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! Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
2
Executive Summary
Energy security is a critical strategic and economic issue for India. The National Action Plan on Climate
Change launched by the Hon’ble Prime Minister on June 30, 2008 emphasised the need for a graduated
shift from economic activity based on fossil to one based on non-fossil fuels, and from reliance on non-
renewable and depleting sources of energy to renewable sources. The Electricity Act.2003 already
provides a role for Renewable Energy sources and Tariff Policy, 2006 mandates the State Electricity
Regulatory Commissions (SERCs) to fix a minimum percentage of energy purchases from renewable
sources of energy, taking into account availability of such resources in the region and its impact on retail
tariff.
From an energy security perspective, solar is the most secure of all sources, since it is abundantly
available. Theoretically, a small fraction of the total incident solar energy (if captured effectively) can
meet the entire country’s power requirements. Similarly, the peninsular and western parts of India are rich
in wind resource. The geographical spread of renewable energy resource is a boon for this country. It is
also clear that given the large proportion of poor and energy un-served population in the country, every
effort needs to be made to exploit the relatively abundant sources of renewable energy available to the
country. While, today, domestic coal based power generation is the cheapest electricity source, future
scenarios suggest that this could well change.
Already, faced with crippling electricity shortages, price of electricity traded internally touched Rs.7 per
unit for base loads, and around Rs 8.50 per unit during peak periods. The situation will also change, as the
country moves towards imported coal to meet its energy demand. The price of power will have to factor
in the higher prices of coal in international markets and the cost of developing import infrastructure. It is
also evident that as the cost of environmental degradation is factored into the mining of coal, as it must,
the price of this raw material will increase. In a situation of energy shortages, the country is increasing the
use of diesel-based electricity, which is both expensive - costs as high as Rs15 per unit - and polluting. It
is in this scenario, that the solar and wind imperatives are both urgent and feasible to enable the country
to meet its long-term energy needs. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
3
The Task Force constituted by the Planning Commission in June, 2013 held three meetings, identified
various issues which needed to be addressed and considered interventions of the Government. However,
the recommendations could not be adopted by the Task Force during the currency of the erstwhile
Planning Commission. In order to share the views received during the deliberations, the present Report is
being brought out capturing the broad suggestions made by the members of the Task Force and
participants at the meetings.
Given the severity of the situation, Government of India needs to act urgently, focusing on the following
key areas:
i) Setting up of Ultra Mega Solar Projects and Roof-Top Solar Projects to meet the upscale solar target of
1,00,000 MW by 2020;
ii) Substituting kerosene for lighting and cooking purposes in rural areas with Solar Energy/Heating;
iii) Expediting the project “Green Corridor” for transmission of renewable power;
iv) Enforcement of RPO by all the States and taking action to amend the Electricity Act. 2003 to increase
penalty for non-fulfilment of RPO, and make it mandatory;
v) Bringing down the cost of equipment to make it help achieve grid parity;
vi) Support domestic market manufacturing through subsidy, to provide level playing field with imported
solar equipment;
vii) Need for providing finance for the Wind Project developers for achieving the 12
th
Plan target of 15
GW and NAPCC target of 60 GW by 2022.
viii) Need for low interest rate loans from financial institutions and also encourage non-recourse
financing in the future.
ix) Solar and Wind could be made amenable to decentralized distribution;
x) SERCs need to show support for RE as per Electricity Act.2003
xi) Identify major reasons for low capacity expansion in the States and find ways to improve the sector.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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Accordingly, the report includes early action measures classified as per the following categories:
1. Finance related recommendations
2. Manufacturing related recommendations
3. Infrastructure related policy measures
4. Regulatory Support
5. Support through GOI measures
6. State Government related policies for encouragement of RE
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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Table of Contents
Preface
1 Introduction and Context.………………………………………………... 6
1.1 Context and objective of this Report………………………………………. 7
1.2 Call to action………………………………………………………………………. 10
1.3 Approach………………………………………………………………………….. 11
2 Early Action Measures………………………………………………………………… 14
2.1 Finance related recommendations………………………………………………… 15
2.2 Manufacturing related recommendations…………………………………………. 17
2.3 Infrastructure related policy measures…………………………………………….. 18
2.4 Regulatory Support………………………………………………………………... 19
2.5 Support through GOI measures…………………………………………………… 20
2.6 State Government related policies for encouragement of RE…………………….. 21
3 The way forward………………………………………………………………….......... 23
3.1 Manufacturing related Issues…………………………………………………….. 24
3.2 Financing of Solar and Wind sectors……………………………………………… 25
3.3 Renewable Energy Regulatory/Policy related Issues (MNRE/MoP)……………... 31
4 Annexure…………………………………………………………………………........... 36
4.1 Annexure A: Constitution of Task Force
………………………………………………………………………...
37
4.2 Annexure B: Minutes of the meetings of Task Force
………………………………………………………………………...
42
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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Chapter 1
Introduction and Context
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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1 Introduction and Context
1.1 Context and objective of this Report
1.1.1 The Planning Commission vide its order dated 24
th
June, 2013 constituted a Task Force under the
Chairmanship of Shri B.K. Chaturvedi, Member (Energy) to coordinate different activities relating to
solar energy, integrate solar power in the electricity grid and provide marketing support to this power,
and build solar sector considering the satisfactory progress made under the Jawaharlal Nehru National
Solar Mission, even beyond the 13
th
Plan Period. Subsequently, it was also decided to consider issues
being faced by the wind sector. It was felt that many concerns were similar to these two renewable energy
sources, and could be addressed commonly.
1.1.2 The constitution of the Task Force was as follows:
1. Shri B.K. Chaturvedi, Member (Energy), Planning Commission, Chairman
2. Chief Economic Adviser, MoF, Member
3. Secretary, Power, Member
4. Secretary, MNRE, Member
5. Secretary, DIPP, Member
6. Secretary, DEITY, Member
7. Advisor, (Energy), Member
8. Secretary, CERC, Member
9. Chairman, SBI, Member
10. Director General, FICCI, Member
11. Director General, CII, Member
12. JS, Solar, MNRE, Member Secretary
The Task Force was authorised to co-opt officials from related organizations from time to time.
1.1.3 The Terms of Reference (TOR) of the Task Force was as follows: Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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i) To suggest policy interventions for improving domestic manufacturing;
ii) To suggest measures to enhance availability of cost-effective finance;
iii) To ensure effective implementation/strengthening of the REC mechanism;
iv) To address issues related to evacuation of solar power and development of green corridors;
v) To seek involvement of State Governments for solar capacity development.
The constitution of the Task Force is at Annexure-A
1.1.4 The 1
st
meeting of the Task Force was held on 9
th
September,2013 and deliberated on the following
issues:
i) Setting up of Ultra Mega Solar Projects around Sāmbhar Lake in Rajasthan;
ii) Substituting kerosene for lighting and cooking purposes in rural areas with use of Solar
Energy/Heating;
iii) Expediting the project “Green Corridor” for transmission of renewable power;
iv) Enforcement of RPO by all the States and taking action to amend the Electricity Act to increase
penalty for non-fulfilment of RPO and make it mandatory.
v) Bringing down the cost of equipment to make it help achieve grid parity;
vi) Support Domestic Market manufacturing through subsidy, to provide level playing field with
imported solar equipment;
1.1.5 The 2
nd
meeting of the Task Force was held on 1
st
November,2013 and representatives from
different organizations presented their views as given below:
i) Need for providing finance for the Wind Project developers for achieving the 12
th
Plan target of 15 GW
and NAPCC target of 17 GW by 2020.
ii) Need for low interest rate loans from financial institutions and also encourage non-recourse financing
in the future.
iii) Solar and Wind could be made amenable to decentralized distribution;
iv) SERCs need to show support for RE as per Electricity Act.2003
v) Task Force’s need to look upon enforcement of RPO by SERCs. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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1.1.6 The 3
rd
meeting of the Task Force was held on 3
rd
December,2013 and presentations covered the
following issues:
i) Status of manufacturing of solar and wind power equipments-
a) International Debt is much cheaper;
b) Chinese industry has decimated manufacturing of these equipments in India and world-wide.
c) Government of India should create a barrier against dumping/cheap import and extend financial
support to this sector.
ii) Financial Matter and policy issues-
a) Lack of reliable long-term site specific resource and operational data;
b) Lack of evacuation infrastructure for RE;
c) Unbundling of land/EPC/equipment and O&M issues needed to bring down costs.
d) State Government to assist in arranging land and necessary facilities;
e) Enforcement of RPO obligations;
f) Need for a bouquet of financial models to choose from;
g) Need for “carving out” of funds dedicated for financing this sector;
h) State Governments need to create payment security mechanism just like NVVN at the national
level;
i) Security creation of assets to increase lender’s confidence, for recovery of loans.
j) IIFCL’s credit enhancement to be examined.
k) Need for Certification of imported solar equipments.
iii) Major reasons for low performance by the States and ways to improve the sector-
a) Inadequate availability of land and solar resources, insufficient State Government initiative
and delayed payments for power purchase;
b) Need for a Long-Term stability in policy framework;
c) Availability of operational data from reliable sources;
d) Need for a strong evacuation infrastructure and establishment of payment security mechanism
in view of weak financial health of DISCOMS;
e) SERCs may follow CERC norms for uniform tariff setting;
f) Procurement process/bidding process need to be refined to filter out impractical bids for award
of RE projects;
g) Quality standards should be maintained;
h) Low cost resources through tax-Free Bonds for IREDA;
i) Leveraging of NCEF funds through IREDA. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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iv) Regulatory environment and improvement needed-
a) Lack of RPO enforcement by SERCs and fixing of RPOs by SERC as per convenience;
b) Definition of “Co-generation”, in the Electricity Act.2003 which presently includes “fossil fuel
based generation” need to be amended.
c) High price in solar and wind in the REC mechanism in the Tariff Policy and the Electricity
Act. 2003 needs a fresh look.
1.1.7 The minutes of above three meetings of the Task Force are at Annexure-B
1.2 Call to action
1.2.1 India’s electricity generation is dominated by coal (about 60%). With a total installed generation
capacity of 254 GW as on end October, 2014, Renewable Energy source of power constitute only 13%.
The latter is significant from the point of view of curbing emissions. Although the country ranks low in
per capita emissions, it is amongst the top five emitters of overall greenhouse gas emissions. As a
developing country, it does not have binding emissions reduction targets, but we have voluntarily
declared a target reduction of 20-25 percent in emissions intensity by 2020 compared to 2005, at the
Copenhagen talks.
1.2.2 India has been promoting renewable energy through its Ministry of New and Renewable Energy
(MNRE) since the 1980s, through its various programmes. The growth of Renewable Energy Source in
India has registered significant growth from 1997.
1.2.3 With the enactment of the Electricity Act, 2003, generation of power using renewable energy source
has got a further boost. Under this Act, one of the functions of the State Electricity Regulatory
Commissions included in their mandate is to promote the generation of electricity from renewable sources
of energy. Further, with the amendment of the Tariff Policy, 2006 in January, 2011, the State
Commissions are required to reserve a minimum of 0.25% for purchase of solar energy by the end of
2012-13 and further go up to 3% by 2022. The non-solar component has been separately provided.
1.2.4 The Central Electricity Regulatory Commission has issued guidelines for fixing feed-in-tariff for
purchase of Solar power taking into account the current cost and technology trends. These are being
revised on an annual basis. The CERC has also issued Regulations for purchase of Renewable Energy Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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Certificates by an obligated entity. As mandated in the Electricity Act, the State Electricity Regulatory
Commission has issued Regulations for compliance of RPO by an obligated entity and has also spelled
out consequences of default on non-compliance of its direction.
1.2.5 The National Action Plan on Climate Change launched by the Hon’ble Prime Minister on 30th June,
2008 pointed out: “India is a tropical country, where sunshine is available for longer hours per day and in
great intensity. Solar energy, therefore, has great potential as future energy source. It also has the
advantage of permitting the decentralized distribution of energy, thereby empowering people at the
grassroots level”. In the Budget speech of 2014-15, the Finance Minister made an announcement to take
up Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Ladakh region in J&K and
launch a scheme for solar power driven agricultural pump sets and water pumping stations for energizing
one lakh pumps. Implementation of the Green Energy Corridor Project will be also be accelerated in the
current financial year to facilitate evacuation of renewable energy across the country. In the recent
Budget speech (2015-16), an announcement was made to revise the target of Renewable Energy capacity
to 1,75,000 MW by 2022; comprising 1,00,000 MW of Solar, 60,000 MW of Wind 10,000 MW of Bio
mass and 5,000 MW of small Hydro.
1.3 Approach
1.3.1 To ensure that Government actions are aligned with the country's energy security goals, the Task
Force was guided by the following overarching principles:
1. Finance related recommendations
1. 1. Financial support to renewable energy
x Grant of subsidy/VGF for development of RE in the short term
x Ensure compliance of RPOs by DISCOMS
x Dedicate a percentage of National Clean Energy Fund for RE projects
x Increase the term loan period up to 25 years through DFIs
x GOI to provide hedging cover to the foreign exchange component of the debts raised for
RE projects
1.2 Enhance availability of funds to the solar/wind sectors
x A separate exposure limit may be established for financing RE sector by banks
x Banks to come up with specific schemes to provide loans for off-grid solar RE projects
x Initiate measures to access foreign funds through a local financial institution.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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1.3 Reduce perceived risk of banks.
x Creation of a fund to provide risk cover to a portion of bank finance
x Introduce a system of certification of solar equipment
x Train the bankers to assess the true viability of RE projects.
2. Manufacturing related recommendations
2.1 Support for up-gradation of technology
2.2 Remove duties on raw-material to reduce the cost of domestic manufacture
2.3 Provide assured market for domestic manufacturers through DCR
2.4 Introduce QC check for ensuring quality of imported materials.
3. Infrastructure related policy measures
3.1 Up-gradation of grid to facilitate integration of solar and wind energy
3.2 Up-gradation of transmission infrastructure
3.3 Establishment of solar parks
4. Regulatory Support
4.1 Granting statutory backing to RPOs
4.2 Modification of REC mechanism to make it more practical
4.3 Lower wheeling charges for renewable energy
4.4 Introduce nation-wide regulations to promote roof-top solar projects
4.5 Issue “must run” status for solar and wind power projects.
5. Support through GOI measures
5.1 Statutory measures:
? Amendment of Electricity Act.2003
? Enforce use of RE based products (provision for RPOs in the Electricity Act,
2003)
5.2 Issue policies for development of renewable energy by Government
Departments/Organization
? All conventional energy companies to generate a fixed percentage of their Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
13
generation through renewable energy (provision RGOs in the Electricity Act,
2003)
? Reduce taxes on RE products
? Support from State Governments/DISCOMS
6. State Government related policies for encouragement of RE
6.1 Issue policies for RE, including net-metering and grid-connectivity for roof-top solar PV
6.2 Development of transmission infrastructure
6.3 Allow use of Government land and facilitate change of land use for RE.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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Chapter 2
Early Action Measures
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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2 Early Action Measures
2.1 Finance related recommendations
Recommendations of the Committee
1. Financial support to renewable energy
x Grant of subsidy/VGF for development of RE
o Subsidies be progressively replaced by interest subvention
x Ensure compliance of RPOs by DISCOMS
x Dedicate a percentage of National Clean Energy Fund for RE projects
x Increase the term loan period up to 25 years through DFIs
x GOI to provide hedging cover to the foreign exchange component of the debts
raised for RE projects
2. Enhance availability of funds to the solar/wind sectors
x A separate exposure limit may be established for financing RE sector by banks
x Banks to come up with specific schemes to provide loans for off-grid solar RE
projects (1-2% of total priority sector lending be ear-marked for off-grid projects
by Banks)
x Initiate measures to access foreign funds through a local financial institution.
3. Reduce perceived risk of banks.
x Introduce a system of certification of solar equipment
x Train the bankers to assess the true viability of RE projects.
2.1.1 The cost of renewable energy projects has been falling over the last several years. The
requirement of financial support (VGF or GBI, etc.) has now much reduced. However, the sector will still
need to be supported in the immediate term as the cost of renewable energy is still higher than the cost of
conventional energy. It is also evident that these projects are entirely capex front ended with very low Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
16
variable costs. If the Government were to continue to support capacity addition in these sectors, it is
expected that the costs may come down further, due to scaling up of local manufacturing of RE
equipment in India.
