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Govt seeks to give citizens compensation for feeding solar power to grid in India

According to reports, the government is considering changes in laws that would allow customers to be paid for the solar power they generate and feed into the grid. This will persuade individual consumers, rather than power distribution companies, to supply at least 1,000MW of electricity to India’s grid by installing solar panels on rooftops of residential and commercial buildings by 2017, the government hopes.

If successful, this would generate more than one-tenth of the renewable energy capacity of 9,000MW of solar power that the government plans to add under the marquee Jawaharlal Nehru National Solar Mission (JNNSM), and more than a hundred-fold increase from the current levels of power generated by rooftop solar power systems..

Previous attempts by the authorities, including those in Delhi and Mumbai, to subsidize solar water-heater systems have been unsuccessful, mainly because the costs of buying and installing these were prohibitively high, in spite of a 30% subsidy on solar equipment.

“Once this can be put into place, we should be able to kickstart demand for solar power in a big way,” said Gireesh Pradhan, secretary, ministry of new and renewable energy (MNRE). “Given the rise in power tariffs, a feed-in tariff will make people re-evaluate the costs and benefits of solar power.”

Apart from rising power bills, all states are now coming to terms with an overburdened electricity grid that has crashed twice this year on the back of lopsided and excessive power demands by some states and infrastructure unable to cope with this.

Pradhan added that his ministry was in talks with Germany, which has nearly half its 27,000MW of solar energy capacity generated by rooftop-based systems, to help implement the scheme.

To be sure, several states, such as Gujarat, West Bengal, Karnataka and Tamil Nadu, have announced rooftop solar-power generation schemes but these come with several restrictions, such as being open only to government buildings and academic institutions, as well as requirements that the installed project be of a minimum size.

“We’re planning on a further centralized subsidy,” said Tarun Kapoor, joint secretary, MNRE. “When you couple that with initiatives by various states, we’re expecting a major change in solar usage patterns in the country. I wouldn’t then be surprised with 2,000MW of rooftop solar power by 2017.”

Apart from JNNSM, India’s solar power industry has been boosted by the decline in prices of solar photovoltaic panels, down 25% from what they were in 2008. This is largely due to a manufacturing glut in China, which now surpasses Europe and the US in producing solar cells and is also a primary source of raw material for Indian solar-panel manufacturers.

Rajasthan has a dominant 70% of India’s installed solar power capacity of 1,000MW, thanks to sunshine, desert topography and incentives to power developers under JNNSM.

Experts said a feed-in tariff (FiT) system could be misused and regulators need to be watchful.

They would need to look out for abuses such as “feeding back utility supply generation from subsidised fuels, etc. However, reducing solar prices and increasing diesel prices may make such a situation very improbable,” said a report by Prayas Energy group, a Pune-based energy consultancy. “It is desirable to move away from the FiT route and prioritize self consumption (where homes produce their energy instead of banking on incentives from power distribution companies).”

An FiT policy wouldn’t necessarily be a strong incentive to encourage rooftop solar policy initiatives, said Arunabha Ghosh, CEO, Council on Energy Environment and Water.

“I haven’t specifically analysed the FiT for solar but the big problem to encouraging access to renewable energy is the lack of innovative financing schemes,” Ghosh said. “For example, the incentives that might make more sense in Bangalore are different from Delhi which has different energy consumption patterns. Unless this is addressed, no one scheme can be a panacea.”

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