According to reports, after a heady start, Rajasthan is losing its attractiveness of being a compelling destination for solar power as producers are becoming wary of high transmission charges and ineffective enforcement of renewable purchase obligation (RPO).
States like Madhya Pradesh and Maharashtra, which were on the margins of the country’s solar map a couple of years ago, are now fast catching up with investor friendly policies, while Gujarat still remains the leader.
“Project developers want Rajasthan to rationalize its transmission charges which is as high as Rs 159.48/kW per month and losses of 4.2% even as solar plants use the transmission system only for part of the day resulting in total impact of about Rs 1.5 – 2 per unit,” said developer preferring anonymity.
He said such high charges on solar projects translate into four times the transmission levy and losses being imposed on coal and lignite-based thermal projects.
“Looking at this disparity between renewable and thermal projects, MP and Maharashtra have rationalized the charges based on per unit of electricity transmitted into the grid. Gujarat is levying on per megawatt basis, substantially lowering the charges,” he added.
B K Makhija, director (technical), Rajasthan Renewable Energy Corporation, said the regulator has brought in those levies after weighing many factors and the state transmission and distribution companies need to raise financial resources to provide infrastructure.
Open access system, which allows producers to put up a plant in any state and draw the power in a different location, will not be attractive for investors in Rajasthan where the transmission levies and losses are extremely high.
“MP and Maharashtra have already benefitted by keeping these levies at significant lower levels. Many of the project investors, who used to come to Rajasthan, are now going to these states,” a retired RREC official said.
Similarly, under Rajasthan’s Solar Policy-2011, only RPO and Renewable Energy Certificate (REC) had gained some traction contributing 29% to the state’s total capacity of 730 MW. Capacity through competitive bidding is miniscule at 3% with National Solar Mission projects accounting for whopping 68%.
In order to promote green energy, the Electricity Act 2003 stipulated that states and conventional power utilities are required to source certain portion of total electricity use from renewable energy. For meeting the requirement, obligated entities can purchase RECs from green power generators.
But poor enforcement of this policy meant that there is less demand for RECs, which consequently discouraged power producers to put up new plants. The REC market that gave Rajasthan most of its capacity under the policy is unlikely to attract investments in any significant way until the RPO mechanism is strictly enforced.