2.1.2 One way to help in reduction of cost of renewable energy and make it viable is to provide subsidy
in the shape of grants/viability gap funds to bring down the project cost itself. The cost of debt could be
brought down also, while the tenure of the debt may also be increased, along with purchase support. This
needs to be done through the following means:
x Grant of subsidy/VGF for development of RE
x Ensure compliance of RPOs by DISCOMS
x Utilize NCEF to provide grants to these sectors
x Domestic Financial Institutions (DFI) may provide long term loans (15 to 25 years)
x Enable access to low cost ECB by creation of a fund to pay hedging charges against foreign
exchange fluctuations
2.1.3 The NAPCC targets for share of RE by the year 2020, and the targets included in the 12
th
Five
Year Plan require major augmentation to the renewable energy capacity in the country. These targets have
been further up scaled by the Government. In order to achieve the above targets, there would also be a
need to augment availability of funds to finance this sector. In the light of large demands of debt capital
on the banking sector by competing sectors, RE projects get a lower priority for multiple reasons. In the
light of the above, it is essential that this sector is assured of financing through a slew of measures such as
the following:
9 Separate exposure limit in banks for RE with earmarking of 2-3% of total lending to this sector
9 Banks to devise a specific scheme for loaning off-grids and solar RE systems
9 Tasking a financial agency to raise money overseas (from pension funds, etc.) to loan RE sector.
2.1.4 One reason for banks’ reluctance to finance the RE sector has been its perceived high risk.
However, renewable energy is a viable sector and with rising prices of conventional power, this sector is
less riskier to finance, than even the conventional power, in spite of the present higher cost of renewable
energy. Another reason for the high risk perception of bankers is lack of knowledge/data relating to the Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
Plan
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likely power production, which in turn is dependent on wind resource and solar irradiation data. In order
to lower this risk perception, the following measures need to be adopted:
? Provide exposure and training to banks.
? Certify solar equipment, as is done for wind energy sector to enhance banker confidence
2.2 Manufacturing related recommendations
Recommendations of the Committee
1. Support for up-gradation of technology
2. Remove duties on raw-material to reduce the cost of domestic manufacture
3. Provide assured market for domestic manufacturers through DCR
4. Introduce QC check for ensuring quality of imported materials.
2.2.1 Domestic manufacturers have so far faced problems of unfair competition, due to their getting out
priced by imported products. As RE is higher priced, developers any way look out for measures to reduce
cost, and enhance price competitiveness. When faced with cheaper imports, often due to dumping, this
industry does qualify for protection. One way of helping it lower the cost, could be to remove duties on
imported raw-material. This is particularly true in the case of solar cells, for which there is inadequate
capacity in the country. Another way of enhancing price competitiveness is to provide the manufacturing
sector with low cost funds. The JNNSM policy document recognizes the strength of the manufacturing
sector particularly in its ability to employ large workforce.
2.2.2 There is often a charge that imported products are of higher technical specifications. In order that
the domestic manufacturing conforms to the latest technology, and supplies matching specifications if not
better, there is a need to support up-gradation of technology. MNRE may develop a scheme in this regard.
At the same time, it has to be ensured that the imported products of substandard quality are not allowed to
be installed in the country merely on the basis of their lower prices. Therefore, while the domestic
manufacturers must ensure top technical specifications, at the same time poor quality should not be
allowed to be imported.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
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2.2.3 There is also a need to provide assured market for domestic manufacturers, at least in the initial
years. As we have seen, the cost of solar equipment has come down over the years, and it should not be
the case, that Indian production does not witness this global trend. When viewed against the subsidies
which are presently being extended to this sector, it needs to be ensured that the Indian Government’s
financial resources do not end up supporting foreign manufacture, but is deployed in development of
domestic manufacturing capabilities. In this regard, there could be a trade-off between requirement of
DCR in domestic tenders, and imposition of duties on imported products, especially in the light of similar
imposition against Chinese products in many parts of the world. As the present level of domestic
manufacture (solar equipment) is much lesser than the envisaged solar capacity additions, perhaps, DCR
imposition in domestic tenders would suffice.
2.3 Infrastructure related policy measures
Recommendations of the Committee
1. Up-gradation of grid to facilitate integration of solar and wind energy
2. Up-gradation of transmission infrastructure
3. Establishment of solar parks
2.3.1 Transmission infrastructure is essential for any power generation source. Unlike conventional
energy, RE faces problems in attracting transmission infrastructure. The reasons are:
? Small size of RE projects;
? Location in difficult/interior areas; and
? Poor capacity utilization.
2.3.2 In the above circumstances, developers are unable to tap the best potential, or have to live with
poor quality of transmission facility. The picture is likely to improve with the implementation of the
“Green Corridors” project, which will address the RE capacity which will come up by 2017. But,
Ministry of Power needs to offer transmission infrastructure for medium term development as well (end
of 15
th
FYP). Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
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2.3.3 RE being variable/intermittent, needs management for its acceptance in the grid. Surges of RE in
the high resource days/months have to be accommodated, while low production in poor seasons may have
to be taken care of, by activating “back up” power. This situation could further aggravate the present
scenario, wherein RE is more expensive,while the lower priced conventional power is sought to be
backed down. The entire issue, therefore, is not merely a technical challenge, but also a financial one. As
RE supply is projected to rise manifold, it is proposed that adequate investment is done in Renewal
Energy Management Centres (REMCs), as well as in upgrading the IT infrastructure to handle the grid
with large RE based power.
2.3.4 Solar power requires a large tract of land, to tap the high resource potential in a particular location,
and also achieve the viable scale of production, to make the erection of accompanying infrastructure
financially viable. MNRE is upscaling and fast tracking the solar capacity target to 100,000MW by 2020
from the existing JNNSM target of 20,000 MW by 2022. This energy resource is most amenable to
development through solar parks. The infrastructure required by solar PV installations, is easier to
provide at a specific location than numerous locations, especially because solar installations may
concentrate in interior locations to tap lower priced land. The latter would require extensive infrastructure
development, because of remoteness and would be financially viable, only if the solar plants were to be of
a critical “mass”. This suggestion may require funding support from the GOI, as well as implementation
support from the State Governments.
2.4 Regulatory Support
Recommendations of the Committee
1. Granting statutory backing to RPOs
2. Modification of REC mechanism to make it more practical
3. Lower wheeling charges for renewable energy
4. Introduce nation-wide regulations to promote roof-top solar
5. Issue “must run” status for solar and wind power.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
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2.4.1 We have already discussed supporting projects of RE by States through a statutory back up to
RPOs. As of now, RPOs are supported through regulations. The entire scheme of RPOs leave much to be
desired on many accounts, viz., poor RPO levels viewed against resource potential in the States, granting
extensions, absence of long term RPOs, etc. At this rate, it would be impossible to achieve the NAPCC
target of 15% penetration of RE by 2020. However, it is hoped that with the anticipated statutory back
up, RPO would become a major tool in development of RE.
2.4.2 The REC scheme needs to be made more practical. It has been experienced that even though the
RECs are short of the total RPO requirement, there is poor RPO compliance. Then, there is the issue of
the State DISCOMS being able to contract REC through long term PPAs on lower price, than the ceiling
price of RECs. This explains their dis-interest in RECs. Hence, a call for review of REC scheme to make
it more practical.
2.4.3 The regulatory aspect governing RE, calls for a major overhauling. In this regard, wheeling
charges for RE, facilitation for banking, and regulation to promote net-metering/roof top solar are
particularly notable. There is wide variance amongst State in adopting different models in the above
areas. While State Governments may have flexibility in adopting the measure best suited to their specific
situation, including that of RE resource, there ought to be regulatory support for adopting different
options at the State Government levels. In this regard attention is also drawn towards “must run” status
for solar and wind power projects.
2.5 Support through GOI measures
Recommendations of the Committee
1. Statutory measures:
? Amendment of Electricity Act.2003
? Enforce use of RE based products
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
th
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2. Issue policies for development of renewable energy by Central Government
departments/organization
? All conventional energy companies to generate a fixed percentage of their
generation through renewable energy
? Reduce taxes on RE products
? Support from State Government/DISCOMS
2.5.1 The Electricity Act.2003 and policies issued therein, need to be revisited in the light of the newly
acknowledged potential of RE. It is understood, that Ministry of Power is already in the process of
considering amendments in favour of RE which is expected to meet most of the expectations of the RE
sector.It is felt that definitions of several terms in the Act, including those of ‘RE sources’, ‘obligated
entity’, etc., need to be redefined. But the greatest emphasis needs to be given, on granting statutory status
to Renewable Power Obligations (RPOs). If the Electricity Act.2003 could give a statutory back up to a
long term RPO trajectory for different States, and make non-compliance of RPOs a punishable offence, it
would be a shot in the arm for RE.
2.5.2 Along with the statutory changes, suitable policies also need to be issued for development of RE.
These policies may support roof-top solar, allotment of land, provide incentive for States for meeting
RPOs, etc. Such policies at the Government level could go a long way in making Central Government
Departments pro-active, in installing RE projects on their vacant land and roof tops. Such policies could
also mandate conventional energy companies, including oil and gas PSUs, to generate a fixed percentage
of RE against their total production/generation of conventional energy.
2.5.3 Encouragement also needs to be given to RE based products, both in the consumer and industrial
sectors. Such usages could be of solar water heaters, aero - generated power, heating solutions in the
industry including hybrid ones. These products could particularly be encouraged through lower taxes.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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2.6 State Government related policies for encouragement of RE
Recommendations of the Committee
1. Issue policies for RE, including net metering and grid-connectivity for roof-top solar PV
2. Develop transmission infrastructure
3. Allow use of Government land and facilitate change of land use for RE.
2.6.1 The State Governments have a major responsibility for helping realize the solar/wind resource
potential in the States. They have to facilitate execution of projects on the ground. In this regard, it would
be ideal if all the States were to issue State specific policies for RE. Only a handful of States have issued
state specific RE policies.
2.6.2 The infrastructure issues which have come up for specific recommendations earlier, have a large
interface with the State Governments. The development of transmission infrastructure, including control
centres/IT equipment for management of RE has to be developed by the State Governments.
2.6.3 While the State Governments and regulatory bodies may issue statutory as well as regulatory/policy
regulations, respectively, the States need to develop their own SOPs to implement the same. Two way
meters, grid-connectivity for roof top solar, and purchase of solar and wind power through right tariff
fixation, are important areas where State Regulators and State Governments have to act in unison. State
Governments also have a role in providing their own subsidy support, and tariff fixation for different
sectors. Therefore, their willingness to buy RE and supporting it, either in fixation of higher price of
renewable energy to consumers, or through subsidy support (including VGF) would be necessary for this
sector to grow.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Chapter 3
The way forward
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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3 The way forward
The Task Force on Solar and Wind Energy held three meetings with the various stakeholders like
Ministry of Power, MNRE and Ministry of Finance, Wind power association, Solar power associations,
FICCI, CII and financial sectors like SBI, MVVN. After due deliberations with the stakeholders,
following recommendations/suggestions were received by the Committee, which have been classified into
three categories:
x Manufacturing related issues
x Financing related issues, and
x Policy /regulatory related issues
3.1 Manufacturing Related Issues
(Stakeholders: FICCI/CII, ASSOCHAM, Indian Solar Manufacturing Association, Wind Independent
Power, Indian Wind Turbine Manufacturers Association, Wind Independent Power Producers
Association, Indian Wind Power Association, Sun Edison and Lanco)
(For Existing and new capacities)
Sl.
no.
Issues Suggestions/Recommendations/way forward
1 High cost/ low availability of
finance
There should be
x Interest subvention (14%-5%) directly to banks
- For Existing Units
- For New Units during 2014-17
x Long tenure of loan (12 yrs.) by according infra
status to solar manufacturing (same as power-gear
equipment)
x Fund allocation to meet requirements of existing
Government schemes (eg. SIPS, M-SIPS, capital
subsidy)
2 Absence of supply chain
domestically
We should:
x Incentivize domestic manufacturing of supply chain
components
x Rationalize tax – remove VAT & CST
x Correct inverted duty structure
x Extend M-SIPS to entire solar ecosystem
3 Technology gap - efficiencies
There should be:
x Technology up-gradation fund with sunset clause Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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of 5 yrs.
x Creation of R&D ecosystem (with Government-
industry-academia linkage) for continuous
technology upgrade
4 There is lack of adequate
demand
There is need to:
x Develop Domestic Market through DCR for initial
5 years to facilitate development of PV ecosystem
5 Aggressive Dumping of solar
cells since middle of 2011
x All solar manufacturing
have been referred to
corporate debt
restructuring cell BIFR
x 80% of cell
manufacturing capacity
has been shut down
x Module manufacturers
are operating at 35%
capacity utilization
3.2 Financing of Solar and wind sectors:
(Stakeholders: SBI, Power Finance Corporation, NVVN, etc.)
Sl.
no.
Issues Suggestions/recommendations / way forward
1. Lack of reliable long term
site specific resource and
operational data
x Making available operational data of RE projects in
the public domain to facilitate informed decision by
the sector participants
x Setting up more monitoring stations
x Updating existing data Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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2 Availability of power
evacuation infrastructure
Seasonality of RE power,
Majority of wind generation
takes place during a 4-6
months window; solar
better, but limited to sun
light
x Make RE evacuation a high-transmission priority
x CERC has accorded ‘Must Run’ status to wind and
solar power projects – enforcement.
x Availability of an RE project for generation should
be treated as ‘deemed generation’.
3 Lending Exposure limits
Headroom related
constraints in power sector
exposure levels of
individual lenders
There is need to have:
x Allocation of separate limits for RE projects
x An additional financial instruments to facilitate
churning of portfolio
4 Priority Sector status for
RE financing
Unlike off-grid projects,
grid connected projects’
financing not included
under Priority Sector
x Bank loans to grid-connected RE projects up to 25
MW too may be included under priority sector
lending
5 Payment security -
precarious financial health
of State Utilities - strength
of the PPA comes from the
credit worthiness of the
Discoms
• Discom’s ability to
honour its
contractual
obligation under
PPA
• Risk of utility
default over the
tenure of the PPA
There should be:
x Strict FRP compliance for Discoms to ensure their
long term viability
x Effective open access - enable direct purchase by
other large obligated entities
x Distributed generation of RE
6 Availability of key
facilities – land,
There is a need of
x Setting up RE parks – bundled facilities - on lease/ Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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evacuation, water, input
resource data, etc. – in
wind sector integrated
model being offered by
equipment suppliers
• Acquisition of large
tracts of land – a
challenge
• Hindrance in
development of RE
projects
• Project costs/ risks
vary from project to
project
sale model
x Facilitating approvals/ off take arrangements, etc.
largely state oriented
7 Availability of long term
funds
• Assets/ contracts
have long lives –
require long term
funding to bring
down costs/ improve
risk profile.
• Banks have been a
major source of debt
funding so far.
• Are constrained by
ALM issues – limits
loan tenor - adds to
project risks.
• Exposes banks to
liquidity and interest
rate risks
x Long term funds is a necessity
x Diversification of sources/ instruments is needed.
x Churning of loan portfolio of banks
x Banks may be allowed to raise RE bonds – sans
SLR/ CRR requirements
x Credit enhancement support to improve credit
rating & stimulate diversified participation /
markets – NCEF could be leveraged through
IREDA, select banks, etc.
x Support from institutions like ADB, KfW, JICA,
etc. – funding/ credit guarantee
8 Availability of Equity
• Given the
uncertainties/ risks
and viability related
issues, conservatism
in DER is preferred
– say around 60:40
0r max. 65:35
• Equity constraints
are also being faced
x Alternative sources of equity/ quasi equity need to
be built up.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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– developers look
for more aggressive
debt levels.
9 Tariff Setting –
Preferential tariff norms
not uniform
Zone based tariff
principles not followed by
several States
• Wide range of tariffs
among different
states - Rs 3.51 in
TN to Rs 5.91 per
kWh in MP –
skewed development
of sector.
• Impact of inflation/
indexation of cost
structures not
factored in in
preferential tariffs
x Consistent approach to determining preferential
tariffs across different states based on capex and
operating costs, generation experience and maturity
of technology
10 Power Purchase
Agreements
Lower tenure PPA –
(e.g. 13 yrs. in MH)
not able to leverage
longer project life of
25 years
• PPAs not signed
before
commissioning in
some states – e.g.
Maharashtra, a key
wind power state
x There should be a longer tenure PPA
x Upfront signing of PPAs eliminating risk for
lenders
11 Forecasting and
scheduling on day ahead
basis
Due to intermittent
The guidelines may be reviewed based on actual
experience
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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nature of wind
power this is a key
challenge – may
have financial
implications
12 Payment Security
• Not uniform across
PPAs of different
States – impacts
financing decisions
of lenders
• Deteriorating health
of state Discoms
Uniform PPAs with payment security mechanism
13 Tariff setting: Two
Methods:
1. F-i-T
2. Reverse Bidding
• F-i-T not being
determined by states
based on uniform
methodology (as per
CERC)
• Reverse Bidding is
leading to non-
bankable bids -
Aggressive bidding
– lowest Rs 5.51 /
kWh in Karnataka
• F-i-T mechanism has been normally followed
globally until the markets mature
• CERC recommendations to form basis of tariff
setting in all States uniformly
• Minimum technical qualification criteria must be
stipulated for bankable bids – bidders would not
only set up the projects, but also be able to
ensure smooth operations
Other Issues
1 Diverse PPA formats/
terms across states –
Risk perception varies –
PPA related issues.
Bankable PPAs facilitates
non-recourse financing
There should be a Standardized PPA across different
States.
