GOVERNMENT OF KERALA

Abstract

POWER DEPARTMENT—KERALA SOLAR ENERGY POLICY 2013—

APPROVED—ORDERS ISSUED

POWER (PS) DEPARTMENT

G.O. (P) No. 49/2013/PD.

Dated, Thiruvananthapuram, 25th November 2013.

Read:—(1) Minutes of the meeting held on 29-6-2012, under the

Chairmanship of Hon’ble Minister (Power and Transport).

(2)

G.O. (Rt.) 160/2012/PD dated 4-8-2012.

ORDER

The State has substantial sources of renewable energy, viz, Solar, Wind,

Small Hydro Power, etc. The potential of Solar Power in the State is yet to be

exploited. In order to tap the vast potential of Solar Power in the State,

Government as per the minutes read as first paper above have decided to

formulate a Solar Policy for the development of Solar Power in the State. Based

on the decision at the above meeting, a Committee was constituted vide order

read as 2nd paper above for formulating the draft Solar Policy in the State.

2. Accordingly the Draft Solar Policy submitted by the Committee was put

on the website of ANERT calling for comments and suggestions. Based on the

comments from the Public, the members of the Committee and other experts in

the field, certain modifications were made in the draft policy.

Kerala Gazette No. 51 dated 24th December 2013.

PART I

3. Government have examined the draft Solar Policy so prepared in detail

and are pleased to approve the ‘Kerala Solar Energy Policy 2013’ as appended to

this Order.

By order of the Governor,

NIVEDITA P HARAN,

Additional Chief Secretary.

All Heads of Department’s/PSU’s

The Chairman, KSEB, Thiruvananthapuram.

The Director, ANERT, Thiruvananthapuram

The Director, EMC, Thiruvananthapuram

The Secretary, KSERC, Thiruvananthapuram

The Secretary, Kerala Legislature, Thiruvananthapuram

The Principal Accountant General (Audit), Thiruvananthapuram

The Accountant General (A&E), Thiruvananthapuram

The General Administration (SC) Department

The I and PR (Web and New Media) Department (For vide publicity)

The Stock file/Office copy.

KERALA SOLAR ENERGY POLICY 2013

Preamble

A forward looking Government needs to have a structured

approach to seriously evaluate the possibilities of harnessing renewable

energy sources and accord due weightage in a realistic manner for such

sources to be integrated into its overall energy generation strategies.

There is a popular perception that solar energy could be a key part of the

solution to the energy crisis in the State. To promote the systematic tapping

of the Solar Energy potential to the maximum, an appropriate policy frame

work is essential. This policy seeks to evaluate, in a realistic manner, the

possibilities of harnessing solar energy to optimal levels and to put in place the

necessary framework.

Low maturity level and high cost of the technology, non-compatibility

of transmission and distribution infrastructure, limitations on land

availability, inadequacy of fiscal incentives and entry of unscrupulous

elements into the field have been the reasons behind the very low penetration of

solar energy in the mainstream life of Kerala. The lack of easy off-the-shelf

availability of solar powered equipments with standardised quality and pricing is

another reason for its very low presence.

Solar energy is one of the major sources of renewable energy. As

improved technology becomes available and at a reasonable cost, the use of

Solar energy will gain acceptance. The negative impact that the actions of the

imposters and fly-by-night operators out to make illegal gains, has to be

strongly counter-acted by the governmental agencies working in the field of

renewable energy.

However at a macro level, Electricity Act 2003 promotes absorption of

renewable energy and mandates for specified consumption from renewable

sources in the area of every distribution utility. Accordingly Renewable

Purchase Obligation (RPO) and more specifically solar purchase obligations

have become mandatory recently. This at present is fixed at 3% of the total

consumption for RPO and out of which 0.25% shall be from the solar sources

alone, with annual escalation at 10% till the quantum from renewable reaches

10% of total purchase.

2. Vision

Vision is to mainstream the use of solar energy in the energy mix of Kerala

in an inclusive manner to ensure optimal usage of the available solar potential

in this region.

