Gujarat Amends Solar Policy; Omits 50% Cap for MSME Manufacturers But There is Some Bad News Also

Gujarat solar policy

Just before the budget announcement, January ended with some good news for MSMEs who are planning to go solar in Gujarat’s Manufacturing sector. The Micro, Small and Medium Manufacturing Enterprises in the state can now install solar systems above their sanctioned load. The Gujarat solar policy, which earlier had a capping of 50% of the sanctioned load on MSMEs installing rooftop solar, was removed after much consideration including a public redressal. The removal, however, comes with a catch. Let’s take a look at it along with the other amendments announced by the Gujarat Electricity Regulatory Commission (GERC) on 23rd January 2020, below:

The Good:

  1. The commission has revoked the capping of 50% for manufacturing enterprises falling under the MSME segment, which earlier prevented MSME Manufacturers in the state from installing rooftop solar systems more than 50% of the sanctioned load.
  2. Similar to the MSME Manufactures of the state, the limitation on the solar system size has also been removed for the residential consumers in the state, which earlier stopped them from installing a system above the sanctioned load.
  3. The capping of the cumulative capacity of solar PV systems allowed under a particular distribution transformer has been given relaxation in the amendments. The capacity has now been increased to a transformer’s full capacity over the earlier limitation of 65% of the total capacity.

The Bad:

  1. Even though the commission, in its amendment, has removed the installable solar system size capping for MSME Manufacturers, the commission has not included other industries in it. The prevalent capping of 50% of sanction load will continue to be effective in other MSME industries in the state.
  2. The rate at which the surplus energy generated from the solar system is transferred to the DISCOM via net-metering has now been reduced to INR 1.50 ~1.75 per unit from INR 6.5 per unit for all MSMEs including manufacturers. This change will have a severe impact on the benefits of net-metering for consumers in the category impacting their savings from solar.
  3. The removal of the installable capacity cap for the manufacturing industry in the MSME segment has been made subject to a 15 minutes settlement mechanism. Under this, for the enterprises installing a rooftop solar system above 50% of the sanctioned load, the energy accounting will be carried out on 15 minutes time block basis instead of a monthly basis. So, solar generation during non-operational days or non-operational hours within a day, when there is less or no consumption, would be credited at 1.5~2-0 Rs/unit instead of 6.5 Rs/unit(the earlier solar tariff), thereby cutting down on solar project Return on Investment and increasing Payback period.
  4. The rate of transferring surplus energy to the DISCOM has also been reduced for residential consumers in the state to INR 2.25 per unit, thereby will affect their savings as well.

MYSUN Take –

The amendment released by the commission is no doubt ambivalent in nature. While on one hand, the commission has omitted the capping on the installing capacity for manufacturing category, on the other hand, it has brought no relaxation to MSMEs falling in other categories. The reduction of solar tariff from the earlier equivalent to electricity tariff has further diminished benefits an MSME or a residential consumer can avail by going solar. Amendments with conditions as such are set to slow the acceptance of a clean source of energy that solar is. The provisions made do seem to make efforts to increase the capacity of solar energy in the state but then holds the potential back with many restraints.