2 Enforcement of RPO
obligations
Strengthening of market
mechanism
There should be a uniform RPO targets across States
• Strict enforceability of RPO obligations
• Stiff penalties for non-compliance
• Compliance monitoring Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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• RPO targets adopted
across the states are
not uniform
• Enforcement of RPO
is lacking
• REC prices have
remained subdued
with high unsold
inventory
• APPC+REC route
for development of
RE sector, as an
alternative to F-i-T
has not taken off
• REC floor and forbearance pricing to be made
more acceptable, e.g. solar floor price appears
out of sync
• Providing statutory backing to RPOs
3 Land acquisition &
Statutory clearances –
significant land
requirements
• Short
implementation -
delays in statutory
clearances derail
project – tariff
linked to specified
commissioning
schedule
• Land acquisition /
usage conversion
issues
• Unified, light-touch regulation for RE
• Single window clearance for RE projects
4 Operations &
Maintenance Contract
Developers rely largely on
equipment suppliers for
O&M.
- Also includes free
O&M for
stabilization period.
Conflict of interest–supplier
may not highlight issues in
equipment
x Specialized agency focused on O&M may be
encouraged
x This may bring in transparency and more efficiency
and may bring confidence in the financial sector
5 EPC Contracts
Turnkey EPC contracts may
Own development model in place of turnkey EPC – may Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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not have transparent break-
up of components
help to reduce inefficiency of bundling
6 Wind Sites
Turbine manufacturers
identify wind sites, set up
wind masts for data
collection and supply data to
developers – quality of data
leaves much to be desired.
CWET can be made the nodal agency for identification
of sites, setting of wind monitoring stations and
collection of data
7 Security creation
• Security on forest
land cannot be
created.
x Facilitation letter from forest authorities to be made
uniform across States
x Step-in/ substitution rights be provided.
8 Equipment Certification
• No standardization
of equipment –
whereas in wind
sector, CWET is the
certifying agency, no
such agency is
available for solar.
• Quality assurance
for panels leads to
uncertainty over
bankability
• Solar equipment certification in line with that
done by CWET for WTGs
• Bid documents to stipulate that equipment shall
be sourced from empanelled suppliers/minimum
technical criteria for equipment
3.3 Renewable Energy Regulatory/Policy related Issues (MNRE/MoP)
MNRE Issues Suggestions/Recommendations/way forward
1 RPO percentage
SERCs to specify certain percentage of total energy
consumption from renewable in the area of
distribution licensee. Ref-(Section 86(1) (e) EA 2003,
National Tariff Policy)
2 Feed-in-Tariff Renewable power procurement should be at
preferential tariffs (Ref(National Tariff Policy6.4
(1) (iii))
3 Impact on retail tariff An Appropriate Commission to fix a minimum Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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percentage for purchase of energy from RE sources
taking into account their availability in the region and its
impact on retail tariffs. (National Tariff Policy6.4 (1) )
4 RPO applicability to
OA/CPP
x SERCs to specify certain percentage of total
energy consumption from renewable in the area of
distribution licensee.
x This suggested RPO framework is also applied to
OA and CPPs and not distribution licensee
alone(Section 86(1) (e) EA 2003, NTP, Rajasthan
High Court Judgement 2012).
5 RE certificates
Authorities to issue renewable certificates, which are
tradable to enable utilities which are falling short to
meet RPO (CERC REC Regulation 2010).
6 Increase in RPO targets
x Progressively, the share of electricity from non-
conventional sources would need to be increased as
prescribed by SERCs
(Clause 5.12.2 NEP)
x RE injection into the national grid set at 5% at the
beginning of FY 2009–10 to be increased at 1% per
annum in the subsequent years to reach 15% at the
end of FY 2019–20 (NAPCC)
x SERCs may set higher percentages than this
minimum at each point in time(NAPCC).
7 RPO compliance
verification
Central and State Governments may set up a
verification mechanism to ensure that the renewables
based power is actually procured as per the applicable
standard (DMRPS or SERC specified) – (Section 4.2.2
NAPCC)
8 Penal provisions
Penalties for non-compliance of directions by
Appropriate Commission
(Section 142 EA 2003, Section 4.2.2 NAPCC)
9 Regulatory issues
There is ambiguity
between cogeneration
from fossil fuel and
renewable energy
(Appellate Tribunal for
Electricity has ruled that
co-generation from fossil
fuel may be considered
There is need to provide policy framework Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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for meeting RPOs)
10 RPO compliance regime
– No long term
visibility (3 to 5
years)
– Lack of enforcement
of RPO by SERCs-
Instead of enforcing
penalty, some of the
SERCs have waived
obligation for past
years or carry forward
it for future years
– Very few SERCs
initiated proceeding
for enforcement of
RPO- Lack of
monitoring and
verification
mechanism for RPO
compliance at State
level
– RPO currently being
fixed on RE resource
availability in States.
Since a part of RPO is
to be satisfied through
REC mechanism for
resource scarce States
advisory from CERC
to SERCs would help
There should be long term RPO targets. Like Bihar
has projected up to 2022 including Kerala and HP.
11 Proposals for
Amendment in
Electricity Act 2003
w.r.t. Functions of State
Commission
To promote cogeneration
and generation of
electricity from renewable
sources of energy by
providing suitable
measures for connectivity
Functions of State Commission
We need to promote generation ( including co-
generation using renewable sources of energy only) of
electricity from renewable sources of energy:-
x by providing suitable measures for connectivity
with the grid and sale of electricity to any
person;
x by encouraging market based instruments such
as renewable energy certificate,
and also specify; Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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with the grid and sale of
electricity to any person,
and also specify, for
purchase of electricity
from such sources, a
percentage of the total
consumption of electricity
in the area of a distribution
licensee
x a minimum electricity purchase obligation to be
carried out by the obligated entity from
renewable sources of energy including through
REC, as a percentage of total consumption of
electricity;
x measures for ensuring compliance of renewable
purchase obligation including by way of levy of
penalty for non-compliance of such obligation
without prejudice to any other penalty under this
Act;
and also
x encourage setting up of renewable energy
generating plants by conventional power
generating companies by introducing
instruments like bundling of renewable energy
power with conventional power with tariff pass
through
12 Other Suggestions:
x The Central Government ought to publish the
National Renewable Energy Policy from time to
time. The Ministry of New and Renewable Energy
shall bring out this policy at the earliest and
update/revise it at regular interval with at least once
in 5 years duration (Section 3(2A));
x Exempt RESCOs from distribution licensee
requirement. (Section 13);
x Central and State Transmission Utility shall
provide due consideration and priority to
generation capacities based on renewable sources
of energy (Section 38& 39);
x Exempting renewable energy from cross subsidy
and open access charge on sale of electricity
generated from renewable energy sources (section
42(2));
x PROVIDED in case of grid penetration in the
areas where off-grid renewable energy systems
already exists, both the systems may co-exist with
independent power distribution network along with
the provision of grid integration of the off-grid
system by the respective DISCOMS (Section 14)
x The Appropriate Commission shall endeavour to
promote the development of a market (including Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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trading and forward market) in power and in
market based instruments such as Renewable
Energy Certificates in such manner as may be
specified and shall be guided by the National
Electricity Policy and the Tariff Policy referred to
in Section 3 in this regard(Section 66 1 (e))
x Provision shall be made in Annual Revenue return
(ARR) for meeting Renewable Purchase Obligation
(RPO) shortfall by keeping sum money aside to
purchase Renewable Energy Certificates equivalent
to the shortfall (Section 142 (a))
MoP M/o Power has indicated
that they are looking at
amendments in the
Electricity Act to make
scope of Renewable
Purchase Obligation
(RPO) wider and more
enforceable
Following changes were proposed by MOP:
x Long term trajectory for RPO
x Incentive structure for distribution utilities for
buying renewable energy to compensate for
financial and reliability issues
x M/o Power may work closely with MNRE to
support bundling of conventional power to make
RE more affordable
x Strengthening of institutional framework for
handling Ultra Mega Renewable Power projects
x RE should focus on island states to provide reliable
and substitute power against diesel in a time bound
manner.
x DDG through RE sources should also be given
preference for electrification of remote areas
x On financial issues, RE projects can be considered
for priority lending and RFO (Renewable Funding
Obligation) can be imposed on the financial
institutions
IREDA x Payment Security Mechanism ( in view of weak
financial health of DISCOMs)
x Uniform methodology for tariff setting – SERCs
may follow CERC norms
x Refining of procurement / bidding process to filter
out impractical bids.
x Ensuring maintenance of quality standards
x Low cost resources though Tax Free Bonds for
IREDA
• Leveraging NCEF funds through IREDA as
announced in the Budget
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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4.1 Annexure-A
Constitution of Task Force
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Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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4.2 Annexure B
Minutes of the Meetings of the Task Force
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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No. P-11072/4/2013-RE (P&E)
Planning Commission
(Power & Energy Division)
Subject: Minutes of 1
st
Meeting of Member (Energy) led Task Force on Solar Sector held on
09.09.2013
Member (E) in chair. The list of participant is at annexure
At the outset, the Chairman of the Task Force welcomed the participants for the meeting and
invited MNRE to make their presentation.
JS (MNRE), while making presentation highlighted various issues pertaining to the solar sector as
listed below:
x Importance of enforcing renewable purchase obligations (RPO) by all the States
x Devising plans for financing of solar projects by Banks/Financial Institutions to reduce cost
of finance and enhance availability
x Steps required to improve transmission infrastructure and grid integration
x Requirement of Regulatory and Policy framework for promotion of grid connected
rooftop PV projects
x Ensuring availability of good quality solar equipment particularly home lighting systems
x Increasing availability of trained manpower and capacity building so as to improve
service of the systems installed anywhere in the country
x Steps required for the manufacturing sector to attain self-sufficiency
x Steps required to achieve the targets of JNNSM
The following issues were discussed:
1. Ultra Mega Solar Projects have been identified particularly in Rajasthan. While planning
for this, it was felt that one has to simultaneously plan for evacuation infrastructure. DHI
representative informed that about 18,000 acre land has been identified around
Sāmbhar Lake. A Note in this regard is being circulated for consideration by the Cabinet.
Six PSUs such as BHEL, Power Grid Corporation have been taken on board for realising
the project. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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2. In rural areas many people use kerosene for lighting and cooking purposes. Solar
energy/heating can be a substitute in a big way in rural areas.
3. Department of Heavy industries informed about the proposal to set up larger project in
Sāmbhar Lake area and BHEL’s intentions to go for manufacturing of panels. If suitable
policy mechanism is evolved, it could not only create local value addition but create
jobs, too. The Salt pans of Gujarat, Maharashtra and Rajasthan states may be explored
for development of large solar projects.
4. JS, MOP stated that transmission of renewable power is being taken up under the project
“Green Corridor”. MOP is taking action to amend the Indian Electricity Act to increase
the penalty for non-fulfilment of RPO and make it mandatory. It was suggested that
state representatives should also be taken on board in the Task Force both to hear the
version of renewable energy surplus States and also of the deficit ones.
5. The representative from Moserbaer stated that there is no level playing field between
then domestic manufacturers and imported Solar equipment manufacturers. He
informed that a detailed write up would be sent in this regard to Planning Commission.
It was acknowledged that the views of local manufacturers needed to be factored into
for a decision on import curbs versus open sourcing.
6. Power Finance Corporation stated that funding is an issue because of poor quality of
data pertaining to the solar projects and their viability. Some export independent
agencies may be needed for vetting the irradiation data. No satellite data or local
project area data are available. In some cases, it is even difficult to establish the data
source. A variation of about 35-40% have been noticed in the data. No guarantee is
available for quality assurance in the manufacturing side. This is major issue. Levelised
tariff is another area of concern. MNRE informed that Solar Energy Centre has been
identified as the recognised agency for certifying the data. PFC stated that there
remains a problem when PBG is transferred to NVVN. It was also brought out that
government guarantee could add project cost, therefore an amicable solution may be
fond out after mutual consultations.
7. FICCI indicated that better feed-in-tariff along with green production incentive of Rs. 1-2
per kWh may bring many solar projects into stream. Also technology up gradation is
required so that domestic industry can match international standards. High interest costs,
short term year of repayment were also important issues. FICCI was requested to provide
a write up on their recommendations to the Planning Commission.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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8. It was suggested that states having potential of high insolation may also be called for
discussions. It is quite important to evolve along term business model keeping in view the
capital costs, land acquisition, debt financing, depreciation, price discovery etc.
Emphasis should be given for volume maximisation in the states with highest potential as
these States could yield the cheapest solar power.
9. It was argued that RPO endorsement provision needs to be made stronger otherwise
REC market could collapse.
10. The representatives of the banking sector brought out that Manufacturing solar
module/panel has not been found to be viable in the country, as lot of Chinese
components are available at lower costs. There is a need to provide support to the
industry by the government to make the manufacturing sector viable. It was also pointed
out that subsidy should be provided on the manufacturing side to reduce the price of
equipment and resultant cost of solar power, so as to enable achievement off grid
parity. Discussion was oriented towards how to designed the Incentive for large size solar
thermal so as to make it viable.
11. IREDA also indicated that there is need to bring down the cost of equipment to make
help achieve grid parity thereby maximising the installed capacity. It was suggested that
IREDA should submit a paper to Planning Commission on how to bring down the cost.
12. Based on the above discussions, it was decided to call for presentation on the following
four areas:
i. FICCI/CII along with the related manufacturing associations should make a
presentation on issues related to manufacturing side
ii. NVVN, SBI, PFC and baking sectors should make a presentation to highlight
the issues related to funding/financing of the solar projects.
iii. IREDA should make a presentation related to states indicating the factors
responsible for high performance and low performance. They should also
bring out the views of the states and what support was required from the
centre?
iv. A Presentation on RPO issues, regulatory issues and policy related matters
would be desirable. MoP, MNRE and CERC ma y bring out these issues
jointly.
Chairman indicated to finalise the report in next two months.
The meeting ended with vote of thanks to the chair. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Subject : List of Participants for the 1st Meeting of Task Force on Solar and Wind Energy on 09-09-2013
at 5.00 P.M at Room No.136 Yojana Bhawan
Sl.No Name (Shri/Ms) Designations, Organization
1 B. K. Chaturvedi
Member (Energy), Planning
Commission …..in chair
2 Ratan P. Watal Secretary, MNRE
3 Shri Saurabh Chandra Secretary, DIPP, Ministry of Commerce
& Industry
4 Shri Satyanarayana Secretary, Department of Electronics
& IT
5 Shri Anil K. Jain Adviser(Energy),Planning Commission
6 Shri Tarun Kapoor Joint Secretary, MNRE
7 Ms Jyoti Arora Joint Secretary, Ministry of Power
8 Dr. Arbind Prasad DG, FICCI
9 Shri Rita Roy Choudhary FICCI
10 Shri Rajnath Ram Dy.Adviser, Planning Commission
11 Dr.S.C Sharma OSD, Planning Commission
12 Shri Manish Singhal Head-BD North, L & T
13 Shri A.R Soni L&T
14 Shri Debashish Majumdar, CMD, IREDA
15 Sanyukta Samaddar, Director, HI
16 Shri R.K. Tandon, CMD, Hindustan Salts Limited
17 Shri Deepak Puri Moser Baer-CII
18 Shri Rajesh Menon CII
19 Shri Satnam Singh, CMD, PFC
20 Shri Saibaba, CEO, Lanco Solar
21 Shri Sumant Sinha, CEO &Chairman, Renew Power
22 Shri P.K. Malhotra, Dy. MD, SBI, Mumbai
23 Shri W.V.K Krishna Shankar, Director/IS&P, BHEL
24 Shri C.V.S Murthy G.M, I/C, BHEL
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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No. P-11072/4/2013-RE (P&E)
Planning Commission
(Power & Energy Division)
Subject: Minutes of the meeting of “Task Force on Solar and Wind Sectors ” under
chairmanship of Member (Energy) held on 1 -11-2013
Member (Energy) in Chair. The list of participants is annexed.
2. At the outset, Shri Anil Kumar Jain, Adviser (Energy), Planning Commission
welcomed the participants and informed that the instant meeting was the first one on
the expanded mandate of the Task Force, which would also cover wind sector along with
solar energy. The participants in the meeting related to the wind sector , while the
members hailing from solar energy sector would be invited next, when the Task Force
took up the issues relating to their sector.
3. Member (E) made brief opening remarks and welcomed the participants. He
hoped that the Task Force would be able to identify the issues which need to be
addressed both by the industry and the Government in order to tap the vast potential of
wind resources in our country. Following Member’s remarks, Shri Alok Srivastava, JS,
MNRE made a brief presentation on the present status of the wind energy potential and
capacity utilization through the different Plan period. He mentioned that the pace of
growth of wind energy had slackened during the 12
th
Plan due to uncertainty on
availability of GBI and AD. Consequently, the fresh capacity creation fell to 1700 MW in
the first year (2012-13) and even in the present year, the same capacity is likely to be
created. With the Government having announced GBI from the beginning of the 12
th
Plan, the pace of the capacity of the wind power will pick up. He, however, added that
there is a felt need for continuing AD and it is likely that during the budgetary exercise
for the year 2014-15, this aspect may be addressed by the Government of India. The
presentation also highlighted some of the issues which are holdin g back the growth
including land related issues, evacuation related problems and under -availability of
finance as well as markets for wind power.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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4. Following the above presentation, Member (E) invited the representative s of
different organizations to present their views on the subject. The observations of the
participants have been captured as below:
Shri Ramesh Kym al, President, India Wind Turbine Manufacturers’ Association
5. Shri Kymal observed that the wind turbine manufactu ring capacity in the
country had grown at a fast pace over the years. The Indian turbines are also known
for their quality and India is an exporter of turbines to the entire world including the
developed countries. He added that as per the findings of E&Y in a study commissioned
by them, it has been found that Indian wind turbines are one of the lowest priced ones
in the world. He added that the critical issue before project developers is the poor
availability of finance. There is a preference in financiers for balance-sheet based
financing and not for IPPs. India could easily achieve the 12
th
Plan target of 15 GW, as
well as NAPCC target of 17 GW capacities by 2020, if RPOs were enforced. As the entire
issue was related to financing, there is a need for the Government to set aside foreign
exchange savings accruing from the sector by avoiding fuel imports , for financing this
sector. He suggested that a sum of Rs.12000 crore was approximately needed to fund
the sector and these funds could be rotated annually by a financing agency such as
IREDA.
