Solar energy policy in Gujarat

This page outlines all the available funding and incentive schemes for solar energy in the state of Gujarat in India, both at the Federal and State level. If you notice anything that is incorrect or out of date, please let us know via our contact page.

Gujarat is the fourth leading Indian state in terms of installed solar power capacity, with 1,160 MW as of January 1, 2017, according to the Ministry of New and Renewable Energy (MNRE). Overall the state has seen a huge amount of large-scale solar power plants installed in recent years, and it’s only set to increase its embrace of a cleaner, fairer future.

Federal incentives for solar energy in India

Jawaharlal Nehru National Solar Mission

The Jawaharlal Nehru National Solar Mission by the Ministry of New and Renewable Energy (MNRE) has the ambitious goal of reaching 100 GW of grid-connected solar power by 2022, and making India a global leader in the development of solar energy. Currently India is on track to reach this goal, and a recent poll we conducted via Twitter showed that half of respondents thought that India would surpass this and install “much more than 100 GW” by 2022, proving that optimism abounds on this question.

The JNNSM is geared toward large-scale solar installations and not small-scale residential plants. It is rolled out in phases and batches, each of which consists of a reverse bidding auction. This means that bidders bid the price per kilowatt hour at which they would be willing to sell the electricity. The most recent auction, Phase II Batch I of the JNNSM, saw 505 MW of solar projects receive approval.

State incentives for solar energy in Gujarat

The state of Gujarat has strong policies in favour of stimulating solar energy in the region. What follows are the various policies, incentives, and financial rules Gujarat has enacted to stimulate growth in the solar energy sector in the state. For the 2016-2017 period, Gujarat has set a renewable purchase obligation (RPO) of 1.75%, according to p. 19 of the Gujarat Electricity Regulatory Commission (GERC) Discussion Paper 2016.

Solar feed-in tariff in Gujarat

The state of Gujarat differentiates between two types of solar systems: “kilowatt-scale” power plants (1 kW – 1 MW); and “megawatt-scale” power plants (1 MW and above). Energy produced by a solar plant will be purchased by the relevant distribution company (discom) at the following levelized tariffs from April 1, 2017 to March 31, 2018, according to p. 31 of the Determination of Tariff for Procurement of Power by Distribution Licensees and Others from Solar Energy Projects for the State of Gujarat:

Megawatt-scale Without accelerated depreciation benefit ₹5.86
With accelerated depreciation benefit ₹5.34
Kilowatt-scale Without accelerated depreciation benefit ₹7.28
With accelerated depreciation benefit ₹6.61

This was based on the following assumed tariff parameters:

Plant cost
Capital cost (megawatt-scale) ₹615 lakhs per MW
Capital cost (kilowatt-scale) ₹0.8 lakhs per kW
O&M cost (megawatt-scale) ₹10.9 lakhs per MW per year
O&M cost (kilowatt-scale) ₹0.01 lakhs per kW per year
Escalation of O&M cost 5.72% per year

 

Performance parameters
Capacity utilisation factor (CUF) 19%
Performance degradation 1% per year
Auxiliary consumption (megawatt-scale) 0.25% of energy generation
Auxiliary consumption (kilowatt-scale) 0% of energy generation
Useful life 25 years

 

Financial parameters
Debt-to-equity ratio 70% debt; 30% equity
Loan tenure 10 years
Interest rate on loan 12.7% per year
Insurance cost 0.35% per year
Interest on working capital 11.85% per year
Working capital 1 month’s O&M expense + 1 month’s energy charges at normative CUF
Rate of depreciation 6% per year for the first 10 years and 2% per year for the next 15 years
Minimum alternate tax rate 20.008% per year for the first 10 years
Corporate tax rate 32.445% per year from the 11th year to the 25th year
Return on equity 14% per year
Discount rate 10.647% per year

 

Gujarat subsidy for rooftop solar

The State of Gujarat also offers a subsidy of ₹10,000 per kW of installed capacity up to a maximum of ₹20,000 per customer. It is paid by the Gujarat Energy Development Agency (GEDA) subsequent to installation and commissioning of a rooftop solar system.

Are you interested in installing solar in Gujarat?

If so, get in touch and learn how we can help you join us in the solar energy revolution.

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