Mission

The Mission is to:

(i)

Increase the installed capacity of the solar sector in the State to 500MW

by 2017 and 2500 MW by 2030;

(ii)

Contribute to long term energy security of the State of Kerala as well as

ecological security by reduction in carbon emission;

(iii)

Define end users who can adapt solar in a big way and target them;

(iv)

Adopt a multi-pronged approach in targeting different groups of

consumers;

(v)

Deploy package of incentives and disincentives for identified groups;

(vi)

Adapt solar to trigger a paradigm shift in the usage of energy at the

micro and macro levels;

(vii)

Generate large direct and indirect employment opportunities in solar and

allied industries;

(viii)

Create skilled and semi-skilled man power resources for installation and

maintenance of the solar systems through promotion of technical and

other related training facilities;

(ix)

Promote entrepreneurs/startups industries/institutions in the State that are

engaged in the development of innovative solar based systems;

(x)

Create an R&D hub by establishment of institutional collaborations with

educational institutions, research centres, industries, utility, etc. for

working towards applied research and commercialization of nascent

technologies to accelerate deployment of various combinations of solar

power technologies and solar-based hybrid co-generation technologies

which will focus on improving efficiency in existing systems, reducing

cost of balance of system.

4. Title and enforcement

(a)

This Policy will be known as Kerala Solar Energy Policy, 2013.

(b)

The Policy will come into operation with effect from the date of

publication and will remain in force until superseded or modified by

another Policy.

(c)

State Government may undertake review of this Policy as and when the

need arises in view of any technological breakthrough or to remove any

inconsistency with Electricity Act 2003, Rules & Regulation made thereof

or any Government of India Policy/State Electricity Regulatory

Commission’s order.

5. Strategy of implementation

The strategies to achieve the policy objectives are outlined as below:

1. Supply side interventions

1.1

Off-grid roof top systems at demand points/consumer premises like

solar inverter installations, solar powered cellular towers, display boards/

hoardings, etc.

1.2

Promoting conversion of existing inverter installations to solar power by

way of providing suitable incentive schemes.

1.3

Grid connected systems partly meeting requirements at demand points and

feeding to the grid.

1.4

Off site generation at locations like canals, reservoirs (floatovoltaic),

wastelands, quarries, etc.

1.5

Off shore generating plants-primarily solar-thermal systems.

1.6

The off-grid solar applications shall be promoted for replacement of

diesel-based generator sets. Guidelines and incentives issued by MNRE

from time to time shall be followed in the State for promotion of

decentralized and off-grid solar applications.

1.7

Empanelment of Suppliers/system integrators as per the guidelines in

force for implementation of the solar systems envisaged in the policy.

1.8

Standards for grid connectivity at LT level will be notified for the State to

promote decentralized solar power generation, which will remain applicable

until national standards are notified and adopted by the State.

1.9

Since large scale absorption of solar electricity into the system is

impossible without sufficient storage, a program for exploring and

developing Pumped Storage schemes in the state shall be promoted as

part of the Solar Policy.

1.10

Since developing Balance of Supply (BoS) plants is essential to tap the

employment opportunities presented by Solar to the fullest measure, the

state will promote public sector enterprises like Keltron etc. to manufacture

BoS plants.

2. Promotion of Solar Thermal Collectors:

2.1 Solar Water Heating System (SWHS):

The State will promote Solar Water heating system by adopting the key

strategy of making necessary policy changes for mandatory use of solar water

heating system (SWHS) in the following potential categories:—

(a)

All Industrial buildings where hot water is required for processing.

(b)

All Govemment/Private Hospitals and Nursing homes.

(c)

All Hotels, Resorts, Motels, Banquet halls, Catering Units and Industrial

Canteens.

(d)

Individual Residential buildings with an area of 3000 sq feet and above

within the limits of Municipality/Panchayat/Corporations including

Housing Complexes set up by Group Housing Societies/Housing

Boards.

(e)

Hostels in educational institutions/Pvt. Hostels, Testing Labs/Laboratories

of Educational Institutes/Hospitals.

(f)

Barracks of Police, Paramilitary Forces and Jails.

(g)

Private/Government Guest Houses, Govt. Tourist Hotels, Inspection

Bungalow, Circuit House and retiring rooms of Railways.

(h)

Health Centres, Sports Complex.

(i)

All weather swimming pools.