Shri Debashish Majumdar, Chairman, IREDA
6. Shri Majumdar’s remarks reflected on the historical origin of RECs stating that
the objective of the same was that the sector would be funded by electricity consumers
without the need for Government to fund the renewable sector. However, this
mechanism has not delivered so far. He observed that due t o complex reasons, the
power sector as a whole is not seen as bankable any more. The current problem is that
renewable energy which otherwise has strong financial fundamentals, has also been
clubbed with the power sector. He felt that it would be useful, if NCEF funds could be
obtained and blended with debt funds from financial institutions , so that the zero
interest NCEF could lead to a lower rate of interest on the blended debt fund. He also
recommended that the banks need a different loan window for the renewable energy
sector and there is a need to encourage non-recourse financing in the future. He felt
that availability of funds was not an issue in the Indian conditions, but it is the mind set
of the financiers, who do not find the renewable energy sector bankable due to the
larger disdain for power sector.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Shri A.K. Agarwal, Director (Project), PFC
7. Shri Agarwal made two important remarks. He felt that as RPOs were not
being enforced, they do not provide comfort to financiers. Therefore, no financing takes
place against the scheme of RPO. Secon dly, Shri…. mentioned that PFC does both
recourse and non-recourse financing. He agreed that there ought to be a separate
window in the banking sector for funding renewable energy projects. He added that the
sector was wrongly maligned as they do not have any NPA for this sector in PFC.
Shri P.K.Malhotra, Dy.MD, SBI
8. Shri Malhotra remarked that it would be incorrect to say that banks are not
financing the renewable energy sector and do not distinguish between renewable energy
vis-à-vis power sector. However, the banks differ with the risk perception as observed
by IREDA/PFC. This is because of the regulatory set up being different between banks
and the above institutions. Regardless of the following sector, if payments are not
realized by banks in 90 days intervals, the account is rendered NPA. In IREDA/PFC it
was 180 days. He added that wind was an attractive sector vis-à-vis the conventional
power and it has already achieved grid parity. However, interest payments often do not
get paid within 90 days, as due to seasonality, IPP do not have the capacity to pay
interest during the lean season. He felt that there was a need for RBI to allow payment
in instalments towards interest to be deferred beyond 90 days during the under -
resource period of wind and extend it to 180 days. This was supported by IREDA as
they have adopted 180 days norm and it was felt that this make s a huge difference in
financing by banks vis-à-vis IREDA/PFC.
Shri P.K.Sinha, Secretary, Ministry of Power, GoI
9. Shri Sinha observed that as regards RPO obligations, the issue pertains
entirely to enforcement as State Governments go for cheap power, SERCs are
influenced into not enforcing the RPOs. He added that the Ministry of Power was
considering amendments in the Electricity Act to make RPOs effective. Shri Sinha felt
need for focus on larger wind projects, perhaps, in offshore on similar lines as MNRE’s
proposal to support large solar projects. He added that there was a need to consider
how wind and solar could be made amenable to decentralized distribution. He also felt
that we have to look at our large Islands, viz., A&N Islands and Lakshadweep Islands ,
and MNRE may develop renewable energy options in these two islands.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Shri Jami Hossain, Indian Wind Power Association
10.Shri Hussain fully supported the views of the IWTMA and felt that besides the IPPs,
the Government also needed to address the concerns of AD inves tors. This alone could
help it to achieve the target of 2500 MW/year capacity addition. He felt, in order to
address the grid availability issues, there is a need to identify large areas where
resource is rich and then set up evacuation infrastructure in such regions.
Shri Sunil Jain, CEO, WIPPA
11.Shri Jain observed that availability of finance was not the real reason which is
holding back the wind sector. While he appreciated need for a separate window for
financing wind sector for a sharper focus, but there was no need for sops and the
market mechanism could be allowed to play its role. However, the issue that was
holding back growth was regulatory uncertainty. There are no long term policy
commitments on power purchase, infrastructure policy, tariff fixation, wind capacity
auctions, etc. These issues hinder large financial commitments by project developers.
There was a need for 5 year policy window so that investors could realize their projects
from concept stage to power production stage. He felt that there is a need to have a
different statutory mechanism than the Electricity Act for the renewable energy sector.
He also added that SERCs need to show their support for RE, as provided in the
Electricity Act for this sector.
Shri V. Subramanian, former Secretary, MNRE
12.Shri Subramanian observed that there is a need for the Task Force to look at the
issues confronting the SERCs who are rightly responsible for enforcing RPOs and other
mechanisms. If need be, MNRE should take a stand consistent with law and place its
views before SERCs. Further, the 15% RPO observance by 2020 was large ly a NAPCC
vision statement, it needs to be given a firm status. He added that there was a need to
look at re-powering of the earlier capacity as good wind sites which were taken away
earlier, need to be re-powered. May be the Planning Commission should come out with
a policy for re-powering. Finally, he added that the State Governments need to look at
RE sector as a development agenda in itself, and not ignore it in favour of their power
utilities.
Shri W.V.K.Krishan Shankar, Director/IS&P, BHEL
13.Shri Shankar comment ed that they were already working on RE solution for
Lakshadweep, and could introduce 80% RE penetra tion in less than 10 years in these
islands. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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In the end, Member (E) made the following observations:
i. We need to adopt an aim to introduce up to 80% renewable energy solution in the
next 10 years in our islands.
ii. Member (E) would chair a group with Secretar ies in the Ministries of Power and
MNRE as well as from the Departments related to renewable energy from two State
Governments, which would suggest a road map for effective implementation of
RPOs. This group will also look at the regulatory aspects of the wind sector.
iii. Funding was identified as a major bottleneck and as directed during the earlier
meeting of the Task Force on Solar Energy, SBI, PFC and IREDA would give joint
inputs on funding aspects.
The meeting ended with a vote of thanks to the Chair.
*****
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Planning Commission
Power and Energy Division
**********
Subject : List of Participants for the Task Force on Solar and Wind Energy 01.11.2013
Sl.no Name and Designation
(Shri /Ms.)
Organization
B.K Chaturvedi ,Member ( Energy) Planning Commission
Anil Kumar Jain, Adviser (Energy), Planning Commission
Tarun Kapoor Joint Secretary MNRE
Alok Srivastava Joint Secretary MNRE
Dilip Nigam, Director MNRE
Dr. Ajay Kumar, Joint Secretary Dept. of Electronics
Shubhra Singh, Joint Secretary DIPP
S. Jainendra Kumar, Director D/O Heavy Industry
Rajnath Ram, Deputy Adviser Planning Commission
Dr. S. C Sharma, OSD Planning Commission
Arbind Prasad ,Director General FICCI
Rita Roy Choudhary , Sr. Director FICCI
Pranav Patel Assistant Director FICCI
P.K Malhotra, Dy, MD SBI Mumbai
Shashanka Shekhar Panda, Head Public Policy RENEW Power
Rasika CII
Y.K Sehgal Power Grid Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Kashish Bhambhani Power Grid
Debashish Majumdar, CMD IREDA
A,K Agarwal Director Project PFC
W.V.K. Krishan Shankar, Director /IS&P BHEL
D.P Bhutani, Principal Advisor BHEL
G.S Rotti, GM BHEL
Deepak Gupta , Sr. Prog. MGR Shakti Foundation
K.R. Nair , Vice President Indian Wind Power Association
Jami Hossain , President -do-
Ramesh Kymal Chairman , Indian Wind Turbine
Manufacturing Association
V.Subramanian Technical Wind Energy Association
D. V Giri, Secy. Gas India Wind …
Bhaskar Deol NRDC
Anjali Jaiswal NRDC
R.K Tandon …..
Dr. V.S. G Rao LANCO Solar , Gurgaon
Dr. Arunabha Ghosh, CEO Council on Energy , Environment
Sunil Jain CEO Hero Future and WIPPA
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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No. P-11072/4/2013-RE(P&E)
Planning Commission
Power & Energy Division
Subject: Minutes of the Third meeting of the Task Force on Solar and Wind Energy held on 3-12-
2013 at Planning Commission.
Member (Energy) in Chair. The list of participants is annexed.
2. Member (E) greeted the participants and recalled the decisions taken in the
previous two meetings. He invited the identified associations/agencies to make presentations
regarding their recommendations. The salient observations of the presenters were as follows:
(i) Presentation on manufacturing by CII & FICCI
3. A comprehensive presentation on the status of manufacturing of solar and wind power
equipments was made. The salient observations were as follows:
? Debt is much cheaper internationally than in India;
? Chinese industry has decimated manufacturing of these equipments not only in India,
but on a world-wide basis. They have been helped by Government grants which straight
away reduces the cost of manufacturing; and
? Even Government of India needs to extend financial support to this sector perhaps, by
erecting some kind of barrier against dumping/cheap import.
4. It was argued that Indian industry has the capability to produce solar panels as
per world’s best efficiency norms. Hence, encouraging Indian manufactured products over
imported ones would not compromise on performance. Member (E) raised several issues on
technological improvements globally, efficiency levels, including feedback from industry
associations as to what policy intervention was sought to promote roof top SPV. It was
responded that various finance instruments including net-metering, inter-state loans for roof
top and other such measures would be helpful. Ms Shubhra Singh, JS, DIPP added that the Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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new manufacturing policy (NMP) has provisions to promote solar manufacturing in the
country. The Department has already identified salt lands and is examining their suitability
for promotion of both solar equipment manufacture and solar energy development.
(ii) Presentation on financing by SBI/PFC
4. This presentation was made jointly on behalf of NVVN, PFC and the banking sector. This
covered both financial matters as well as policy issues. The presentation covered the following
aspects:
? There is Lack of reliable long term site specific resource and operational data
? There is lack of evacuation infrastructure for RE;
? Unbundling of land/EPC/equipment and O&M issues (handl ing by State agencies in an
efficient manner) is needed to bring down costs. Government assistance was sought in
arranging land and necessary facilities;
? Enforcement of RPO obligations
? As regards policy framework on financing, their needs to be a bouquet of financial
models to choose from;
? There ought to be some “carving out” of funds dedicated for financing this sector;
? State Governments need to create payment security mechanism just like NVVN at the
national level;
? Security creation of the assets should be of such type which increases the lender
confidence, for recovery of loans, should their be a case of assets to be taken over and
transferred to another entity; and
? A need was voiced to examine why the IIFCL’s credit enhancement scheme has not
taken off. It was also pointed out that imported solar equipment presently does not go
through certification. It was argued that this lacuna may be fulfilled.
(iii) The presentation on State Government issues by Shri D. Mazumdar, CMD, IREDA Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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5. Shri Mazumdar, brought out the issues which hold back the States to realize the potential
of wind and solar energy in their respective domains. The major issues raised were as follows:
? The major reasons for low performance by the states were identified as:
o Inadequate availability of land and solar resource
o Insufficient State government initiative
o Conducive long term policies yet to stabilize
o Delayed payments for power purchase
? To improve the sector outlook and attract investments in these sectors, following were
proposed:
o There should be a Long term stability in policy framework
o Operational data should be made available from reliable sources
o There should be strong evacuation infrastructure. Payment Security Mechanism
needs to be established in view of weak financial health of DISCOMs
o A common/uniform methodology should be adopted for tariff setting. SERCs may
follow CERC norms
o There should be refinement in the process of procurement / bidding process so as
to to filter out impractical bids for award of RE projects.
o Quality standards should be maintained
o Low cost resources though Tax Free Bonds for IREDA
o Leveraging of NCEF funds through IREDA
(iv) Presentation on regulatory matters made by Shri Alok Shrivastava, JS, MNRE and Ms.Jyoti
Arora, JS, MoP
6. A joint presentation was presented by MNRE and MoP on the regulatory environment
and the studies needed to improve the environment.
? It was stated that there is lack of RPO enforcement by SERCs. States fix RPO targets as
per their convenience and not commensurate with the capacity/potential. It was
pointed out that long term RPOs were required to provide assurance to the industry; Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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? Electricity Act presently includes fossil fuel based generation also in the definition of “co-
generation”. Perhaps, this needs to be amended;
? MoP is already considering amendments both in the Electricity Act and Tariff Policy;
? RPOs long term trajectory ought to be put into the Statute itself; and
? It was also mentioned that the new Tariff Policy and Electricity Act provisions had
factored in very high price in solar and wind in the REC mechanism. The recent reality of
low prices calls for a fresh look
7. Member (E) summed up that the Task Force needs to spell out the strategy for achieving
both short term renewable energy target as well as the longer ones, with due place for all
stakeholders. He directed that the Task Force may finalize its report on the above two set of
recommendations in two submissions. Based on the discussions held so far, he observed that a
Sub-Committee may perhaps prepare a report which may be submitted to the Government.
The constitution of the Sub-Committee would have Joint Secre taries concerned from the
Ministries of MNRE and Power. The Adviser (Energy), Planning Commission may be the
Convener of this Sub-Committee which would submit its report by the first week of January,
2014.
The meeting ended with a vote of thanks to the Chair.
***** Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Planning Commission
Power & Energy Division
*******
Subject: List of participants for the Task Force on Solar & Wind Energy-03.12.2013.
Sl.No Name & Designation
(Shri/Ms)
Organization Contact Nos.
1. B.K.Chaturvedi,
Member (Energy)
Planning Commission
2. Shri A.K.Jain , Adviser(Energy) Planning Commission
3. Dr.S.C Sharma, OSD Planning Commission
4. Shri Rajnath Ram,Dy.Adviser Planning Commission
5. Shri Rakesh Shah(Adviser-CERC) CERC 8
6. Shri R R Jha PFC 9868549105
7. Shri A Chakravarthi, ED PFC 011-2345668
8. Shri Sushant Sinha,Chairman Renewable Power 0124-46671
9. Shri J. Arora M/o Power 011-237103
10. Shri Prnay Kumar M/o Power 01123715250
11. Shri S B Agnihotri MNRE
12. Shri Alok Srivastava MNRE 9868107118
13. ShriP C Maitham, Director MNRE 99669312
14. Shri Dilip Nigam, Director MNRE 91184867
15. Shri Taren Kapoor, Joint Secretary MNRE 8130461118 Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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16. Shri Krishan Dhawan Shakti Foundation 9910821666
17. Shri Deepak Gupta Shakti Sust.Energy
Foundation
9958545441
18 Shri B K Makhija, Director RREC 94140667
19. Shri Rahul Gupta,M.D Indo Solar 9810210465
20. Shri P.K. Kheruka,Vice Chairman Gujarat Borosil Ltd. 9821037435
21. Shri Subir Sen, G.M Powergrid 9650293185
22. Ms Shubhra Singh, J.S DIPP 9560052144
23. Samyukta Samaddar,Director DHI 99139069
24. Gururaj Rolli, GM BHEL 9650235666
25. Shri W.V.K. Krishna Shanker,
Director
(IS &P), BHEL 9810977858
26. Shri O.P Bhutani, Principal Advisor BHEL 9810413982
27. Shri Deepak Puri Moser Baer 9818156000
28. Shri Vivek Chaturvedi Moser Baer 9810174090
29. Shri Debasish Majumdar,CMD IREDA 9810563220
30. Shri V. Saibaba Lanco Solar Pvt.Ltd 9971067373
31. Shri V.S Gangadara Rao Lanco Solar Pvt. Ltd. 9971067373
32. Shri Vikram Kotru FICCI 9717840606
33. Shri Sarvesh Kumar IWTMA/ASSOCHAM 9810091100
34. Shri Vineet Mittal WELSPUN/ASSOCHAM ----
35. Shri Kalyan Kukherjee,Director ASSOCHAM 99061154
36. Shri Narendra Mishra ASSOCHAM 91766968
37. Disha Banerjee WELSPUN Energy Ltd 9910446655 Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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38. Shri Sanjeev Singhal State Bank of India 9819799411
39 Shri Rajnish Kumar, CGM SBI,PFSBV 750627108
40. Gulshan Mallik DGM,SBI,PFSBU 9958
41. Shri Alok Verma Manager,SBI, Policy 9650114173
42. Shri N.K.Sharma CEO,NVVN 011-24361929
43. Shri A.K.Maggu GM,NVVN 9650995995
44. Shri P.K.Mahajan AGM,NVVN 9650992230
45. Shri Saurabh Yadav GM,Suzlon 98
46. Shri Rajeev Palakshappa Assc.Fellow,CEEW 9711701932
47. Shri S.S Panda Head,Publoc Policy,
Renew
98
th
Plan
2
Executive Summary
Energy security is a critical strategic and economic issue for India. The National Action Plan on Climate
Change launched by the Hon’ble Prime Minister on June 30, 2008 emphasised the need for a graduated
shift from economic activity based on fossil to one based on non-fossil fuels, and from reliance on non-
renewable and depleting sources of energy to renewable sources. The Electricity Act.2003 already
provides a role for Renewable Energy sources and Tariff Policy, 2006 mandates the State Electricity
Regulatory Commissions (SERCs) to fix a minimum percentage of energy purchases from renewable
sources of energy, taking into account availability of such resources in the region and its impact on retail
tariff.
