In order to leverage the full potential of solar, the Madhya Pradesh government has come up with a decentralized solar policy. On the sidelines of the Renewable Energy India (REI) Expo 2018, Mercom’s news team sat down with Manu Srivastava, Principal Secretary and Commissioner, New and Renewable Energy Department, Government of Madya Pradesh, to find out more about the newly introduced Madhya Pradesh Decentralized Solar PV Policy.

“Madhya Pradesh Policy for Decentralized Renewable Energy, 2016, is not just a solar rooftop policy; rather, it is a decentralized renewable energy policy which supports rooftop solar, small scale wind, small biomass project or their combinations that can be installed at a consumer premise,” stated Srivastava.

“The objective of the policy is to make renewable energy cover the entire state. Rural areas, which are still not connected to the grid or where grid supply is unreliable, can be powered through off-grid renewable energy-based solutions, while urban consumers can reduce their electricity bills by adopting a cleaner source of energy on their rooftop,” added Srivastava.

Key Highlights

• Solar rooftop systems can be installed in off-grid and grid-connected mode.
• Grid connected solar systems can be installed under three categories: on a net-metered basis, for consumption within or outside premises through wheeling and banking, and for consumption within premises with no export of power.
• The policy permits multiple configurations based on ownership, location of rooftop system, and consumption.
• The rooftop system can be owned by the beneficiary or a RESCO operator.
• Energy consumed from net-metered renewable energy system by a non-obligated entity qualifies towards renewable purchase obligation (RPO) compliance of the concerned distribution company (DISCOM). The DISCOM does not need to pay for such power.
• This is aimed at addressing the resistance of DISCOMs to its customer installing a rooftop system and reducing the DISCOM’s demand. The DISCOM benefits from meeting its RPO at zero procurement cost.
• No restrictions on the system size, based on the contract demand of the beneficiary, unlike many other states. Beneficiaries can install a rooftop solar PV system much larger than their contract demand, if the rooftop system’s size and distribution transformer capacity permit so. They can even be energy self-dependent.
• In case installation of the decentralized renewable energy system for low tension (LT) consumer requires system augmentation, such as replacement of existing distribution transformer (DT) with a DT of higher capacity, the entire cost related to augmentation for the interconnection of the renewable energy system with the network of the DISCOM will be borne by the DISCOM. The DISCOM can claim it as part of the ARR filing.
• Excess or surplus energy remaining banked with the distribution licensee at the end of the year will be settled at an Average Pooled Power Purchase Cost (APPC).
• The DISCOM will provide money credit equivalent to the amount payable to the net-metered consumer in the immediately succeeding billing period. Providing monetary credit is a source of revenue for the consumers and allows to start the next year with a clean slate. This ensures that there is no risk of banked energy getting accumulated every year for some consumers and not ever getting settled.
• Multiple business models are permitted under RESCO mode.
  • The first is Build Own Operate Maintain (BOOM), wherein the RESCO will own the renewable energy generating system and supply power to beneficiary and later RESCO will uninstall the renewable energy system once the term of the agreement is completed and restore the roof as it was before the installation of the renewable energy system.
  • The other model is Build Own Operate Transfer (BOOT), wherein the RESCO will finance, develop and own the renewable energy system and supply power to the beneficiary for the period of agreement. At some time in future, the renewable energy system will be transferred to the beneficiary.
• A subsidy of 20 percent over the MNRE subsidy for the installation of solar rooftop PV systems on government buildings will be provided. For private institutions, such subsidy is limited up to 25 kW capacity.
• Electricity duty will not be applicable on the producer of renewable energy, beneficiary, consumer, licensee for supply, sale or consumption of renewable energy from generating systems installed under this policy for a period of 10 years from the date of commencement of supply.
• Beneficiary connected at LT level will enjoy electricity duty exemption for the lifetime of the generating system.
• Installation of the generating system at the premises of beneficiary will not be considered under eligible floor area ratio (FAR) calculation. It will allow the beneficiaries an additional FAR for construction in the premises.

• The first is Build Own Operate Maintain (BOOM), wherein the RESCO will own the renewable energy generating system and supply power to beneficiary and later RESCO will uninstall the renewable energy system once the term of the agreement is completed and restore the roof as it was before the installation of the renewable energy system.
• The other model is Build Own Operate Transfer (BOOT), wherein the RESCO will finance, develop and own the renewable energy system and supply power to the beneficiary for the period of agreement. At some time in future, the renewable energy system will be transferred to the beneficiary.

This decentralized solar policy addresses the inhibitions of DISCOMs by allowing them RPO fulfilment at zero cost. On the other hand, it takes care of the capital costs incurred by rooftop solar PV consumers (residential) while installing the system. This is a fully rounded policy with all loose ends tied up for a seamless process.

The effects are already visible in Madhya Pradesh Urja Vikas Nigam Limited (MPUVNL)’s 35 MW of grid-connected rooftop solar under a RESCO tender. As reported previously by Mercom, AMP Solar India quoted the lowest tariff (L1) of ₹1.58 (~$ 0.022)/kWh in this rooftop auction.