2.2 Solar Steam Systems:

The State will promote the use of solar steam systems for wider

applications such as

(a)

Community cooking in residential institutions/industrial mess/Hotels/

Barracks/Mid day meal program/Hospitals etc.

(b)

Industrial application of steam in process industries such as Textile/Food

industry etc.

(c)

Laundries

2. 3 Industrial Applications:

The State will promote the use of Solar Water Heating System (SWHS),

Solar Steam Systems etc. for Industrial applications such as:

(a)

Process requirements of hot water.

(b)

Process requirements of steam.

(c)

Pre-heating applications in variety of Industries.

(d)

Drying applications.

(e)

Steam press and laundry units

(f)

Solar steam cooking applications in industrial mess/hotels etc.

3. Financing the projects

3.1

For off-grid systems the policy seeks to ensure bank finance at attractive

rates and provide generation based incentives rather than capital

subsidies to ensure that the systems are installed, maintained and

continue to remain functional. The existing capital subsidies shall be

restructured appropriately

for the same.

3.2

For grid- connected systems Government itself by way of setting an

example would initiate a programme by which all public buildings are

provided with generation facilities using appropriate technology options.

Here also rather than an EPC mode of implementation, a design, build,

operate and transfer scheme with annuity payments shall be preferred. As

the Load cycle of the government offices match with that of the solar

plants, they are fitting cases for solar application. Policy urges all the

concerned to make use of the roof top and premises to install solar

plants to match maximum demand of the concerned office, within a period

of 2 years time. A panel of implementing agencies and pro-rata costs per

kilo watt shall be prepared and each office/department can choose a

developer for implementing this scheme.

3.3

For grid - connected systems in non-Government buildings/premises the

incentives shall be on the basis of net metering, feed-in tariff and

Renewable Energy Certificate mechanism, the appropriate tariff system

being decided by following due procedure.

3.4

Grid - connected systems will be promoted for domestic consumers in a

phased manner after formulating grid connection standards for LT

distribution in line with this policy. In this regard cluster wise installations

will be given suitable incentives on a conditional basis for adopting solar

installations.

3.5

Regarding floatovoltaic and public place installations a wider community

ownership model with direct financial stake by the public shall be

encouraged.

3.6

For logistically difficult and technically challenging options like

off-shore generating plants, projects shall be structured on the basis of

competitive bidding in IPP mode.

4. Building Transmission and Distribution Infrastructure.

4.1

Safety/quality protocols for all such installations shall be worked out in

detail at international standards. For this the capability of academic

institutions both within and outside the country shall be leveraged.

4.2

This whole initiative would also be structured to improve the quality of

the grid in general with specific focus on evolving nano/community grids

working on smart grid principles.

4.3

Evolving standards for grid connectivity at different voltage levels.

4.4

Notifying User Manual/guidelines on solar application - leveraging

Internet Communication Technologies (lCT), Social media etc., for

propagation.

4.5

Integrating with no load shedding campaign.

4.6

Creation of mechanisms like Battery banks, centralized banking of energy

etc. for decentralized distributed generation of infirm energy.

5. Industry tie-ups

In the case of grid-tie systems, only components complying with national

or international standards as approved by CEA can be used. But in the case of

non-subsidised off-grid systems, there are currently no such regulations. It is

proposed to bring about licensing for all solar photovoltaic systems and

manufactures to be installed in Kerala. A certification and testing facility would

be set up. Industries based in Kerala, including system integrators will have to

obtain licensing from designated authority (Chief Electrical Inspectorate) to be

eligible to install systems and components meeting approved specifications or

standards. For industries from outside the State, channel-partner status or

recognition of MNRE (Govt. of India) would be mandatory.

6. Legal and regulatory framework

6.1

Support the formulation of regulatory environment encouraging the

common

man more towards solar applications

6.2

Legally enforcing use of electricity from solar source in specified sectors

of energy use.

6.3

A tariff incentive for consumers opting for solar generation shall be

offered

with respect to non-solar consumption subject to prefixed levels

of usage.

6.4

Incentive for people’s representatives/panchayats for promoting solar

installations and street light optimization.

6.5

Incentive schemes for conversion of existing inverter installations to solar

based ones.