From an energy security perspective, solar is the most secure of all sources, since it is abundantly
available. Theoretically, a small fraction of the total incident solar energy (if captured effectively) can
meet the entire country’s power requirements. Similarly, the peninsular and western parts of India are rich
in wind resource. The geographical spread of renewable energy resource is a boon for this country. It is
also clear that given the large proportion of poor and energy un-served population in the country, every
effort needs to be made to exploit the relatively abundant sources of renewable energy available to the
country. While, today, domestic coal based power generation is the cheapest electricity source, future
scenarios suggest that this could well change.
Already, faced with crippling electricity shortages, price of electricity traded internally touched Rs.7 per
unit for base loads, and around Rs 8.50 per unit during peak periods. The situation will also change, as the
country moves towards imported coal to meet its energy demand. The price of power will have to factor
in the higher prices of coal in international markets and the cost of developing import infrastructure. It is
also evident that as the cost of environmental degradation is factored into the mining of coal, as it must,
the price of this raw material will increase. In a situation of energy shortages, the country is increasing the
use of diesel-based electricity, which is both expensive - costs as high as Rs15 per unit - and polluting. It
is in this scenario, that the solar and wind imperatives are both urgent and feasible to enable the country
to meet its long-term energy needs. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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3
The Task Force constituted by the Planning Commission in June, 2013 held three meetings, identified
various issues which needed to be addressed and considered interventions of the Government. However,
the recommendations could not be adopted by the Task Force during the currency of the erstwhile
Planning Commission. In order to share the views received during the deliberations, the present Report is
being brought out capturing the broad suggestions made by the members of the Task Force and
participants at the meetings.
Given the severity of the situation, Government of India needs to act urgently, focusing on the following
key areas:
i) Setting up of Ultra Mega Solar Projects and Roof-Top Solar Projects to meet the upscale solar target of
1,00,000 MW by 2020;
ii) Substituting kerosene for lighting and cooking purposes in rural areas with Solar Energy/Heating;
iii) Expediting the project “Green Corridor” for transmission of renewable power;
iv) Enforcement of RPO by all the States and taking action to amend the Electricity Act. 2003 to increase
penalty for non-fulfilment of RPO, and make it mandatory;
v) Bringing down the cost of equipment to make it help achieve grid parity;
vi) Support domestic market manufacturing through subsidy, to provide level playing field with imported
solar equipment;
vii) Need for providing finance for the Wind Project developers for achieving the 12
th
Plan target of 15
GW and NAPCC target of 60 GW by 2022.
viii) Need for low interest rate loans from financial institutions and also encourage non-recourse
financing in the future.
ix) Solar and Wind could be made amenable to decentralized distribution;
x) SERCs need to show support for RE as per Electricity Act.2003
xi) Identify major reasons for low capacity expansion in the States and find ways to improve the sector.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Accordingly, the report includes early action measures classified as per the following categories:
1. Finance related recommendations
2. Manufacturing related recommendations
3. Infrastructure related policy measures
4. Regulatory Support
5. Support through GOI measures
6. State Government related policies for encouragement of RE
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Table of Contents
Preface
1 Introduction and Context.………………………………………………... 6
1.1 Context and objective of this Report………………………………………. 7
1.2 Call to action………………………………………………………………………. 10
1.3 Approach………………………………………………………………………….. 11
2 Early Action Measures………………………………………………………………… 14
2.1 Finance related recommendations………………………………………………… 15
2.2 Manufacturing related recommendations…………………………………………. 17
2.3 Infrastructure related policy measures…………………………………………….. 18
2.4 Regulatory Support………………………………………………………………... 19
2.5 Support through GOI measures…………………………………………………… 20
2.6 State Government related policies for encouragement of RE…………………….. 21
3 The way forward………………………………………………………………….......... 23
3.1 Manufacturing related Issues…………………………………………………….. 24
3.2 Financing of Solar and Wind sectors……………………………………………… 25
3.3 Renewable Energy Regulatory/Policy related Issues (MNRE/MoP)……………... 31
4 Annexure…………………………………………………………………………........... 36
4.1 Annexure A: Constitution of Task Force
………………………………………………………………………...
37
4.2 Annexure B: Minutes of the meetings of Task Force
………………………………………………………………………...
42
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Chapter 1
Introduction and Context
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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1 Introduction and Context
1.1 Context and objective of this Report
1.1.1 The Planning Commission vide its order dated 24
th
June, 2013 constituted a Task Force under the
Chairmanship of Shri B.K. Chaturvedi, Member (Energy) to coordinate different activities relating to
solar energy, integrate solar power in the electricity grid and provide marketing support to this power,
and build solar sector considering the satisfactory progress made under the Jawaharlal Nehru National
Solar Mission, even beyond the 13
th
Plan Period. Subsequently, it was also decided to consider issues
being faced by the wind sector. It was felt that many concerns were similar to these two renewable energy
sources, and could be addressed commonly.
1.1.2 The constitution of the Task Force was as follows:
1. Shri B.K. Chaturvedi, Member (Energy), Planning Commission, Chairman
2. Chief Economic Adviser, MoF, Member
3. Secretary, Power, Member
4. Secretary, MNRE, Member
5. Secretary, DIPP, Member
6. Secretary, DEITY, Member
7. Advisor, (Energy), Member
8. Secretary, CERC, Member
9. Chairman, SBI, Member
10. Director General, FICCI, Member
11. Director General, CII, Member
12. JS, Solar, MNRE, Member Secretary
The Task Force was authorised to co-opt officials from related organizations from time to time.
1.1.3 The Terms of Reference (TOR) of the Task Force was as follows: Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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i) To suggest policy interventions for improving domestic manufacturing;
ii) To suggest measures to enhance availability of cost-effective finance;
iii) To ensure effective implementation/strengthening of the REC mechanism;
iv) To address issues related to evacuation of solar power and development of green corridors;
v) To seek involvement of State Governments for solar capacity development.
The constitution of the Task Force is at Annexure-A
1.1.4 The 1
st
meeting of the Task Force was held on 9
th
September,2013 and deliberated on the following
issues:
i) Setting up of Ultra Mega Solar Projects around Sāmbhar Lake in Rajasthan;
ii) Substituting kerosene for lighting and cooking purposes in rural areas with use of Solar
Energy/Heating;
iii) Expediting the project “Green Corridor” for transmission of renewable power;
iv) Enforcement of RPO by all the States and taking action to amend the Electricity Act to increase
penalty for non-fulfilment of RPO and make it mandatory.
v) Bringing down the cost of equipment to make it help achieve grid parity;
vi) Support Domestic Market manufacturing through subsidy, to provide level playing field with
imported solar equipment;
1.1.5 The 2
nd
meeting of the Task Force was held on 1
st
November,2013 and representatives from
different organizations presented their views as given below:
i) Need for providing finance for the Wind Project developers for achieving the 12
th
Plan target of 15 GW
and NAPCC target of 17 GW by 2020.
ii) Need for low interest rate loans from financial institutions and also encourage non-recourse financing
in the future.
iii) Solar and Wind could be made amenable to decentralized distribution;
iv) SERCs need to show support for RE as per Electricity Act.2003
v) Task Force’s need to look upon enforcement of RPO by SERCs. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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1.1.6 The 3
rd
meeting of the Task Force was held on 3
rd
December,2013 and presentations covered the
following issues:
i) Status of manufacturing of solar and wind power equipments-
a) International Debt is much cheaper;
b) Chinese industry has decimated manufacturing of these equipments in India and world-wide.
c) Government of India should create a barrier against dumping/cheap import and extend financial
support to this sector.
ii) Financial Matter and policy issues-
a) Lack of reliable long-term site specific resource and operational data;
b) Lack of evacuation infrastructure for RE;
c) Unbundling of land/EPC/equipment and O&M issues needed to bring down costs.
d) State Government to assist in arranging land and necessary facilities;
e) Enforcement of RPO obligations;
f) Need for a bouquet of financial models to choose from;
g) Need for “carving out” of funds dedicated for financing this sector;
h) State Governments need to create payment security mechanism just like NVVN at the national
level;
i) Security creation of assets to increase lender’s confidence, for recovery of loans.
j) IIFCL’s credit enhancement to be examined.
k) Need for Certification of imported solar equipments.
iii) Major reasons for low performance by the States and ways to improve the sector-
a) Inadequate availability of land and solar resources, insufficient State Government initiative
and delayed payments for power purchase;
b) Need for a Long-Term stability in policy framework;
c) Availability of operational data from reliable sources;
d) Need for a strong evacuation infrastructure and establishment of payment security mechanism
in view of weak financial health of DISCOMS;
e) SERCs may follow CERC norms for uniform tariff setting;
f) Procurement process/bidding process need to be refined to filter out impractical bids for award
of RE projects;
g) Quality standards should be maintained;
h) Low cost resources through tax-Free Bonds for IREDA;
i) Leveraging of NCEF funds through IREDA. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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iv) Regulatory environment and improvement needed-
a) Lack of RPO enforcement by SERCs and fixing of RPOs by SERC as per convenience;
b) Definition of “Co-generation”, in the Electricity Act.2003 which presently includes “fossil fuel
based generation” need to be amended.
c) High price in solar and wind in the REC mechanism in the Tariff Policy and the Electricity
Act. 2003 needs a fresh look.
1.1.7 The minutes of above three meetings of the Task Force are at Annexure-B
1.2 Call to action
1.2.1 India’s electricity generation is dominated by coal (about 60%). With a total installed generation
capacity of 254 GW as on end October, 2014, Renewable Energy source of power constitute only 13%.
The latter is significant from the point of view of curbing emissions. Although the country ranks low in
per capita emissions, it is amongst the top five emitters of overall greenhouse gas emissions. As a
developing country, it does not have binding emissions reduction targets, but we have voluntarily
declared a target reduction of 20-25 percent in emissions intensity by 2020 compared to 2005, at the
Copenhagen talks.
1.2.2 India has been promoting renewable energy through its Ministry of New and Renewable Energy
(MNRE) since the 1980s, through its various programmes. The growth of Renewable Energy Source in
India has registered significant growth from 1997.
1.2.3 With the enactment of the Electricity Act, 2003, generation of power using renewable energy source
has got a further boost. Under this Act, one of the functions of the State Electricity Regulatory
Commissions included in their mandate is to promote the generation of electricity from renewable sources
of energy. Further, with the amendment of the Tariff Policy, 2006 in January, 2011, the State
Commissions are required to reserve a minimum of 0.25% for purchase of solar energy by the end of
2012-13 and further go up to 3% by 2022. The non-solar component has been separately provided.
1.2.4 The Central Electricity Regulatory Commission has issued guidelines for fixing feed-in-tariff for
purchase of Solar power taking into account the current cost and technology trends. These are being
revised on an annual basis. The CERC has also issued Regulations for purchase of Renewable Energy Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Certificates by an obligated entity. As mandated in the Electricity Act, the State Electricity Regulatory
Commission has issued Regulations for compliance of RPO by an obligated entity and has also spelled
out consequences of default on non-compliance of its direction.
1.2.5 The National Action Plan on Climate Change launched by the Hon’ble Prime Minister on 30th June,
2008 pointed out: “India is a tropical country, where sunshine is available for longer hours per day and in
great intensity. Solar energy, therefore, has great potential as future energy source. It also has the
advantage of permitting the decentralized distribution of energy, thereby empowering people at the
grassroots level”. In the Budget speech of 2014-15, the Finance Minister made an announcement to take
up Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Ladakh region in J&K and
launch a scheme for solar power driven agricultural pump sets and water pumping stations for energizing
one lakh pumps. Implementation of the Green Energy Corridor Project will be also be accelerated in the
current financial year to facilitate evacuation of renewable energy across the country. In the recent
Budget speech (2015-16), an announcement was made to revise the target of Renewable Energy capacity
to 1,75,000 MW by 2022; comprising 1,00,000 MW of Solar, 60,000 MW of Wind 10,000 MW of Bio
mass and 5,000 MW of small Hydro.
1.3 Approach
1.3.1 To ensure that Government actions are aligned with the country's energy security goals, the Task
Force was guided by the following overarching principles:
1. Finance related recommendations
1. 1. Financial support to renewable energy
x Grant of subsidy/VGF for development of RE in the short term
x Ensure compliance of RPOs by DISCOMS
x Dedicate a percentage of National Clean Energy Fund for RE projects
x Increase the term loan period up to 25 years through DFIs
x GOI to provide hedging cover to the foreign exchange component of the debts raised for
RE projects
1.2 Enhance availability of funds to the solar/wind sectors
x A separate exposure limit may be established for financing RE sector by banks
x Banks to come up with specific schemes to provide loans for off-grid solar RE projects
x Initiate measures to access foreign funds through a local financial institution.
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1.3 Reduce perceived risk of banks.
x Creation of a fund to provide risk cover to a portion of bank finance
x Introduce a system of certification of solar equipment
x Train the bankers to assess the true viability of RE projects.
2. Manufacturing related recommendations
2.1 Support for up-gradation of technology
2.2 Remove duties on raw-material to reduce the cost of domestic manufacture
2.3 Provide assured market for domestic manufacturers through DCR
2.4 Introduce QC check for ensuring quality of imported materials.
3. Infrastructure related policy measures
3.1 Up-gradation of grid to facilitate integration of solar and wind energy
3.2 Up-gradation of transmission infrastructure
3.3 Establishment of solar parks
4. Regulatory Support
4.1 Granting statutory backing to RPOs
4.2 Modification of REC mechanism to make it more practical
4.3 Lower wheeling charges for renewable energy
4.4 Introduce nation-wide regulations to promote roof-top solar projects
4.5 Issue “must run” status for solar and wind power projects.
5. Support through GOI measures
5.1 Statutory measures:
? Amendment of Electricity Act.2003
? Enforce use of RE based products (provision for RPOs in the Electricity Act,
2003)
5.2 Issue policies for development of renewable energy by Government
Departments/Organization
? All conventional energy companies to generate a fixed percentage of their Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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generation through renewable energy (provision RGOs in the Electricity Act,
2003)
? Reduce taxes on RE products
? Support from State Governments/DISCOMS
6. State Government related policies for encouragement of RE
6.1 Issue policies for RE, including net-metering and grid-connectivity for roof-top solar PV
6.2 Development of transmission infrastructure
6.3 Allow use of Government land and facilitate change of land use for RE.
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Chapter 2
Early Action Measures
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2 Early Action Measures
2.1 Finance related recommendations
Recommendations of the Committee
1. Financial support to renewable energy
x Grant of subsidy/VGF for development of RE
o Subsidies be progressively replaced by interest subvention
x Ensure compliance of RPOs by DISCOMS
x Dedicate a percentage of National Clean Energy Fund for RE projects
x Increase the term loan period up to 25 years through DFIs
x GOI to provide hedging cover to the foreign exchange component of the debts
raised for RE projects
2. Enhance availability of funds to the solar/wind sectors
x A separate exposure limit may be established for financing RE sector by banks
x Banks to come up with specific schemes to provide loans for off-grid solar RE
projects (1-2% of total priority sector lending be ear-marked for off-grid projects
by Banks)
x Initiate measures to access foreign funds through a local financial institution.
3. Reduce perceived risk of banks.
x Introduce a system of certification of solar equipment
x Train the bankers to assess the true viability of RE projects.
2.1.1 The cost of renewable energy projects has been falling over the last several years. The
requirement of financial support (VGF or GBI, etc.) has now much reduced. However, the sector will still
need to be supported in the immediate term as the cost of renewable energy is still higher than the cost of
conventional energy. It is also evident that these projects are entirely capex front ended with very low Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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variable costs. If the Government were to continue to support capacity addition in these sectors, it is
expected that the costs may come down further, due to scaling up of local manufacturing of RE
equipment in India.
