COMPARITIVE STUDY OF SOLAR POLICIES OF INDIA AND ABROAD& MODEL SOLAR POLICY FOR MAHARASHTRA AND FINANCIAL MODELING OF A SOLAR PV PLANT

Summer Internship Report On COMPARITIVE STUDY OF SOLAR POLICIES OF INDIA AND ABROAD& MODEL SOLAR POLICY FOR MAHARASHTRA AND FINANCIAL MODELING OF A SOLAR PV PLANT UNDER THE GUIDANCE OF Mrs. Manju Mam, Director(MS), CAMPS, NPTI, Faridabad & Mr. Vijay L. Sonavane, Member (Technical) MERC, Mumbai Submitted By: Anish Kumar Deb NPTI, MBA Power Management (Under Ministry of Power, Govt. of India) Maharishi Dayanand University, Rohtak August 2013

DECLARATION I, Anish Kumar Deb, Roll no. 14 / Semester 3 rd / Class of 2012-14 of the MBA (Power Management) of the National Power Training Institute, Faridabad hereby declare that the Summer Training Report entitled: COMPARITIVE STUDY OF SOLAR POLICIES OF INDIA AND ABROAD& MODEL SOLAR POLICY FOR MAHARASHTRA AND FINANCIAL MODELING OF A SOLAR PV PLANT is an original work and the same has not been submitted to any other Institute for the award of any other degree. A Seminar presentation of the Training Report was made on.. and the suggestions as approved by the faculty were duly incorporated. Presentation In charge (Faculty) Signature of Candidate Countersigned Director/Principal of the Institute

ACKNOWLEDGEMENT Learning experience is like no other, but to learn one seeks a teacher, a guide, and I found all of these in MR. Vijay L. Sonavane (MEMBER MERC) who were my project guide during my stay at MAHARASHTRA ELECTRICITY REGULATORY COMMISION. I would also like to thank MR. Anant Sant (DY DIRECTOR, TECHNICAL, MERC) for the valuable teachings, Sir the inputs given by you will always be with me. I also express gratitude towards MRS. Sarita Thakur (DY DIRECTOR, ADINISTRATION AND FINANCE, MERC)for coordinating administrative activities and other efforts. I would like to thank MR. Amit Chilwe (REGULATORY OFFICER, MERC) who helped me throughout my learning of each and every aspect. His guidance and support made the learning easy and enjoyable. I take this opportunity to express my sincere thanks to MRS. Megha Singhal (REGULATORY OFFICER(FINANCE), MERC)who helped me and supported me an guided me. I would like to each and every person in MERC who helped me and contributed in my project. I also extend my thanks to all the faculty members and my batch mates in CAMPS (NPTI), for their support throughout the course of internship. THANK YOU ALL.

EXCECUTIVE SUMMARY COMPARITIVE STUDY OF SOLAR POLICIES It is a known fact that Sun is the ultimate source of energy and mankind has been harnessing Sun s energy ever since the dawn of civilization. In modern era electricity has become fundamental need of every human-being and the demand of it is rising by the day. The world has awakened towards the need of alternate sources of electricity; hence almost all major countries are coming up with policies to attract investors and industrialists. A study of federal policies, regulations and incentives given in countries namely GERMANY, ITALY, CHINA, UNITED STATES, JAPAN, FRANCE, AUSTRALIA and UNITED KINGDOM was done during the training period. To unite the effort towards reducing environmental pollution, nations united and formed Kyoto protocol in which inter-country methods were designed to fulfil the binding target set. This report contains the provisions and important statements in the Indian federal legislative documents relating to solar/renewable energy. Comparative study of rules, regulations, policies and tariff components related to solar technologies has been done of the states of India namely GUJARAT, RAJASTHAN, KARNATAKA, MADHYA PRADESH, ANDHRA PRADESH, TAMIL NADU and CHATTISGARH. Pro s and Con s of state policies and regulations are mentioned from a developer s point of view after comparing them on the basis of parameters namely eligible producer, land allotment, operative period, sale of power and tariff, wheeling, banking of electricity, power, evacuation & grid interfacing and incentives & general. The project proceeds with MERC initiative to develop solar power in Maharashtra. A model solar policy is been prepared during the training period which may be helpful to encourage more and more solar power generators across the state of Maharashtra. Last but not the least a financial modelling of a Solar PV plant has been prepared for a capacity of 1MW to determine various financial indicators i.e. IRR, NPV, DSCR and various other parameters has been taken in to account for the project viability of a Solar PV plant.