6.6

Solar Procurement Obligation (SPO) will be mandated for Commercial

consumers with more than 20kVA connected load, LT Industrial with more

than 50kVA connected load and for all HT & EHT consumers in a phased

manner. All HT/EHT consumers shall have to procure 0.25% of their

energy consumed through SPO till March 2015 with 10% increase every

year. From April 2015 onwards the same shall be applicable for commercial

consumers and LT industrial as per the criteria mentioned above. The

same shall be made applicable for high consuming domestic consumers i.e.

more than 500 units per month at a later stage.

The above obligated consumers may fulfill their SPO by

Buying equivalent to or more than their SPO from third party

developers of Solar Power projects in the State of Kerala.

Buying RECs generated by Solar Power projects in the State

equivalent to or more than their SPO.

Purchasing power from KSEB at Solar Tariff.

Consumers desirous of availing SPO exemption by captive solar

generation shall necessarily install separate meters to measure

captive generation.

6.7

All new domestic buildings having a floor area in between 2000 sq.ft. to

3000 sq.ft. should install at least 100 litres solar water heater and 500W

solar PV system. All the buildings above 3000 sq.ft. should install 100 litre

solar water heater and at least 1000W solar PV system.

6.8

In the case of residential flats/apartments 5% of the energy usage for

common amenities should be from Solar.

6.9

In the potential categories to be notified like star hotels, hospitals,

residential complexes, with more than 50 kVA total connected load, the use

of solar water heating system shall be made mandatory.

7. ‘Feed-in-Tariff’, ‘Net Metering’ and ‘Pooled Cost of Energy’ of

the utility applicable to Solar energy.

Kerala State Electricity Regulatory Commission (KSERC) will notify the

normative Feed-in-Tariff of solar power for procurement by KSEB in case of

off-site commercial installations. For all agencies that consume grid power

and have installed solar installations with some form of Government subsidy

only net metering shall be applicable. However for consumers with monthly

consumption of 30 units and below efforts shall be made involving welfare

departments of Government and LSGIs to solar enable them and in such

cases a special feed-in-tariff scheme shall be notified.

KSERC will also annually notify the Pooled Cost of Power Purchase of the

utility as applicable to solar power sector, as required under CERC (Terms and

Conditions for Recognition and Issuance of REC for Renewable Energy

Generation) Regulations 2010, to facilitate investors tap the Renewable Energy

Certificate market.

8. Request for connectivity

Plants requiring grid connectivity shall make application to the utility as per

the standards in place and the utility shall provide connectivity if found

feasible as per the interconnection standards in practice, after collecting a

processing fee.

9. Procurement Policy on grid connected solar plant.

KSEB will have first right of refusal for the power from the plants established

in private lands/premises, except in cases of self/captive use. In such cases

the sale of power to KSEB shall be as at a tariff decided by KSERC or at the

pooled cost of the power purchase of the utility or net metering.

10. Reservation of land for the renewable project

The prime responsibility for identifying the land for renewable energy

shall be with the developer. Government shall endeavor to assess clearly

the land suitable for the development of solar installations in the

possession of either Government, private or tribal individuals. For tribal

lands, in addition to the lease rentals, a revenue (not profit) sharing

mechanism for the land owner is envisaged as follows.

The willingness of the land owner is mandatory.

The land ownership rights shall continue to fully vest with the original

owner. The developer shall have only rights to setup and operate the

project. The land owner will have the right to use land for agricultural

purpose.

Revenue (not profit) sharing based on the power generated, possibly in

the range not below of 5% is envisaged.

The payment of share of revenue shall be made directly to the bank

account of the land owner. For this purpose a tripartite agreement has to

be entered into among the developer, the land owner and the KSEB.

Only lands which do not have an immediate productive use shall be thus

identified/permitted.

11. Settlement of Energy charges

All settlement associated with the energy charges for the grid connected

plant between the developer and the utility shall be settled on a monthly basis.

12. Incentives and facilities under this policy

(a) Evacuation facility

KSEB shall create necessary evacuation facility beyond the pooling station

for the projects with capacity less than or equal to l0MW. For higher

capacity plants, KSEB shall construct the evacuation facility on deposit

work basis.

(b) Open access Charges

There shall be no open access charges for solar projects for wheeling the

power within the state.

(c) Wheeling charges and T&D losses

Wheeling charges and T & D losses will not be applicable for the Captive

Solar generators within the state.