2.1.2 One way to help in reduction of cost of renewable energy and make it viable is to provide subsidy
in the shape of grants/viability gap funds to bring down the project cost itself. The cost of debt could be
brought down also, while the tenure of the debt may also be increased, along with purchase support. This
needs to be done through the following means:
x Grant of subsidy/VGF for development of RE
x Ensure compliance of RPOs by DISCOMS
x Utilize NCEF to provide grants to these sectors
x Domestic Financial Institutions (DFI) may provide long term loans (15 to 25 years)
x Enable access to low cost ECB by creation of a fund to pay hedging charges against foreign
exchange fluctuations
2.1.3 The NAPCC targets for share of RE by the year 2020, and the targets included in the 12
th
Five
Year Plan require major augmentation to the renewable energy capacity in the country. These targets have
been further up scaled by the Government. In order to achieve the above targets, there would also be a
need to augment availability of funds to finance this sector. In the light of large demands of debt capital
on the banking sector by competing sectors, RE projects get a lower priority for multiple reasons. In the
light of the above, it is essential that this sector is assured of financing through a slew of measures such as
the following:
9 Separate exposure limit in banks for RE with earmarking of 2-3% of total lending to this sector
9 Banks to devise a specific scheme for loaning off-grids and solar RE systems
9 Tasking a financial agency to raise money overseas (from pension funds, etc.) to loan RE sector.
2.1.4 One reason for banks’ reluctance to finance the RE sector has been its perceived high risk.
However, renewable energy is a viable sector and with rising prices of conventional power, this sector is
less riskier to finance, than even the conventional power, in spite of the present higher cost of renewable
energy. Another reason for the high risk perception of bankers is lack of knowledge/data relating to the Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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likely power production, which in turn is dependent on wind resource and solar irradiation data. In order
to lower this risk perception, the following measures need to be adopted:
? Provide exposure and training to banks.
? Certify solar equipment, as is done for wind energy sector to enhance banker confidence
2.2 Manufacturing related recommendations
Recommendations of the Committee
1. Support for up-gradation of technology
2. Remove duties on raw-material to reduce the cost of domestic manufacture
3. Provide assured market for domestic manufacturers through DCR
4. Introduce QC check for ensuring quality of imported materials.
2.2.1 Domestic manufacturers have so far faced problems of unfair competition, due to their getting out
priced by imported products. As RE is higher priced, developers any way look out for measures to reduce
cost, and enhance price competitiveness. When faced with cheaper imports, often due to dumping, this
industry does qualify for protection. One way of helping it lower the cost, could be to remove duties on
imported raw-material. This is particularly true in the case of solar cells, for which there is inadequate
capacity in the country. Another way of enhancing price competitiveness is to provide the manufacturing
sector with low cost funds. The JNNSM policy document recognizes the strength of the manufacturing
sector particularly in its ability to employ large workforce.
2.2.2 There is often a charge that imported products are of higher technical specifications. In order that
the domestic manufacturing conforms to the latest technology, and supplies matching specifications if not
better, there is a need to support up-gradation of technology. MNRE may develop a scheme in this regard.
At the same time, it has to be ensured that the imported products of substandard quality are not allowed to
be installed in the country merely on the basis of their lower prices. Therefore, while the domestic
manufacturers must ensure top technical specifications, at the same time poor quality should not be
allowed to be imported.
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2.2.3 There is also a need to provide assured market for domestic manufacturers, at least in the initial
years. As we have seen, the cost of solar equipment has come down over the years, and it should not be
the case, that Indian production does not witness this global trend. When viewed against the subsidies
which are presently being extended to this sector, it needs to be ensured that the Indian Government’s
financial resources do not end up supporting foreign manufacture, but is deployed in development of
domestic manufacturing capabilities. In this regard, there could be a trade-off between requirement of
DCR in domestic tenders, and imposition of duties on imported products, especially in the light of similar
imposition against Chinese products in many parts of the world. As the present level of domestic
manufacture (solar equipment) is much lesser than the envisaged solar capacity additions, perhaps, DCR
imposition in domestic tenders would suffice.
2.3 Infrastructure related policy measures
Recommendations of the Committee
1. Up-gradation of grid to facilitate integration of solar and wind energy
2. Up-gradation of transmission infrastructure
3. Establishment of solar parks
2.3.1 Transmission infrastructure is essential for any power generation source. Unlike conventional
energy, RE faces problems in attracting transmission infrastructure. The reasons are:
? Small size of RE projects;
? Location in difficult/interior areas; and
? Poor capacity utilization.
2.3.2 In the above circumstances, developers are unable to tap the best potential, or have to live with
poor quality of transmission facility. The picture is likely to improve with the implementation of the
“Green Corridors” project, which will address the RE capacity which will come up by 2017. But,
Ministry of Power needs to offer transmission infrastructure for medium term development as well (end
of 15
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2.3.3 RE being variable/intermittent, needs management for its acceptance in the grid. Surges of RE in
the high resource days/months have to be accommodated, while low production in poor seasons may have
to be taken care of, by activating “back up” power. This situation could further aggravate the present
scenario, wherein RE is more expensive,while the lower priced conventional power is sought to be
backed down. The entire issue, therefore, is not merely a technical challenge, but also a financial one. As
RE supply is projected to rise manifold, it is proposed that adequate investment is done in Renewal
Energy Management Centres (REMCs), as well as in upgrading the IT infrastructure to handle the grid
with large RE based power.
2.3.4 Solar power requires a large tract of land, to tap the high resource potential in a particular location,
and also achieve the viable scale of production, to make the erection of accompanying infrastructure
financially viable. MNRE is upscaling and fast tracking the solar capacity target to 100,000MW by 2020
from the existing JNNSM target of 20,000 MW by 2022. This energy resource is most amenable to
development through solar parks. The infrastructure required by solar PV installations, is easier to
provide at a specific location than numerous locations, especially because solar installations may
concentrate in interior locations to tap lower priced land. The latter would require extensive infrastructure
development, because of remoteness and would be financially viable, only if the solar plants were to be of
a critical “mass”. This suggestion may require funding support from the GOI, as well as implementation
support from the State Governments.
2.4 Regulatory Support
Recommendations of the Committee
1. Granting statutory backing to RPOs
2. Modification of REC mechanism to make it more practical
3. Lower wheeling charges for renewable energy
4. Introduce nation-wide regulations to promote roof-top solar
5. Issue “must run” status for solar and wind power.
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2.4.1 We have already discussed supporting projects of RE by States through a statutory back up to
RPOs. As of now, RPOs are supported through regulations. The entire scheme of RPOs leave much to be
desired on many accounts, viz., poor RPO levels viewed against resource potential in the States, granting
extensions, absence of long term RPOs, etc. At this rate, it would be impossible to achieve the NAPCC
target of 15% penetration of RE by 2020. However, it is hoped that with the anticipated statutory back
up, RPO would become a major tool in development of RE.
2.4.2 The REC scheme needs to be made more practical. It has been experienced that even though the
RECs are short of the total RPO requirement, there is poor RPO compliance. Then, there is the issue of
the State DISCOMS being able to contract REC through long term PPAs on lower price, than the ceiling
price of RECs. This explains their dis-interest in RECs. Hence, a call for review of REC scheme to make
it more practical.
2.4.3 The regulatory aspect governing RE, calls for a major overhauling. In this regard, wheeling
charges for RE, facilitation for banking, and regulation to promote net-metering/roof top solar are
particularly notable. There is wide variance amongst State in adopting different models in the above
areas. While State Governments may have flexibility in adopting the measure best suited to their specific
situation, including that of RE resource, there ought to be regulatory support for adopting different
options at the State Government levels. In this regard attention is also drawn towards “must run” status
for solar and wind power projects.
2.5 Support through GOI measures
Recommendations of the Committee
1. Statutory measures:
? Amendment of Electricity Act.2003
? Enforce use of RE based products
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2. Issue policies for development of renewable energy by Central Government
departments/organization
? All conventional energy companies to generate a fixed percentage of their
generation through renewable energy
? Reduce taxes on RE products
? Support from State Government/DISCOMS
2.5.1 The Electricity Act.2003 and policies issued therein, need to be revisited in the light of the newly
acknowledged potential of RE. It is understood, that Ministry of Power is already in the process of
considering amendments in favour of RE which is expected to meet most of the expectations of the RE
sector.It is felt that definitions of several terms in the Act, including those of ‘RE sources’, ‘obligated
entity’, etc., need to be redefined. But the greatest emphasis needs to be given, on granting statutory status
to Renewable Power Obligations (RPOs). If the Electricity Act.2003 could give a statutory back up to a
long term RPO trajectory for different States, and make non-compliance of RPOs a punishable offence, it
would be a shot in the arm for RE.
2.5.2 Along with the statutory changes, suitable policies also need to be issued for development of RE.
These policies may support roof-top solar, allotment of land, provide incentive for States for meeting
RPOs, etc. Such policies at the Government level could go a long way in making Central Government
Departments pro-active, in installing RE projects on their vacant land and roof tops. Such policies could
also mandate conventional energy companies, including oil and gas PSUs, to generate a fixed percentage
of RE against their total production/generation of conventional energy.
2.5.3 Encouragement also needs to be given to RE based products, both in the consumer and industrial
sectors. Such usages could be of solar water heaters, aero - generated power, heating solutions in the
industry including hybrid ones. These products could particularly be encouraged through lower taxes.
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2.6 State Government related policies for encouragement of RE
Recommendations of the Committee
1. Issue policies for RE, including net metering and grid-connectivity for roof-top solar PV
2. Develop transmission infrastructure
3. Allow use of Government land and facilitate change of land use for RE.
2.6.1 The State Governments have a major responsibility for helping realize the solar/wind resource
potential in the States. They have to facilitate execution of projects on the ground. In this regard, it would
be ideal if all the States were to issue State specific policies for RE. Only a handful of States have issued
state specific RE policies.
2.6.2 The infrastructure issues which have come up for specific recommendations earlier, have a large
interface with the State Governments. The development of transmission infrastructure, including control
centres/IT equipment for management of RE has to be developed by the State Governments.
2.6.3 While the State Governments and regulatory bodies may issue statutory as well as regulatory/policy
regulations, respectively, the States need to develop their own SOPs to implement the same. Two way
meters, grid-connectivity for roof top solar, and purchase of solar and wind power through right tariff
fixation, are important areas where State Regulators and State Governments have to act in unison. State
Governments also have a role in providing their own subsidy support, and tariff fixation for different
sectors. Therefore, their willingness to buy RE and supporting it, either in fixation of higher price of
renewable energy to consumers, or through subsidy support (including VGF) would be necessary for this
sector to grow.
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Chapter 3
The way forward
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3 The way forward
The Task Force on Solar and Wind Energy held three meetings with the various stakeholders like
Ministry of Power, MNRE and Ministry of Finance, Wind power association, Solar power associations,
FICCI, CII and financial sectors like SBI, MVVN. After due deliberations with the stakeholders,
following recommendations/suggestions were received by the Committee, which have been classified into
three categories:
x Manufacturing related issues
x Financing related issues, and
x Policy /regulatory related issues
3.1 Manufacturing Related Issues
(Stakeholders: FICCI/CII, ASSOCHAM, Indian Solar Manufacturing Association, Wind Independent
Power, Indian Wind Turbine Manufacturers Association, Wind Independent Power Producers
Association, Indian Wind Power Association, Sun Edison and Lanco)
(For Existing and new capacities)
Sl.
no.
Issues Suggestions/Recommendations/way forward
1 High cost/ low availability of
finance
There should be
x Interest subvention (14%-5%) directly to banks
- For Existing Units
- For New Units during 2014-17
x Long tenure of loan (12 yrs.) by according infra
status to solar manufacturing (same as power-gear
equipment)
x Fund allocation to meet requirements of existing
Government schemes (eg. SIPS, M-SIPS, capital
subsidy)
2 Absence of supply chain
domestically
We should:
x Incentivize domestic manufacturing of supply chain
components
x Rationalize tax – remove VAT & CST
x Correct inverted duty structure
x Extend M-SIPS to entire solar ecosystem
3 Technology gap - efficiencies
There should be:
x Technology up-gradation fund with sunset clause Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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of 5 yrs.
x Creation of R&D ecosystem (with Government-
industry-academia linkage) for continuous
technology upgrade
4 There is lack of adequate
demand
There is need to:
x Develop Domestic Market through DCR for initial
5 years to facilitate development of PV ecosystem
5 Aggressive Dumping of solar
cells since middle of 2011
x All solar manufacturing
have been referred to
corporate debt
restructuring cell BIFR
x 80% of cell
manufacturing capacity
has been shut down
x Module manufacturers
are operating at 35%
capacity utilization
3.2 Financing of Solar and wind sectors:
(Stakeholders: SBI, Power Finance Corporation, NVVN, etc.)
Sl.
no.
Issues Suggestions/recommendations / way forward
1. Lack of reliable long term
site specific resource and
operational data
x Making available operational data of RE projects in
the public domain to facilitate informed decision by
the sector participants
x Setting up more monitoring stations
x Updating existing data Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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2 Availability of power
evacuation infrastructure
Seasonality of RE power,
Majority of wind generation
takes place during a 4-6
months window; solar
better, but limited to sun
light
x Make RE evacuation a high-transmission priority
x CERC has accorded ‘Must Run’ status to wind and
solar power projects – enforcement.
x Availability of an RE project for generation should
be treated as ‘deemed generation’.
3 Lending Exposure limits
Headroom related
constraints in power sector
exposure levels of
individual lenders
There is need to have:
x Allocation of separate limits for RE projects
x An additional financial instruments to facilitate
churning of portfolio
4 Priority Sector status for
RE financing
Unlike off-grid projects,
grid connected projects’
financing not included
under Priority Sector
x Bank loans to grid-connected RE projects up to 25
MW too may be included under priority sector
lending
5 Payment security -
precarious financial health
of State Utilities - strength
of the PPA comes from the
credit worthiness of the
Discoms
• Discom’s ability to
honour its
contractual
obligation under
PPA
• Risk of utility
default over the
tenure of the PPA
There should be:
x Strict FRP compliance for Discoms to ensure their
long term viability
x Effective open access - enable direct purchase by
other large obligated entities
x Distributed generation of RE
6 Availability of key
facilities – land,
There is a need of
x Setting up RE parks – bundled facilities - on lease/ Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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evacuation, water, input
resource data, etc. – in
wind sector integrated
model being offered by
equipment suppliers
• Acquisition of large
tracts of land – a
challenge
• Hindrance in
development of RE
projects
• Project costs/ risks
vary from project to
project
sale model
x Facilitating approvals/ off take arrangements, etc.
largely state oriented
7 Availability of long term
funds
• Assets/ contracts
have long lives –
require long term
funding to bring
down costs/ improve
risk profile.
• Banks have been a
major source of debt
funding so far.
• Are constrained by
ALM issues – limits
loan tenor - adds to
project risks.
• Exposes banks to
liquidity and interest
rate risks
x Long term funds is a necessity
x Diversification of sources/ instruments is needed.
x Churning of loan portfolio of banks
x Banks may be allowed to raise RE bonds – sans
SLR/ CRR requirements
x Credit enhancement support to improve credit
rating & stimulate diversified participation /
markets – NCEF could be leveraged through
IREDA, select banks, etc.
x Support from institutions like ADB, KfW, JICA,
etc. – funding/ credit guarantee
8 Availability of Equity
• Given the
uncertainties/ risks
and viability related
issues, conservatism
in DER is preferred
– say around 60:40
0r max. 65:35
• Equity constraints
are also being faced
x Alternative sources of equity/ quasi equity need to
be built up.
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– developers look
for more aggressive
debt levels.
9 Tariff Setting –
Preferential tariff norms
not uniform
Zone based tariff
principles not followed by
several States
• Wide range of tariffs
among different
states - Rs 3.51 in
TN to Rs 5.91 per
kWh in MP –
skewed development
of sector.
• Impact of inflation/
indexation of cost
structures not
factored in in
preferential tariffs
x Consistent approach to determining preferential
tariffs across different states based on capex and
operating costs, generation experience and maturity
of technology
10 Power Purchase
Agreements
Lower tenure PPA –
(e.g. 13 yrs. in MH)
not able to leverage
longer project life of
25 years
• PPAs not signed
before
commissioning in
some states – e.g.
Maharashtra, a key
wind power state
x There should be a longer tenure PPA
x Upfront signing of PPAs eliminating risk for
lenders
11 Forecasting and
scheduling on day ahead
basis
Due to intermittent
The guidelines may be reviewed based on actual
experience
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nature of wind
power this is a key
challenge – may
have financial
implications
12 Payment Security
• Not uniform across
PPAs of different
States – impacts
financing decisions
of lenders
• Deteriorating health
of state Discoms
Uniform PPAs with payment security mechanism
13 Tariff setting: Two
Methods:
1. F-i-T
2. Reverse Bidding
• F-i-T not being
determined by states
based on uniform
methodology (as per
CERC)
• Reverse Bidding is
leading to non-
bankable bids -
Aggressive bidding
– lowest Rs 5.51 /
kWh in Karnataka
• F-i-T mechanism has been normally followed
globally until the markets mature
• CERC recommendations to form basis of tariff
setting in all States uniformly
• Minimum technical qualification criteria must be
stipulated for bankable bids – bidders would not
only set up the projects, but also be able to
ensure smooth operations
Other Issues
1 Diverse PPA formats/
terms across states –
Risk perception varies –
PPA related issues.
Bankable PPAs facilitates
non-recourse financing
There should be a Standardized PPA across different
States.
2 Enforcement of RPO
obligations
Strengthening of market
mechanism
There should be a uniform RPO targets across States
• Strict enforceability of RPO obligations
• Stiff penalties for non-compliance
• Compliance monitoring Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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• RPO targets adopted
across the states are
not uniform
• Enforcement of RPO
is lacking
• REC prices have
remained subdued
with high unsold
inventory
• APPC+REC route
for development of
RE sector, as an
alternative to F-i-T
has not taken off
• REC floor and forbearance pricing to be made
more acceptable, e.g. solar floor price appears
out of sync
• Providing statutory backing to RPOs
3 Land acquisition &
Statutory clearances –
significant land
requirements
• Short
implementation -
delays in statutory
clearances derail
project – tariff
linked to specified
commissioning
schedule
• Land acquisition /
usage conversion
issues
• Unified, light-touch regulation for RE
• Single window clearance for RE projects
4 Operations &
Maintenance Contract
Developers rely largely on
equipment suppliers for
O&M.