Contents 1. GLOBAL SOLAR POWER SCENARIO... 1 2. COUNTRY WISE SOLAR POWER INSTALLATIONS ACROSS THE WORLD... 1 3. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER... 3 3.1 UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE... 3 3.2 KYOTO PROTOCOL... 3 4. POLICIES ADOPTED BY DIFFERENT COUNTRIES TO DEVELOP SOLAR POWER GENERATION... 4 4.1 GERMANY... 4 4.2 ITALY... 5 4.3 CHINA... 6 4.4 UNITED STATES... 7 4.5 JAPAN... 8 4.6 FRANCE... 9 4.7 AUSTRALIA... 10 4.8 UNITED KINGDOM... 11 5. INDIA S SOLAR POWER SCENARIO... 12 6. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER... 13 6.1 ELECTRICITY ACT 2003... 13 6.2 NATIONAL ELECTRICITY POLICY 2005 (NEP)... 14 6.3 NATIONAL TARIFF POLICY 2006 (NTP)... 14 6.4 NATIONAL ACTION PLAN ON CLIMATE CHANGE... 14 7. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION... 16 8. REC MECHANISM OVERVIEW:... 20 9. OPERATIONAL FRAMEWORK OF REC MECHANISM... 21 10. STATE WISE RPO (SOLAR & NON SOLAR)... 22 11. STATEs SOLAR POLICIES... 24 11.1 GUJARAT SOLAR POLICY 2009... 24 11.2 RAJASTHAN SOLAR POLICY 2011... 26 11.3 KARNATAKA SOLAR POLICY... 31 11.4 MADHYA PRADESH SOLAR POLICY 2012... 33 11.5 ANDHRA PRADESH SOLAR POLICY 2012 & FIRST AMENDMENT... 37

11.6 TAMIL NADU SOLAR POLICY 2012... 39 11.7 CHATTISGARH SOLAR POICY 2012-17... 42 12. CONCLUSION... 44 13. MAHARASHTRA STATE SOLAR POWER SCENARIO... 45 14. LEGAL EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER... 46 15. MERC INITIATIVE TO DEVELOP RENEWABLE ENERGY... 46 15.1 Renewable Purchase Obligation... 46 15.2 Renewable Tariff... 47 16. MAHARASHTRA MODEL SOLAR POLICY... 48 17. FINANCIAL MODELLING (SOLAR PV PLANT)... 54

1. GLOBAL SOLAR POWER SCENARIO Solar energy has experienced an impressive technological shift. While early solar technologies consisted of small-scale photovoltaic (PV) cells, recent technologies are represented by solar concentrated power (CSP) and also by large-scale (PV) systems that feed into electricity grids. The costs of solar energy technologies have dropped substantially over the last 30 years. The rapid expansion of the solar energy market can be attributed to a number of supportive policy instruments, the increased volatility of fossil fuel prices and the environmental externalities of fossil fuels, particularly greenhouse gas (GHG) emissions. Germany is the world's top photovoltaic (PV) installer, with a solar PV capacity as of December 2012 of more than 32.5 gigawatts (GW).The German new solar PV installations increased by about 7.6 GW in 2012, and solar PV provided 18 TWh (Trillion kilowatt-hours) of electricity in 2011, about 3% of total electricity. Some market analysts expect this could reach 25% by 2050. The overall capacity installation across the world has increased from 39.78 GW in 2010 to 102.024 GW in 2012. It is visible that though energy usage from renewables is increasing but still the majority of energy is supplied by fossil fuels and there is a long time before world becomes independent from fossil-fuel usage. There is a need of continuous improvement and implementation of renewable technologies. 2. COUNTRY WISE SOLAR POWER INSTALLATIONS ACROSS THE WORLD COUNTRY 2010(MW) 2011(MW) 2012(MW) GERMANY 17320 24875 32509 ITALY 3502 12764 16987 CHINA 893 3093 8043 UNITED STATES 2519 4383 7665 JAPAN 3617 4914 6704 FRANCE 1025 2831 3843 AUSTRALIA 504 1298 2291 UNITED KINGDOM 72 1014 1831 INDIA 189 461 1686 REST OF WORLD 10137 14051 20465 TOTAL 39778 69684 102024

35000 30000 25000 20000 15000 10000 5000 0 2010(MW) 2011(MW) 2012(MW) The 370 MW Ivanpah Solar Power Facility, located in California's Mojave Desert, is the world s largest solar thermal power plant (SINGLE TOWER TYPE) project currently under construction. The Solana Generating Station is a 280 MW solar power plant which is under construction about 70 miles (110 km) southwest of Phoenix, Arizona.

3. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER 3.1 UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE In 1992, countries joined an international treaty, the United Nations Framework Convention on Climate Change, to cooperatively consider what they could do to limit average global temperature increases and the resulting climate change, and to cope with whatever impacts were, by then, inevitable. By 1995, countries realized that emission reductions provisions in the Convention were inadequate. They launched negotiations to strengthen the global response to climate change, and, two years later, adopted the Kyoto Protocol. The Kyoto Protocol legally binds developed countries to emission reduction targets. The Protocol s first commitment period started in 2008 and ends in 2012. Till date there are total 195 parties. 3.2 KYOTO PROTOCOL The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. The detailed rules for the implementation of the Protocol were adopted at COP 7 in Marrakesh in 2001, and are called the Marrakesh Accords. In Kyoto protocols three mechanisms namely emission trading, clean development mechanism (CDM) and Joint implementation (JI) with targets for reduction in overall GHG emissions were stated and accepted by the parties (nations). India acceded to the Kyoto Protocol in August 2002 and one of the objectives of acceding was to fulfill prerequisites for implementation of Clean Development Mechanism projects, in accordance with national sustainable priorities, where-under, a developed country would take up greenhouse gas reduction project activities in developing countries. MoEF is pursuing capacity building projects with GTZ (Gesellschaft für Technische Zusammenarbeit), UNDP (United Nations development programme) and ADB (Asian Development Bank). CDM is explained in detail in the later part of this report.

4. POLICIES ADOPTED BY DIFFERENT COUNTRIES TO DEVELOP SOLAR POWER GENERATION 4.1 GERMANY 35000 30000 25000 20000 15000 10000 5000 0 SOLAR INSTALLED CAPACITY IN MW 32643 25039 17554 10566 4170 6120 2007 2008 2009 2010 2011 2012 INSTALLED CAPACITY In the electricity sector, as of July 2010, feed-in tariffs for solar PV have been lowered substantially while the incentive for auto-consumption (captive) was increased. Feed-in Tariffs in c /kwh Installations not attached to a building Installations attached to a building Agricultural land Sealed or Conversion land Certain other land 30 kw >30 kw and 100 kw >100 kw and 1,000 kw >1,000 Kw 0.0 22.07 21.11 28.74 27.33 25.68 21.56 In addition, the degression rates where increased for 2011 and a flexible breathing cap was introduced in order to adapt the degression rates to PV market development. Different additional benefits are granted for certain characteristics, such as innovative technology, the fulfilment of sustainability criteria, auto-consumption or high efficiency. New installations are supported at different rates to modernized or retrofitted installations. Investment costs for commercial systems (incl. Planning and installation) can be depreciated over a 20 year period and other costs can be considered as operations cost Commercial systems are VAT exempted (VAT is at 19% in Germany) In exceptional cases for some commercial systems which operate closely to producing or manufacturing facilities 12.5-27.5 % of investment can be claimed as tax credit.

4.2 ITALY COMPARITIVE STUDY OF SOLAR POLICIES 20000 15000 10000 SOLAR INSTALLED CAPACITY IN MW 16361 12783 INSTALLED CAPACITY 5000 0 3470 87 432 1144 2007 2008 2009 2010 2011 2012 Feed-in tariffs (15 years) for electricity produced by renewable energy plants with a maximum power output of 1 MW (0.2 MW for wind energy), as an alternative to the green certificates; An incentive scheme ( Conto Energia ) for photovoltaic and solar thermodynamic plants through the feed-in premium mechanism.this defines a premium for PV production differentiated by size and level of architectural integration. The premium is constant for 20 years. The electricity produced can be used for own consumption, sale, or exchange with the network (net metering up to 200 kw installed capacity). The initial premiums of 2007 have been reduced by 2% per year, and will be reduced by a further 2% for plants beginning production in 2010. An obligation has been introduced to install PV on new buildings: A minimum of 1 kw for each residential unit has to be covered by RES and 5 kw in industrial buildings larger than 100 m 2. Electricity suppliers can fulfil their obligation using tradable Green Certificates, issued by GSE, the body in charge of collecting resources from electricity suppliers and giving them to the producers.the quota had an annual increase of 0.35%, from 2004 to 2006, and of 0.75% from 2007 to 2012, though a change in the support system is expected in 2011. Italy s Conto Energia V solar incentive programme will expire on 6 July 2013 having reached its cap of 6.7 billion and therefore cease any further investment into solar power.