(d) Exemption of electricity Duty

The energy generated from the plants under this policy shall be fully

exempted from the Electricity duty.

(e) Banking facility

Conditional Banking facility shall be available to captive generators after

considering system constraints.

(f) Facilitating for subsides from MNRE

ANERT being the nodal agency for the non conventional energy in the

State, shall act as a facilitator for the developer for making available the

subsidy from MNRE or any other central agency.

13. Agencies involved and their role under this policy

(a) State Level Empowered Committee (SLEC)

Administration of this policy shall be entrusted with the State Level

Empowered Committee (SLEC) constituted for that purpose. The committee

shall have the following constitution.

(i)

Additional Chief Secretary/Principal Secretary (Power), GoK-Chairman

(ii)

Chairman, KSEB

(iii)

Member (Generation Projects), KSEB

(iv)

Member (Transmission & Generation Operations), KSEB

(v)

Member (Distribution), KSEB

(vi)

Director, EMC

(vii)

Director, ANERT - Convenor

(viii)

Exe, Vice President of the Kerala S&Y Council (KSCSTE)

(ix)

Director of Industries

(x)

Land Revenue Commissioner

(xi)

A representative from Law Department

(xii)

An expert from Government SPB (nominated)

The Committee shall have the following responsibilities:—

(a) To suggest necessary amendments to the policy to remove

difficulties in implementing the policy;

(b) Give approval for the developer requiring land allocation from the

government;

development of renewable energy;

(d) Specifying the time schedule of eligible projects for which land had

been allocated;

(e) Empowered Committee shall do an yearly review and publish a

document;

(f)

Any other function which may found necessary.

(b) Agency for Non-conventional Energy and Rural Technology (ANERT)

ANERT is the nodal agency for the non conventional energy in the State.

In administering this policy ANERT will have the following responsibilities:

(i)

To act as the linking agency between all the stake holders in matters

related with this policy;

(ii)

To empanel the system providers in solar technology after due

process;

(iii)

To assess the solar energy potential in the State and prepare area

map of renewable energy potential of the State; .

(iv)

To act as the nodal agency for the Off-grid solar applications in the

State;

(v)

To facilitate in providing incentives and subsidies to the

investor in the off grid application;

(vi)

To directly set up solar energy installation manufacturing units as

paradigm centres;

(vii)

To be part of the joint mechanism with KSEB in the administration of

Roof-Top solar installations with grid connectivity;

(viii)

To short list and maintain the database on the system provider in the

case of solar plants with LT connectivity and prescribe maximum

permissible installations under each system provider in proportion to

their financial strength and infrastructure capability.

(c) System Provider/Integrator

Being new technology and considering safety requirements due to

complexity of the system, the assistance from the system provider is

essential through out the life period of the plant. This is necessary to instill

confidence among potential small scale investors and roof top owners in

the initial phase of technology adoption, which could be reviewed

periodically based on the maturity achieved by the technology and the

level of deployment. Thus the system provider will have the following

responsibilities:

(i)

To register itself with the ANERT through their due process to

enable itself to provide service in the state.

(ii)

On completion of the project, enter into a tri-partite agreement

involving also the facility owner of the roof top solar plant and

KSEB, ensuring continued technical support to the plant.

(iii)

Conduct periodical maintenance to the plant as per the standards and

provide report of the same to the investor as well as to KSEB.

(iv)

In case investors under him opt for REC mechanism, to play the role

of facilitator for the purpose.

(d) Kerala State Electricity Board

Being the integrated utility on transmission and distribution in the state,

KSEB shall have the following responsibility under this policy:

(i)

To mainstream solar applications by pioneering installations in

canals, reservoirs (floatovoltaic), public spaces, etc.;

(ii)

To evolve and update standards of grid-connectivity for the Solar

Power Systems at LT and HT level and notify to promote

decentralized solar power generation which would also enable the

State to gain maximum benefit from the 13 FC allocation and other

Financial allocation.

(iii)

To assess the feasibility and provide connectivity to grid connected

solar projects in a timely manner;

(iv)

Resort to tariff based bidding for solar energy in meeting RPO, if

required;

(v)

To develop necessary transmission infrastructure based on a