Rajasthan revises developer contribution in solar policy

Source: Financial Express, Dec 24, 2019

The Rajasthan Government has fine-tuned the rates for developer contributions towards the Renewable Energy Development Fund (REDF) for solar projects in the Solar Energy Policy 2019.

Industry players expressed dissatisfaction over the contribution demanded under the draft policy at between Rs 2.5 lakh and Rs 5 lakh/MW per year as cess for supplying power to utilities other than discoms in Rajasthan.

The Rajasthan Renewable Energy Corporation said in its Solar Energy Policy 2019 that large-scale integration of wind and solar power into the grid requires upgradation of transmission and distribution infrastructure of power utilities, leading to increase in system-level cost. “This increased cost has to be borne by state utilities and the government in various forms, mainly as expenditure for development of large power system infrastructure for grid management.”

To meet this requirement, the government has come out with a Renewable Energy Development Fund. In case of solar power projects developed in Rajasthan for sale of power to parties other than discoms of Rajasthan, developers will have to contribute towards the fund.

The Solar Energy Policy 2019 has categorised the contribution from developers under four brackets with respect to date of commissioning. For solar projects to be commissioned by March 2024, the contribution has been fixed at Rs2 lakh/MW/year; for projects to be commissioned between April 2024 and March 2025, it will be Rs 3 lakh/MW/year; for projects getting commissioned between April 2025 and March 2026, the contribution has been fixed at Rs 4 lakh/MW/year; and for projects getting commissioned on or after April 2026, the same will be at Rs 5 lakh/MW/year.

Anil Kumar Gupta, managing director of Rajasthan Renewable Energy Corporation, told FE, “The response from the developers association has been good. We have evaluated the industry concerns and came up with the categoristaion, which will help developers save on the contribution if they come up with the projects in the initial four years…”

Analysts believe the contributions will increase tariffs at the competitive bidding round. At Rs 2 lakh/year, the impact on the tariff is expected to be Rs 0.13 paise/kWh, at Rs 3 lakh/year, the impact will be Rs 0.20 paisa/kWh, at Rs 4 lakh/year the impact will be Rs 0.26 paisa/kWh and at Rs 5lakh/year the impact will be in excess of Rs 0.33 paisa/kWh, if the plant operates at 20% PLF.“The projects bid at a later stage will have to include the cost in higher tariffs, which may become uncompetitive depending on costs at the time of auction,” said Rupesh Sankhe, vice-president and power sector analyst at Elara Securities.

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