Assembly elections were held in five Indian states – Madhya Pradesh, Rajasthan, Telangana, Chhattisgarh, and Mizoram last week. Following the election outcomes, all four states except for Telangana, underwent a change in government. For Madhya Pradesh and Chhattisgarh, this is only the second time in the 21^st century that these states have witnessed a change in the government. The Bhartiya Janata Party (BJP) has governed these two states for the last 15 years.

The elections were of particular interest to the solar industry, as approximately one third of all large-scale solar installations in the country are in the states of Madhya Pradesh, Rajasthan, and Telangana.  Solar was not directly mentioned in any election manifesto.

Here is a closer look at the four states and the growth they have achieved in terms of solar capacity additions over the years:

Madhya Pradesh

Madhya Pradesh has installed over 1 GW of large-scale solar projects with another 1 GW in the pipeline. This accounts for approximately 6 percent of all large-scale solar installations in India.

In recent years, Madhya Pradesh has pioneered some very innovative solar policies. For example, its Rewa Ultra Mega Solar Limited (RUMS) created a new model for setting up ultra mega solar projects and heralded the dawn of falling solar tariffs in India. It introduced a four-tier payment security model which ensured that, in case of any delay or even natural calamities that may lead to a transmission disruption, payment to developers would still be guaranteed. This has boosted the morale of project developers.

Similarly, Madhya Pradesh Urja Vikas Nigam Limited’s (MPUVNL) grid-connected rooftop solar tender under RESCO model underwent a  series of innovative additions which resulted in unexpectedly low tariffs, a first-year rate of ₹1.38 (~$0.0186)/kWh, for rooftop solar PV in India. Mercom previously reported on the salient features incorporated into the tender that made these low tariffs possible.

After the recent election, the Indian National Congress (INC) has come back to power, replacing the Bhartiya Janata Party (BJP) government that had been ruling the state for 15 years.

“Whether the change in government will affect the state’s renewable polices is difficult to say at the moment,” a Madhya Pradesh government official told Mercom, hoping that the focus on renewables does not shift with this change.

Discussing if the change in government will delay the process of solar activities in the state, he added, “There might be a delay of a couple of days until the new minister takes charge and is briefed about the ministry, but there will not be any delay beyond that.”

The solar activity in the state over the next 90 days should give some clues to the industry if it is business as usual or if change is coming.

Rajasthan

Rajasthan is India’s biggest state in terms of area and has the most attractive solar insolation levels in the country and has installed around 3 GW of large-scale solar projects, which is nearly 13 percent of all large-scale solar installations in the country.

The biggest solar power project in the state is Bhadla Solar Park. It received overnight recognition after ACME quoted a tariff of ₹ 2.44 (~$0.037)/kWh in the 500 MW Bhadla Phase-III Solar Park auction in May 2017. This was the first-time a solar tariff in India breached ₹2.50 (~$0.038)/kWh mark, which has not been bettered even after a year and a half.

However, the real picture is not as rosy as it may appear. Mercom has reported that solar projects aggregating 750 MW in Bhadla are facing delays due to land procurement issues. Land, being a state subject, the newly formed government will have to quickly resolve the issue and allocate land needed for solar project development at the park.

One of the prominent solar developers with projects both in Rajasthan and Madhya Pradesh said, “The government has just been formed, so it is too early to comment if the state’s renewable policies will be the same or will change. But the Power Purchase Agreements (PPAs) are generally for 25 years, so even if the new government has come, I don’t believe there will be any changes in the existing PPAs. However, certain auctions are coming up in Rajasthan and if the bids happen on time, then everything will be fine.”

He added, “We are only in the ground mount segment, so from that perspective what we look forward to is the continuation of planned initiatives towards the completion of solar mission.”

Another developer with projects in Rajasthan said, “The biggest concern faced by the solar industry is of safeguard duty. We will request the newly formed government to give us some relief and communicate our concerns to the central government.”

Telangana

Telangana’s cumulative installation of large-scale solar projects of approximately 3.5 GW, is the second highest in India after Karnataka. It accounts for approximately 15 percent of all large-scale solar installations in the country.

The Telangana Rashtra Samithi (TRS) government has focused its policies in all areas of renewable energy and has made the state take impressive strides in the expansion of clean energy.

It was the first state to comply with the Energy Conservation and Building Code Guidelines (ECBC) in August 2018. In 2017, Mercom had reported on the launch of the ECBC-2017 guidelines. The ECBC 2017 prescribes the energy performance standards for new commercial buildings to be constructed in India.

In July 2018, the Telangana State Renewable Energy Development Corporation Limited (TSREDCO) had invited a tender for the design, supply, installation and commissioning of Solar PV water pumping systems across the state. Its initiative towards solarising agriculture may have helped the government to secure 74 percent of seats in the state assembly.

The government has also taken an initiative towards encouraging rooftop sector. Last year in March, an Equated Monthly Installment (EMI)-based rooftop installation program for individual consumers was planned in the state. At its onset, the program would be available to government employees in the state.

In November 2016, the Telangana State Electricity Regulatory Commission (TSERC) approved net metering for solar rooftop customers in the state with systems ranging from 1 kW to 1 MW. The policy was applicable for DISCOMs, eligible consumers and third-party owners of rooftop solar projects in the state of Telangana.

Riding on the Electric Vehicle (EV) bandwagon, Telangana also announced an EV policy aimed at attracting investments worth $3 billion and creating employment for 50,000 individuals by 2022 through EV manufacturing and the development of a charging infrastructure.  Recently, the Telangana State Electricity Regulatory Commission (TSERC) approved a tariff of ₹6.00 (~$ 0.083)/kWh for electric vehicle charging or battery swapping stations.

“It is too premature to say at this moment if there will be any drastic change in policies. But as far as the solar industry is concerned, the current scheme of things should continue”, said a developer who has a project in Telangana.

Telangana is the newest state in the country and among the four states that went to polls, though it is the only state in which the incumbent party, TRS, has come back to power.

However, recently solar development in the state has been extremely weak. It currently does not have a large-scale project development pipeline and solar tenders pending auction is negligible. Hopefully, the state government may see the elections results as an affirmation of its policies and will hopefully renew its push for renewable energy development in the state.

Chhattisgarh

Chhattisgarh, a small state carved out of Madhya Pradesh back in 2000 will be of less significance to the overall solar market.

The Jawaharlal Nehru National Solar Mission was launched by the UPA administration in 2010 with a goal to install 20 GW of solar by 2022. According to the latest Q3 2018 India Solar Market Update, India has installed over 26 GW of solar to date.

“The hope is that solar development in these states continue unabated, though it is not clear how supportive the new governments will be of solar and renewable energy power targets in general. Other areas to look out for are decisions to increase electricity rates, power reforms and address curtailment,” said Raj Prabhu, CEO of Mercom Capital Group.

Image credit: RESOL