- Also includes free
O&M for
stabilization period.
Conflict of interest–supplier
may not highlight issues in
equipment
x Specialized agency focused on O&M may be
encouraged
x This may bring in transparency and more efficiency
and may bring confidence in the financial sector
5 EPC Contracts
Turnkey EPC contracts may
Own development model in place of turnkey EPC – may Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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not have transparent break-
up of components
help to reduce inefficiency of bundling
6 Wind Sites
Turbine manufacturers
identify wind sites, set up
wind masts for data
collection and supply data to
developers – quality of data
leaves much to be desired.
CWET can be made the nodal agency for identification
of sites, setting of wind monitoring stations and
collection of data
7 Security creation
• Security on forest
land cannot be
created.
x Facilitation letter from forest authorities to be made
uniform across States
x Step-in/ substitution rights be provided.
8 Equipment Certification
• No standardization
of equipment –
whereas in wind
sector, CWET is the
certifying agency, no
such agency is
available for solar.
• Quality assurance
for panels leads to
uncertainty over
bankability
• Solar equipment certification in line with that
done by CWET for WTGs
• Bid documents to stipulate that equipment shall
be sourced from empanelled suppliers/minimum
technical criteria for equipment
3.3 Renewable Energy Regulatory/Policy related Issues (MNRE/MoP)
MNRE Issues Suggestions/Recommendations/way forward
1 RPO percentage
SERCs to specify certain percentage of total energy
consumption from renewable in the area of
distribution licensee. Ref-(Section 86(1) (e) EA 2003,
National Tariff Policy)
2 Feed-in-Tariff Renewable power procurement should be at
preferential tariffs (Ref(National Tariff Policy6.4
(1) (iii))
3 Impact on retail tariff An Appropriate Commission to fix a minimum Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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percentage for purchase of energy from RE sources
taking into account their availability in the region and its
impact on retail tariffs. (National Tariff Policy6.4 (1) )
4 RPO applicability to
OA/CPP
x SERCs to specify certain percentage of total
energy consumption from renewable in the area of
distribution licensee.
x This suggested RPO framework is also applied to
OA and CPPs and not distribution licensee
alone(Section 86(1) (e) EA 2003, NTP, Rajasthan
High Court Judgement 2012).
5 RE certificates
Authorities to issue renewable certificates, which are
tradable to enable utilities which are falling short to
meet RPO (CERC REC Regulation 2010).
6 Increase in RPO targets
x Progressively, the share of electricity from non-
conventional sources would need to be increased as
prescribed by SERCs
(Clause 5.12.2 NEP)
x RE injection into the national grid set at 5% at the
beginning of FY 2009–10 to be increased at 1% per
annum in the subsequent years to reach 15% at the
end of FY 2019–20 (NAPCC)
x SERCs may set higher percentages than this
minimum at each point in time(NAPCC).
7 RPO compliance
verification
Central and State Governments may set up a
verification mechanism to ensure that the renewables
based power is actually procured as per the applicable
standard (DMRPS or SERC specified) – (Section 4.2.2
NAPCC)
8 Penal provisions
Penalties for non-compliance of directions by
Appropriate Commission
(Section 142 EA 2003, Section 4.2.2 NAPCC)
9 Regulatory issues
There is ambiguity
between cogeneration
from fossil fuel and
renewable energy
(Appellate Tribunal for
Electricity has ruled that
co-generation from fossil
fuel may be considered
There is need to provide policy framework Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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for meeting RPOs)
10 RPO compliance regime
– No long term
visibility (3 to 5
years)
– Lack of enforcement
of RPO by SERCs-
Instead of enforcing
penalty, some of the
SERCs have waived
obligation for past
years or carry forward
it for future years
– Very few SERCs
initiated proceeding
for enforcement of
RPO- Lack of
monitoring and
verification
mechanism for RPO
compliance at State
level
– RPO currently being
fixed on RE resource
availability in States.
Since a part of RPO is
to be satisfied through
REC mechanism for
resource scarce States
advisory from CERC
to SERCs would help
There should be long term RPO targets. Like Bihar
has projected up to 2022 including Kerala and HP.
11 Proposals for
Amendment in
Electricity Act 2003
w.r.t. Functions of State
Commission
To promote cogeneration
and generation of
electricity from renewable
sources of energy by
providing suitable
measures for connectivity
Functions of State Commission
We need to promote generation ( including co-
generation using renewable sources of energy only) of
electricity from renewable sources of energy:-
x by providing suitable measures for connectivity
with the grid and sale of electricity to any
person;
x by encouraging market based instruments such
as renewable energy certificate,
and also specify; Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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with the grid and sale of
electricity to any person,
and also specify, for
purchase of electricity
from such sources, a
percentage of the total
consumption of electricity
in the area of a distribution
licensee
x a minimum electricity purchase obligation to be
carried out by the obligated entity from
renewable sources of energy including through
REC, as a percentage of total consumption of
electricity;
x measures for ensuring compliance of renewable
purchase obligation including by way of levy of
penalty for non-compliance of such obligation
without prejudice to any other penalty under this
Act;
and also
x encourage setting up of renewable energy
generating plants by conventional power
generating companies by introducing
instruments like bundling of renewable energy
power with conventional power with tariff pass
through
12 Other Suggestions:
x The Central Government ought to publish the
National Renewable Energy Policy from time to
time. The Ministry of New and Renewable Energy
shall bring out this policy at the earliest and
update/revise it at regular interval with at least once
in 5 years duration (Section 3(2A));
x Exempt RESCOs from distribution licensee
requirement. (Section 13);
x Central and State Transmission Utility shall
provide due consideration and priority to
generation capacities based on renewable sources
of energy (Section 38& 39);
x Exempting renewable energy from cross subsidy
and open access charge on sale of electricity
generated from renewable energy sources (section
42(2));
x PROVIDED in case of grid penetration in the
areas where off-grid renewable energy systems
already exists, both the systems may co-exist with
independent power distribution network along with
the provision of grid integration of the off-grid
system by the respective DISCOMS (Section 14)
x The Appropriate Commission shall endeavour to
promote the development of a market (including Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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trading and forward market) in power and in
market based instruments such as Renewable
Energy Certificates in such manner as may be
specified and shall be guided by the National
Electricity Policy and the Tariff Policy referred to
in Section 3 in this regard(Section 66 1 (e))
x Provision shall be made in Annual Revenue return
(ARR) for meeting Renewable Purchase Obligation
(RPO) shortfall by keeping sum money aside to
purchase Renewable Energy Certificates equivalent
to the shortfall (Section 142 (a))
MoP M/o Power has indicated
that they are looking at
amendments in the
Electricity Act to make
scope of Renewable
Purchase Obligation
(RPO) wider and more
enforceable
Following changes were proposed by MOP:
x Long term trajectory for RPO
x Incentive structure for distribution utilities for
buying renewable energy to compensate for
financial and reliability issues
x M/o Power may work closely with MNRE to
support bundling of conventional power to make
RE more affordable
x Strengthening of institutional framework for
handling Ultra Mega Renewable Power projects
x RE should focus on island states to provide reliable
and substitute power against diesel in a time bound
manner.
x DDG through RE sources should also be given
preference for electrification of remote areas
x On financial issues, RE projects can be considered
for priority lending and RFO (Renewable Funding
Obligation) can be imposed on the financial
institutions
IREDA x Payment Security Mechanism ( in view of weak
financial health of DISCOMs)
x Uniform methodology for tariff setting – SERCs
may follow CERC norms
x Refining of procurement / bidding process to filter
out impractical bids.
x Ensuring maintenance of quality standards
x Low cost resources though Tax Free Bonds for
IREDA
• Leveraging NCEF funds through IREDA as
announced in the Budget
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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4.1 Annexure-A
Constitution of Task Force
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4.2 Annexure B
Minutes of the Meetings of the Task Force
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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No. P-11072/4/2013-RE (P&E)
Planning Commission
(Power & Energy Division)
Subject: Minutes of 1
st
Meeting of Member (Energy) led Task Force on Solar Sector held on
09.09.2013
Member (E) in chair. The list of participant is at annexure
At the outset, the Chairman of the Task Force welcomed the participants for the meeting and
invited MNRE to make their presentation.
JS (MNRE), while making presentation highlighted various issues pertaining to the solar sector as
listed below:
x Importance of enforcing renewable purchase obligations (RPO) by all the States
x Devising plans for financing of solar projects by Banks/Financial Institutions to reduce cost
of finance and enhance availability
x Steps required to improve transmission infrastructure and grid integration
x Requirement of Regulatory and Policy framework for promotion of grid connected
rooftop PV projects
x Ensuring availability of good quality solar equipment particularly home lighting systems
x Increasing availability of trained manpower and capacity building so as to improve
service of the systems installed anywhere in the country
x Steps required for the manufacturing sector to attain self-sufficiency
x Steps required to achieve the targets of JNNSM
The following issues were discussed:
1. Ultra Mega Solar Projects have been identified particularly in Rajasthan. While planning
for this, it was felt that one has to simultaneously plan for evacuation infrastructure. DHI
representative informed that about 18,000 acre land has been identified around
Sāmbhar Lake. A Note in this regard is being circulated for consideration by the Cabinet.
Six PSUs such as BHEL, Power Grid Corporation have been taken on board for realising
the project. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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2. In rural areas many people use kerosene for lighting and cooking purposes. Solar
energy/heating can be a substitute in a big way in rural areas.
3. Department of Heavy industries informed about the proposal to set up larger project in
Sāmbhar Lake area and BHEL’s intentions to go for manufacturing of panels. If suitable
policy mechanism is evolved, it could not only create local value addition but create
jobs, too. The Salt pans of Gujarat, Maharashtra and Rajasthan states may be explored
for development of large solar projects.
4. JS, MOP stated that transmission of renewable power is being taken up under the project
“Green Corridor”. MOP is taking action to amend the Indian Electricity Act to increase
the penalty for non-fulfilment of RPO and make it mandatory. It was suggested that
state representatives should also be taken on board in the Task Force both to hear the
version of renewable energy surplus States and also of the deficit ones.
5. The representative from Moserbaer stated that there is no level playing field between
then domestic manufacturers and imported Solar equipment manufacturers. He
informed that a detailed write up would be sent in this regard to Planning Commission.
It was acknowledged that the views of local manufacturers needed to be factored into
for a decision on import curbs versus open sourcing.
6. Power Finance Corporation stated that funding is an issue because of poor quality of
data pertaining to the solar projects and their viability. Some export independent
agencies may be needed for vetting the irradiation data. No satellite data or local
project area data are available. In some cases, it is even difficult to establish the data
source. A variation of about 35-40% have been noticed in the data. No guarantee is
available for quality assurance in the manufacturing side. This is major issue. Levelised
tariff is another area of concern. MNRE informed that Solar Energy Centre has been
identified as the recognised agency for certifying the data. PFC stated that there
remains a problem when PBG is transferred to NVVN. It was also brought out that
government guarantee could add project cost, therefore an amicable solution may be
fond out after mutual consultations.
7. FICCI indicated that better feed-in-tariff along with green production incentive of Rs. 1-2
per kWh may bring many solar projects into stream. Also technology up gradation is
required so that domestic industry can match international standards. High interest costs,
short term year of repayment were also important issues. FICCI was requested to provide
a write up on their recommendations to the Planning Commission.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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8. It was suggested that states having potential of high insolation may also be called for
discussions. It is quite important to evolve along term business model keeping in view the
capital costs, land acquisition, debt financing, depreciation, price discovery etc.
Emphasis should be given for volume maximisation in the states with highest potential as
these States could yield the cheapest solar power.
9. It was argued that RPO endorsement provision needs to be made stronger otherwise
REC market could collapse.
10. The representatives of the banking sector brought out that Manufacturing solar
module/panel has not been found to be viable in the country, as lot of Chinese
components are available at lower costs. There is a need to provide support to the
industry by the government to make the manufacturing sector viable. It was also pointed
out that subsidy should be provided on the manufacturing side to reduce the price of
equipment and resultant cost of solar power, so as to enable achievement off grid
parity. Discussion was oriented towards how to designed the Incentive for large size solar
thermal so as to make it viable.
11. IREDA also indicated that there is need to bring down the cost of equipment to make
help achieve grid parity thereby maximising the installed capacity. It was suggested that
IREDA should submit a paper to Planning Commission on how to bring down the cost.
12. Based on the above discussions, it was decided to call for presentation on the following
four areas:
i. FICCI/CII along with the related manufacturing associations should make a
presentation on issues related to manufacturing side
ii. NVVN, SBI, PFC and baking sectors should make a presentation to highlight
the issues related to funding/financing of the solar projects.
iii. IREDA should make a presentation related to states indicating the factors
responsible for high performance and low performance. They should also
bring out the views of the states and what support was required from the
centre?
iv. A Presentation on RPO issues, regulatory issues and policy related matters
would be desirable. MoP, MNRE and CERC ma y bring out these issues
jointly.
Chairman indicated to finalise the report in next two months.
The meeting ended with vote of thanks to the chair. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Subject : List of Participants for the 1st Meeting of Task Force on Solar and Wind Energy on 09-09-2013
at 5.00 P.M at Room No.136 Yojana Bhawan
Sl.No Name (Shri/Ms) Designations, Organization
1 B. K. Chaturvedi
Member (Energy), Planning
Commission …..in chair
2 Ratan P. Watal Secretary, MNRE
3 Shri Saurabh Chandra Secretary, DIPP, Ministry of Commerce
& Industry
4 Shri Satyanarayana Secretary, Department of Electronics
& IT
5 Shri Anil K. Jain Adviser(Energy),Planning Commission
6 Shri Tarun Kapoor Joint Secretary, MNRE
7 Ms Jyoti Arora Joint Secretary, Ministry of Power
8 Dr. Arbind Prasad DG, FICCI
9 Shri Rita Roy Choudhary FICCI
10 Shri Rajnath Ram Dy.Adviser, Planning Commission
11 Dr.S.C Sharma OSD, Planning Commission
12 Shri Manish Singhal Head-BD North, L & T
13 Shri A.R Soni L&T
14 Shri Debashish Majumdar, CMD, IREDA
15 Sanyukta Samaddar, Director, HI
16 Shri R.K. Tandon, CMD, Hindustan Salts Limited
17 Shri Deepak Puri Moser Baer-CII
18 Shri Rajesh Menon CII
19 Shri Satnam Singh, CMD, PFC
20 Shri Saibaba, CEO, Lanco Solar
21 Shri Sumant Sinha, CEO &Chairman, Renew Power
22 Shri P.K. Malhotra, Dy. MD, SBI, Mumbai
23 Shri W.V.K Krishna Shankar, Director/IS&P, BHEL
24 Shri C.V.S Murthy G.M, I/C, BHEL
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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No. P-11072/4/2013-RE (P&E)
Planning Commission
(Power & Energy Division)
Subject: Minutes of the meeting of “Task Force on Solar and Wind Sectors ” under
chairmanship of Member (Energy) held on 1 -11-2013
Member (Energy) in Chair. The list of participants is annexed.
2. At the outset, Shri Anil Kumar Jain, Adviser (Energy), Planning Commission
welcomed the participants and informed that the instant meeting was the first one on
the expanded mandate of the Task Force, which would also cover wind sector along with
solar energy. The participants in the meeting related to the wind sector , while the
members hailing from solar energy sector would be invited next, when the Task Force
took up the issues relating to their sector.
3. Member (E) made brief opening remarks and welcomed the participants. He
hoped that the Task Force would be able to identify the issues which need to be
addressed both by the industry and the Government in order to tap the vast potential of
wind resources in our country. Following Member’s remarks, Shri Alok Srivastava, JS,
MNRE made a brief presentation on the present status of the wind energy potential and
capacity utilization through the different Plan period. He mentioned that the pace of
growth of wind energy had slackened during the 12
th
Plan due to uncertainty on
availability of GBI and AD. Consequently, the fresh capacity creation fell to 1700 MW in
the first year (2012-13) and even in the present year, the same capacity is likely to be
created. With the Government having announced GBI from the beginning of the 12
th
Plan, the pace of the capacity of the wind power will pick up. He, however, added that
there is a felt need for continuing AD and it is likely that during the budgetary exercise
for the year 2014-15, this aspect may be addressed by the Government of India. The
presentation also highlighted some of the issues which are holdin g back the growth
including land related issues, evacuation related problems and under -availability of
finance as well as markets for wind power.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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4. Following the above presentation, Member (E) invited the representative s of
different organizations to present their views on the subject. The observations of the
participants have been captured as below:
Shri Ramesh Kym al, President, India Wind Turbine Manufacturers’ Association
5. Shri Kymal observed that the wind turbine manufactu ring capacity in the
country had grown at a fast pace over the years. The Indian turbines are also known
for their quality and India is an exporter of turbines to the entire world including the
developed countries. He added that as per the findings of E&Y in a study commissioned
by them, it has been found that Indian wind turbines are one of the lowest priced ones
in the world. He added that the critical issue before project developers is the poor
availability of finance. There is a preference in financiers for balance-sheet based
financing and not for IPPs. India could easily achieve the 12
th
Plan target of 15 GW, as
well as NAPCC target of 17 GW capacities by 2020, if RPOs were enforced. As the entire
issue was related to financing, there is a need for the Government to set aside foreign
exchange savings accruing from the sector by avoiding fuel imports , for financing this
sector. He suggested that a sum of Rs.12000 crore was approximately needed to fund
the sector and these funds could be rotated annually by a financing agency such as
IREDA.
