Project Category I: Solar Power Projects for Sale of Power to Madhya Pradesh Power Management Company Ltd. (MPPMCL)
Objective:
- To encourage solar power developers to set up solar energy projects in Madhya Pradesh with the aim of selling the generated power to Madhya Pradesh Power Management Company Ltd. (MPPMCL) or any other distribution company (DISCOM) in the state.
Key Provisions of Project Category I
- Eligible Project Developers
- Developers interested in setting up solar power projects for direct sale of power to MPPMCL.
- Companies, joint ventures, or consortiums that are capable of developing, financing, and operating solar power plants.
- The projects can be grid-connected and include technologies such as Solar Photovoltaic (PV) and Concentrated Solar Power (CSP).
- Project Size and Capacity
- There is no upper limit on the size of the project capacity under Category I. Developers are free to propose project capacities as per their technical and financial capabilities.
- The minimum project size, however, must be 5 MW for grid-connected solar PV projects.
- For concentrated solar power (CSP) plants, the minimum project size must be 50 MW.
- Power Purchase Agreement (PPA)
- Power Purchase Agreements (PPAs) will be executed between the project developers and MPPMCL (or any other designated DISCOM).
- The PPA will generally have a tenure of 25 years from the date of commercial operation (CoD) of the project.
- Tariff Structure:
- The tariff for solar power projects will be determined through a competitive bidding process, in which developers submit their bids based on the tariff they are willing to accept for the sale of power.
- Projects awarded through the bidding process will sell power to MPPMCL at the quoted tariff for the duration of the PPA.
- Land Allocation
- The government of Madhya Pradesh will facilitate the acquisition of land for solar projects.
- Developers can either:
- Acquire private land on their own or,
- Lease government land at concessional rates, particularly in solar parks designated for solar power projects.
- Solar Parks: Special provisions exist for the development of solar parks, which will include essential infrastructure such as transmission lines, access roads, water supply, etc. The Madhya Pradesh Urja Vikas Nigam Ltd. (MPUVNL) will help facilitate land allocation within these parks.
- Transmission and Evacuation
- The policy mandates that power from solar projects under Category I will be evacuated to the nearest grid substation.
- The Madhya Pradesh Power Transmission Company Ltd. (MPPTCL) will ensure the availability of the transmission network for grid-connected projects.
- Developers are responsible for the cost of creating the necessary infrastructure to connect their projects to the grid, including transmission lines from the project site to the nearest substation.
- Evacuation Priority: Solar power projects under this category will be given priority in evacuation and integration into the grid.
- Subsidies and Incentives
- Capital Subsidies: Developers may be eligible for capital subsidies under various national schemes such as the Jawaharlal Nehru National Solar Mission (JNNSM).
- Renewable Purchase Obligations (RPOs): Power purchased from solar projects will help DISCOMs meet their RPO targets as mandated by the Madhya Pradesh Electricity Regulatory Commission (MPERC).
- Exemptions and Rebates:
- Exemption from Entry Tax: All solar power equipment and machinery required for setting up the project will be exempt from entry tax.
- Electricity Duty Exemption: Electricity generated from solar power projects will be exempt from electricity duty.
- Banking of Power: Solar power developers will be allowed to bank surplus energy with the grid and withdraw it at a later stage (typically within the same financial year).
- Project Timelines
- Developers must adhere to specific timelines for project development to ensure efficient commissioning.
- The typical timeframe for project commissioning is 12-18 months from the date of signing the PPA.
- Delays beyond the specified period may attract penalties unless justified by external factors such as delays in government approvals or force majeure events.
- Financial Assistance
- While direct financial assistance from the state government is not guaranteed, developers can apply for funding through various central government schemes or international climate funds.
- The government also encourages banks and financial institutions to offer priority lending for renewable energy projects, making financing more accessible for solar developers.
- Environmental and Regulatory Compliance
- Projects must comply with all relevant environmental and regulatory guidelines, including those issued by the Ministry of Environment, Forest, and Climate Change (MoEFCC).
- Developers are required to conduct an Environmental Impact Assessment (EIA) for projects above a certain capacity threshold and obtain all necessary environmental clearances.
- The use of water resources for solar thermal projects (CSP) should be carefully managed, with developers encouraged to adopt water-saving technologies.
- Solar Renewable Energy Certificates (RECs)
- Developers can generate Solar Renewable Energy Certificates (SRECs) under the Renewable Energy Certificate (REC) Mechanism. These certificates can be traded on exchanges approved by the Central Electricity Regulatory Commission (CERC), thus providing an additional revenue stream.
- MPPMCL can also purchase these certificates to meet their renewable purchase obligations.
- Local Employment and Skill Development
- The policy encourages developers to prioritize local employment in project areas, particularly in the construction and operation phases of the project.
- Skill development programs are to be implemented in collaboration with local authorities to train the workforce in solar energy technologies, fostering local economic growth.
Key Benefits for Developers
- Favorable Regulatory Environment: The policy provides a clear and supportive framework for solar project development, backed by long-term PPAs and government incentives.
- Subsidies and Tax Exemptions: Generous exemptions, particularly from entry tax and electricity duty, reduce upfront costs for developers.
- Grid Connectivity: Priority evacuation for solar power ensures smoother grid integration, while support from MPPTCL mitigates transmission issues.
- Land Availability: Easy access to land, especially within designated solar parks, accelerates project timelines.
Challenges and Considerations
- Land Acquisition: Despite the policy’s facilitation of government land leases, securing large tracts of land for solar parks may face delays, especially in densely populated areas.
- Transmission Infrastructure: While MPPTCL provides transmission support, grid congestion and transmission line availability could impact the timely commissioning of projects in remote areas.
- Tariff Viability: Competitive bidding may drive down tariffs, which could affect project profitability, especially for developers new to the market or lacking experience in large-scale projects.
Conclusion
The Project Category I under the Madhya Pradesh Solar Power Policy 2012 offers a lucrative opportunity for solar developers to participate in the state’s renewable energy transition by selling power to MPPMCL. With government support, incentives, and a structured PPA framework, the policy creates a conducive environment for investment and project development. However, developers must carefully manage land acquisition, tariff bidding, and transmission challenges to ensure project success. This policy aligns well with Madhya Pradesh’s renewable energy goals and contributes significantly to India’s broader solar mission.
