Maharashtra and Gujarat, and as much as 48% of the households are without access to grid power (source: Ministry of Power). Despite that, progress in renewables remains woeful – as of September 30, 2017, the land-locked state had solar capacity of only 500 MW (3.1%) and no wind capacity. In view of all these factors, it has a huge opportunity to leverage solar power to turn around the local economy. We have maintained for some time that UP could be a major demand driver for solar power in the coming years.

Unfortunately, UP remains a notoriously difficult state for doing business. Most project developers are wary of the state and the recent tariff renegotiation for a 215 MW state tender closed in 2015 has not helped alter that perception.

Tender floodgates set to open

After a prolonged slowdown and subsequent to MNRE’s recent announcement of a new RE rollout plan, we expect a flurry of new tender announcements in the coming months. Solar Energy Corporation of India has released a new tender for development of 2,000 MW wind power projects. Projects can be set up anywhere in India and will be eligible for connectivity to the inter-state transmission system. The premise is that projects would be set up in high wind zones for supply of power to hinterland states with no wind generation potential. Developers shall have 18 months for construction and can bid between 50-400 MW capacity. Auction is expected in about 3 months time.

Meanwhile, Karnataka has announced a new 860 MW solar tender for development of taluk-based projects along the lines of a similar tender two years ago. A list of 43 taluks (sub-districts) has been identified out of a total 177 taluks in the state and each taluk can have a maximum capacity of 20 MW. Tender documents are expected to be released shortly.