Shri Debashish Majumdar, Chairman, IREDA
6. Shri Majumdar’s remarks reflected on the historical origin of RECs stating that
the objective of the same was that the sector would be funded by electricity consumers
without the need for Government to fund the renewable sector. However, this
mechanism has not delivered so far. He observed that due t o complex reasons, the
power sector as a whole is not seen as bankable any more. The current problem is that
renewable energy which otherwise has strong financial fundamentals, has also been
clubbed with the power sector. He felt that it would be useful, if NCEF funds could be
obtained and blended with debt funds from financial institutions , so that the zero
interest NCEF could lead to a lower rate of interest on the blended debt fund. He also
recommended that the banks need a different loan window for the renewable energy
sector and there is a need to encourage non-recourse financing in the future. He felt
that availability of funds was not an issue in the Indian conditions, but it is the mind set
of the financiers, who do not find the renewable energy sector bankable due to the
larger disdain for power sector.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Shri A.K. Agarwal, Director (Project), PFC
7. Shri Agarwal made two important remarks. He felt that as RPOs were not
being enforced, they do not provide comfort to financiers. Therefore, no financing takes
place against the scheme of RPO. Secon dly, Shri…. mentioned that PFC does both
recourse and non-recourse financing. He agreed that there ought to be a separate
window in the banking sector for funding renewable energy projects. He added that the
sector was wrongly maligned as they do not have any NPA for this sector in PFC.
Shri P.K.Malhotra, Dy.MD, SBI
8. Shri Malhotra remarked that it would be incorrect to say that banks are not
financing the renewable energy sector and do not distinguish between renewable energy
vis-à-vis power sector. However, the banks differ with the risk perception as observed
by IREDA/PFC. This is because of the regulatory set up being different between banks
and the above institutions. Regardless of the following sector, if payments are not
realized by banks in 90 days intervals, the account is rendered NPA. In IREDA/PFC it
was 180 days. He added that wind was an attractive sector vis-à-vis the conventional
power and it has already achieved grid parity. However, interest payments often do not
get paid within 90 days, as due to seasonality, IPP do not have the capacity to pay
interest during the lean season. He felt that there was a need for RBI to allow payment
in instalments towards interest to be deferred beyond 90 days during the under -
resource period of wind and extend it to 180 days. This was supported by IREDA as
they have adopted 180 days norm and it was felt that this make s a huge difference in
financing by banks vis-à-vis IREDA/PFC.
Shri P.K.Sinha, Secretary, Ministry of Power, GoI
9. Shri Sinha observed that as regards RPO obligations, the issue pertains
entirely to enforcement as State Governments go for cheap power, SERCs are
influenced into not enforcing the RPOs. He added that the Ministry of Power was
considering amendments in the Electricity Act to make RPOs effective. Shri Sinha felt
need for focus on larger wind projects, perhaps, in offshore on similar lines as MNRE’s
proposal to support large solar projects. He added that there was a need to consider
how wind and solar could be made amenable to decentralized distribution. He also felt
that we have to look at our large Islands, viz., A&N Islands and Lakshadweep Islands ,
and MNRE may develop renewable energy options in these two islands.
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Shri Jami Hossain, Indian Wind Power Association
10.Shri Hussain fully supported the views of the IWTMA and felt that besides the IPPs,
the Government also needed to address the concerns of AD inves tors. This alone could
help it to achieve the target of 2500 MW/year capacity addition. He felt, in order to
address the grid availability issues, there is a need to identify large areas where
resource is rich and then set up evacuation infrastructure in such regions.
Shri Sunil Jain, CEO, WIPPA
11.Shri Jain observed that availability of finance was not the real reason which is
holding back the wind sector. While he appreciated need for a separate window for
financing wind sector for a sharper focus, but there was no need for sops and the
market mechanism could be allowed to play its role. However, the issue that was
holding back growth was regulatory uncertainty. There are no long term policy
commitments on power purchase, infrastructure policy, tariff fixation, wind capacity
auctions, etc. These issues hinder large financial commitments by project developers.
There was a need for 5 year policy window so that investors could realize their projects
from concept stage to power production stage. He felt that there is a need to have a
different statutory mechanism than the Electricity Act for the renewable energy sector.
He also added that SERCs need to show their support for RE, as provided in the
Electricity Act for this sector.
Shri V. Subramanian, former Secretary, MNRE
12.Shri Subramanian observed that there is a need for the Task Force to look at the
issues confronting the SERCs who are rightly responsible for enforcing RPOs and other
mechanisms. If need be, MNRE should take a stand consistent with law and place its
views before SERCs. Further, the 15% RPO observance by 2020 was large ly a NAPCC
vision statement, it needs to be given a firm status. He added that there was a need to
look at re-powering of the earlier capacity as good wind sites which were taken away
earlier, need to be re-powered. May be the Planning Commission should come out with
a policy for re-powering. Finally, he added that the State Governments need to look at
RE sector as a development agenda in itself, and not ignore it in favour of their power
utilities.
Shri W.V.K.Krishan Shankar, Director/IS&P, BHEL
13.Shri Shankar comment ed that they were already working on RE solution for
Lakshadweep, and could introduce 80% RE penetra tion in less than 10 years in these
islands. Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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In the end, Member (E) made the following observations:
i. We need to adopt an aim to introduce up to 80% renewable energy solution in the
next 10 years in our islands.
ii. Member (E) would chair a group with Secretar ies in the Ministries of Power and
MNRE as well as from the Departments related to renewable energy from two State
Governments, which would suggest a road map for effective implementation of
RPOs. This group will also look at the regulatory aspects of the wind sector.
iii. Funding was identified as a major bottleneck and as directed during the earlier
meeting of the Task Force on Solar Energy, SBI, PFC and IREDA would give joint
inputs on funding aspects.
The meeting ended with a vote of thanks to the Chair.
*****
Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Planning Commission
Power and Energy Division
**********
Subject : List of Participants for the Task Force on Solar and Wind Energy 01.11.2013
Sl.no Name and Designation
(Shri /Ms.)
Organization
B.K Chaturvedi ,Member ( Energy) Planning Commission
Anil Kumar Jain, Adviser (Energy), Planning Commission
Tarun Kapoor Joint Secretary MNRE
Alok Srivastava Joint Secretary MNRE
Dilip Nigam, Director MNRE
Dr. Ajay Kumar, Joint Secretary Dept. of Electronics
Shubhra Singh, Joint Secretary DIPP
S. Jainendra Kumar, Director D/O Heavy Industry
Rajnath Ram, Deputy Adviser Planning Commission
Dr. S. C Sharma, OSD Planning Commission
Arbind Prasad ,Director General FICCI
Rita Roy Choudhary , Sr. Director FICCI
Pranav Patel Assistant Director FICCI
P.K Malhotra, Dy, MD SBI Mumbai
Shashanka Shekhar Panda, Head Public Policy RENEW Power
Rasika CII
Y.K Sehgal Power Grid Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Kashish Bhambhani Power Grid
Debashish Majumdar, CMD IREDA
A,K Agarwal Director Project PFC
W.V.K. Krishan Shankar, Director /IS&P BHEL
D.P Bhutani, Principal Advisor BHEL
G.S Rotti, GM BHEL
Deepak Gupta , Sr. Prog. MGR Shakti Foundation
K.R. Nair , Vice President Indian Wind Power Association
Jami Hossain , President -do-
Ramesh Kymal Chairman , Indian Wind Turbine
Manufacturing Association
V.Subramanian Technical Wind Energy Association
D. V Giri, Secy. Gas India Wind …
Bhaskar Deol NRDC
Anjali Jaiswal NRDC
R.K Tandon …..
Dr. V.S. G Rao LANCO Solar , Gurgaon
Dr. Arunabha Ghosh, CEO Council on Energy , Environment
Sunil Jain CEO Hero Future and WIPPA
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No. P-11072/4/2013-RE(P&E)
Planning Commission
Power & Energy Division
Subject: Minutes of the Third meeting of the Task Force on Solar and Wind Energy held on 3-12-
2013 at Planning Commission.
Member (Energy) in Chair. The list of participants is annexed.
2. Member (E) greeted the participants and recalled the decisions taken in the
previous two meetings. He invited the identified associations/agencies to make presentations
regarding their recommendations. The salient observations of the presenters were as follows:
(i) Presentation on manufacturing by CII & FICCI
3. A comprehensive presentation on the status of manufacturing of solar and wind power
equipments was made. The salient observations were as follows:
? Debt is much cheaper internationally than in India;
? Chinese industry has decimated manufacturing of these equipments not only in India,
but on a world-wide basis. They have been helped by Government grants which straight
away reduces the cost of manufacturing; and
? Even Government of India needs to extend financial support to this sector perhaps, by
erecting some kind of barrier against dumping/cheap import.
4. It was argued that Indian industry has the capability to produce solar panels as
per world’s best efficiency norms. Hence, encouraging Indian manufactured products over
imported ones would not compromise on performance. Member (E) raised several issues on
technological improvements globally, efficiency levels, including feedback from industry
associations as to what policy intervention was sought to promote roof top SPV. It was
responded that various finance instruments including net-metering, inter-state loans for roof
top and other such measures would be helpful. Ms Shubhra Singh, JS, DIPP added that the Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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new manufacturing policy (NMP) has provisions to promote solar manufacturing in the
country. The Department has already identified salt lands and is examining their suitability
for promotion of both solar equipment manufacture and solar energy development.
(ii) Presentation on financing by SBI/PFC
4. This presentation was made jointly on behalf of NVVN, PFC and the banking sector. This
covered both financial matters as well as policy issues. The presentation covered the following
aspects:
? There is Lack of reliable long term site specific resource and operational data
? There is lack of evacuation infrastructure for RE;
? Unbundling of land/EPC/equipment and O&M issues (handl ing by State agencies in an
efficient manner) is needed to bring down costs. Government assistance was sought in
arranging land and necessary facilities;
? Enforcement of RPO obligations
? As regards policy framework on financing, their needs to be a bouquet of financial
models to choose from;
? There ought to be some “carving out” of funds dedicated for financing this sector;
? State Governments need to create payment security mechanism just like NVVN at the
national level;
? Security creation of the assets should be of such type which increases the lender
confidence, for recovery of loans, should their be a case of assets to be taken over and
transferred to another entity; and
? A need was voiced to examine why the IIFCL’s credit enhancement scheme has not
taken off. It was also pointed out that imported solar equipment presently does not go
through certification. It was argued that this lacuna may be fulfilled.
(iii) The presentation on State Government issues by Shri D. Mazumdar, CMD, IREDA Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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5. Shri Mazumdar, brought out the issues which hold back the States to realize the potential
of wind and solar energy in their respective domains. The major issues raised were as follows:
? The major reasons for low performance by the states were identified as:
o Inadequate availability of land and solar resource
o Insufficient State government initiative
o Conducive long term policies yet to stabilize
o Delayed payments for power purchase
? To improve the sector outlook and attract investments in these sectors, following were
proposed:
o There should be a Long term stability in policy framework
o Operational data should be made available from reliable sources
o There should be strong evacuation infrastructure. Payment Security Mechanism
needs to be established in view of weak financial health of DISCOMs
o A common/uniform methodology should be adopted for tariff setting. SERCs may
follow CERC norms
o There should be refinement in the process of procurement / bidding process so as
to to filter out impractical bids for award of RE projects.
o Quality standards should be maintained
o Low cost resources though Tax Free Bonds for IREDA
o Leveraging of NCEF funds through IREDA
(iv) Presentation on regulatory matters made by Shri Alok Shrivastava, JS, MNRE and Ms.Jyoti
Arora, JS, MoP
6. A joint presentation was presented by MNRE and MoP on the regulatory environment
and the studies needed to improve the environment.
? It was stated that there is lack of RPO enforcement by SERCs. States fix RPO targets as
per their convenience and not commensurate with the capacity/potential. It was
pointed out that long term RPOs were required to provide assurance to the industry; Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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? Electricity Act presently includes fossil fuel based generation also in the definition of “co-
generation”. Perhaps, this needs to be amended;
? MoP is already considering amendments both in the Electricity Act and Tariff Policy;
? RPOs long term trajectory ought to be put into the Statute itself; and
? It was also mentioned that the new Tariff Policy and Electricity Act provisions had
factored in very high price in solar and wind in the REC mechanism. The recent reality of
low prices calls for a fresh look
7. Member (E) summed up that the Task Force needs to spell out the strategy for achieving
both short term renewable energy target as well as the longer ones, with due place for all
stakeholders. He directed that the Task Force may finalize its report on the above two set of
recommendations in two submissions. Based on the discussions held so far, he observed that a
Sub-Committee may perhaps prepare a report which may be submitted to the Government.
The constitution of the Sub-Committee would have Joint Secre taries concerned from the
Ministries of MNRE and Power. The Adviser (Energy), Planning Commission may be the
Convener of this Sub-Committee which would submit its report by the first week of January,
2014.
The meeting ended with a vote of thanks to the Chair.
***** Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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Planning Commission
Power & Energy Division
*******
Subject: List of participants for the Task Force on Solar & Wind Energy-03.12.2013.
Sl.No Name & Designation
(Shri/Ms)
Organization Contact Nos.
1. B.K.Chaturvedi,
Member (Energy)
Planning Commission
2. Shri A.K.Jain , Adviser(Energy) Planning Commission
3. Dr.S.C Sharma, OSD Planning Commission
4. Shri Rajnath Ram,Dy.Adviser Planning Commission
5. Shri Rakesh Shah(Adviser-CERC) CERC 8
6. Shri R R Jha PFC 9868549105
7. Shri A Chakravarthi, ED PFC 011-2345668
8. Shri Sushant Sinha,Chairman Renewable Power 0124-46671
9. Shri J. Arora M/o Power 011-237103
10. Shri Prnay Kumar M/o Power 01123715250
11. Shri S B Agnihotri MNRE
12. Shri Alok Srivastava MNRE 9868107118
13. ShriP C Maitham, Director MNRE 99669312
14. Shri Dilip Nigam, Director MNRE 91184867
15. Shri Taren Kapoor, Joint Secretary MNRE 8130461118 Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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16. Shri Krishan Dhawan Shakti Foundation 9910821666
17. Shri Deepak Gupta Shakti Sust.Energy
Foundation
9958545441
18 Shri B K Makhija, Director RREC 94140667
19. Shri Rahul Gupta,M.D Indo Solar 9810210465
20. Shri P.K. Kheruka,Vice Chairman Gujarat Borosil Ltd. 9821037435
21. Shri Subir Sen, G.M Powergrid 9650293185
22. Ms Shubhra Singh, J.S DIPP 9560052144
23. Samyukta Samaddar,Director DHI 99139069
24. Gururaj Rolli, GM BHEL 9650235666
25. Shri W.V.K. Krishna Shanker,
Director
(IS &P), BHEL 9810977858
26. Shri O.P Bhutani, Principal Advisor BHEL 9810413982
27. Shri Deepak Puri Moser Baer 9818156000
28. Shri Vivek Chaturvedi Moser Baer 9810174090
29. Shri Debasish Majumdar,CMD IREDA 9810563220
30. Shri V. Saibaba Lanco Solar Pvt.Ltd 9971067373
31. Shri V.S Gangadara Rao Lanco Solar Pvt. Ltd. 9971067373
32. Shri Vikram Kotru FICCI 9717840606
33. Shri Sarvesh Kumar IWTMA/ASSOCHAM 9810091100
34. Shri Vineet Mittal WELSPUN/ASSOCHAM ----
35. Shri Kalyan Kukherjee,Director ASSOCHAM 99061154
36. Shri Narendra Mishra ASSOCHAM 91766968
37. Disha Banerjee WELSPUN Energy Ltd 9910446655 Deliberations of the Task Force on Roadmap for India on Solar & Wind Energy beyond 13
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38. Shri Sanjeev Singhal State Bank of India 9819799411
39 Shri Rajnish Kumar, CGM SBI,PFSBV 750627108
40. Gulshan Mallik DGM,SBI,PFSBU 9958
41. Shri Alok Verma Manager,SBI, Policy 9650114173
42. Shri N.K.Sharma CEO,NVVN 011-24361929
43. Shri A.K.Maggu GM,NVVN 9650995995
44. Shri P.K.Mahajan AGM,NVVN 9650992230
45. Shri Saurabh Yadav GM,Suzlon 98
46. Shri Rajeev Palakshappa Assc.Fellow,CEEW 9711701932
47. Shri S.S Panda Head,Publoc Policy,
Renew
98