12 Jan 2021

Gujarat Solar Policy 2021 Updates

Chief Minister Vijay Rupani announced Gujarat’s new solar power policy on 22/12/2020, Tuesday. The new policy is expected to be valid for the next five years. The policy stands out for the extra freedom it gives to generators, with a focus on both the state and producers benefiting from lower costs.

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The big winner should be industry, with power costs, currently at Rs 8 per unit, targeted to be brought down by 50 percent by using renewable energy.

Among the key points is the move to remove the ceiling on installed capacity. The new policy also allows consumers to lease their premises or roofs to third parties for setting up plants to generate and consume power in the same premises. In the same proportion of their ownership of the plant.

Earlier, the cap on the solar project was 50 per cent of the sanctioned load or contracted demand, which has now been removed, so now any entity can install a solar project without any capacity ceiling.

The security deposit by a developer to a power distribution company (DISCOM), has been reduced from Rs 25 lakh per MW to Rs 5 lakh per MW.

The new policy promises that the state would purchase surplus energy from residential and micro, small and medium enterprises consumers after setting off against their consumption. This means that they would be allowed to sell their surplus power at a tariff of Rs 2.25 per unit. (Gross Metering). This move, while a net positive, may not go down well with smaller producers, as net metering was a real attraction for them. This is possibly offset only by the fact that the state has done a much better job of subsidising smaller installs.

For other consumers, the surplus power will be purchased at 75 percent of latest tariff discovered and contracted by GUVNL through a competitive bidding process for non-park-based solar projects in preceding six months which shall remain fixed for the project life of 25 years.

The policy estimates savings to residential consumers in the range of Rs 1.77 – Rs 3.78 per unit, industrial and commercial (captive) in the range of Rs 2.92 – Rs 4.32 per unit, and industrial and commercial (third-party sale) in the range of Rs 0.91 – Rs 2.30 per unit.