Wednesday, June 25, 2014: RENERGY 2014, that was recently organised in Chennai, concluded with the unanimous call to remove the 30 per cent subsidy on solar PV, provided Ministry of New and Renewable Energy (MNRE). It is noteworthy that MNRE doesn’t take application for subsidy anymore ever since funds have been exhausted. The absence of formal removal of 30 per cent subsidy is going to force the industry to have subsidy-free solar PV.
Tamil Nadu Energy Development Agency (TEDA) formed RENERGY 2014 with the view to bring industry together in order to increase awareness of renewable energy. RENERGY 2014 organised three-day conference, expo in which they featured 200 exhibitors and 75 speaker sessions. The expo saw over 15,000 visitors.
RENERGY 2014 included green facilities where commercial units, hospitals, hotels, factories learned the benefits of using renewable energy resources, how to reduce energy cost etc. This was targeted to commercial and industrial building owners.
The 30 per cent subsidy was slowing down the adoption of rooftop PV. There were talks about the same in the expo. MNRE has stopped taking applications from subsidy since February 2013. The subsidy applies to PV systems below 100 KW.
Commenting on the issue, MD of Solkar Solar Industry said, “Our company hasn’t received Rs 50 lakh of subsidy for approved projects over a year.” The MNRE has Rs 3,200 crore subsidy backlog.
Only words of support for solar
* According to a few companies, the government is not formally taking out subsidy because they want to show their support for renewable energy, even if subsidy has ran out of funds.
*Customers, who invest in rooftop PV projects without subsidies, still try their luck to get subsidy, they don’t mind waiting few months or even a year.
* Indian government’s political vanity has very negative effect on rooftop PV market.
* Despite of warning from PV companies, customers presume 30% subsidy amount and lose their interest in PV after waiting period.
* Programs like net metering in several states have helped to grow rooftop PV market. But the internal cross subsidies of electricity of market affects effectiveness of net metering.
* Commercial and industrial customers have the highest electricity rate in India because they subsidize residential and agricultural users.
* Users are the main revenue source of loss making, indebted companies. State governments are not interested in letting customers use solar PV for cross subsidising agricultural and residential users. Tamil Nadu government approved net metering policy in last November, this policy excludes industrial and commercial customers. With increasing high electricity rates, solar power is good investment option for industrial and commercial users.
Subsidy tax affects commercial PV
* Some states have allowed subsidy free solar projects, while some states make projects uneconomical by adding cross-subsidy tax on industrial and commercial solar power users. Electricity market is dependant upon cross subsidy earned from industrial and commercial users. Opt out policy for cross subsidy is not feasible.
* Agricultural customers don’t pay almost anything for electricity, yet there is good scope for use of solar power in agriculture. Some speakers at RENERGY 2014 suggested that solar power may be able provide alternative solutions. Another panel at RENERGY estimated 125 GW irrigation demand from 25 million irrigation pumps.
* 15 per cent of all electricity can be saved if these 125 GW irrigation pumps are powered with solar energy. This can be helpful in improving balance sheet of distribution companies in the state. This can reduce need of cross subsidisation.
* The challenges rooting from MNRE subsidy shows need of effective policy. Solar power can be really helpful in country’s growth and development. PV industry should start removing subsidies along with power sector’s reformation plan being executed by new Narendra Modi government.