4.3 CHINA COMPARITIVE STUDY OF SOLAR POLICIES 10000 8000 SOLAR INSTALLED CAPACITY IN MW 8300 6000 4000 2000 0 3300 100 140 300 800 2007 2008 2009 2010 2011 2012 INSTALLED CAPACITY Chinese government has employed most internationally recognized policies to stimulate the development of renewable energies, e.g., mandatory renewable portfolio standards, subsidies, special development funds, feed-in tariff, tax credits and etc. Renewable Energy Law of People s Republic of China was first launched in 2006, followed by Medium and long term development plan for renewable energy development and then The eleventh five-year plan for renewable energy development in 2008. According to these programs andregulations, the proportion of renewable energy in China s primary energy consumption will be increased to 10% by 2010, and 15% by 2020. The subsidy s upper limit was set at 20 Yuan/Wp for the year of 2009, which can cover 30-50% the production cost of the manufactures. This can be interpreted as a strong policy driver for solar energy utilization, especially PV utilization. Golden Sun Project aiming at accelerating the PV industries was launched in July, 2009. The subsidies can go as high as 50% of the initial investments for the on-grid electricity and its dispersion systems, 70% for the independent electricity generating system for the remote areas. If a national FIT policy for utility scale-solar plants is adopted, it is predicted that this new type of solar policy will drive much faster growth in the Chinese solar market as compared to China s existing roof-top subsidy and Golden Sun program, which focuses on remote off-grid installations. It is expected that the tariff will fall between US $0.16 and US $0.22 per kilowatt hour of electricity produced at large-scale photovoltaic arrays.

4.4 UNITED STATES COMPARITIVE STUDY OF SOLAR POLICIES 5000 4000 SOLAR INSTALLED CAPACITY IN GW 4342 3000 2000 1000 612 864 891 1212 1818 INSTALLED CAPACITY 0 2007 2008 2009 2010 2011 2012 US proposed a mix of incentives that includes government-guaranteed loans, a mandatory solar portfolio standard for electric utilities, and a solar price support program for a feed in tariff (FIT). In the first 5-year round of solar deployment, the FIT subsidy levels are $0.11/kWh for CSP, $0.11/kWh for PV CAES, and $0.2/kWh for distributed PV. The FIT subsidy levels are reduced in the second 5-year round of solar deployment to $0.07/kWh for CSP, $0.03/kWh for PV CAES, and$0.1/kwh for distributed PV. The FIT subsidies are paid over the entire 30- year capital recovery period. Section 204 of EP Act 2005 establishes a photovoltaic (PV) energy commercialization program for the procurement and installation of PV systems in public and federal buildings. It requires the installation of 20,000 solar-energy systems on federal buildings by 2010, as contained in the federal Million Solar Roof Initiative (MSRI) of 1997. The commercialization program has been appropriated $50 million annually for fiscal years 2006 2010, until funds are expended. An evaluation program has been appropriated $10 million annually for fiscal years 2006-2010, until funds are expended. The Property Tax Exemption for Solar Systems is a product of the California Revenue and Taxation Code, section 73. Active solar energy systems installed between January 1, 1999 and January 1, 2006 are not subject to property taxes when assessing property for property tax purposes.

4.5 JAPAN COMPARITIVE STUDY OF SOLAR POLICIES 8000 7000 6000 5000 4000 3000 2000 1000 0 INSTALLED CAPACITY IN MW 7000 4914 3618 2627 1919 2144 2007 2008 2009 2010 2011 2012 INSTALLED CAPACITY In December 2008, the Ministry of Economy, Trade and Industry announced a goal of 70% of new homes having solar power installed, and would be spending $145 million in the first quarter of 2009 to encourage home solar power. The government enacted a feed-in tariff on November, 2009 that requires utilities to purchase excess solar power sent to the grid by homes and businesses and pay twice the standard electricity rate for that power. On June 18, 2012, a new feed-in tariff was approved, of 42 Yen/kWh, about 0.406 Euro/kWh or USD 0.534/kWh. The tariff covers the first ten years of excess generation for systems less than 10 kw, and generation for twenty years for systems over 10 kw. It became effective July 1, 2012. In 2013, Japan is expected to install 5-9 GW of solar power. In July, 2012, Japan's Ministry of Economy, Trade and Industry (METI) introduced a restructured feed-in tariff in order to spike investments in large-scale renewable energy and photovoltaic. Market segmentation and development in Japan are anticipated to change significantly in the near future, with residential market share projected to fall sharply by 2013 and shift towards commercial, industrial, and small and large utility markets. These sectors are expected to grow quickly through 2016, creating more room for foreign manufacturers.

4.6 FRANCE COMPARITIVE STUDY OF SOLAR POLICIES 4500 4000 3500 3000 2500 2000 1500 1000 500 0 INSTALLED CAPACITY IN MW 4027.6 2948.6 1197.3 98.2 103.9 289.3 1 2 3 4 5 6 INSTALLED CAPACITY The support scheme for PV projects was largely modified in December 2010. A clear distinction between projects under 100kWp and projects above 100kWp has been made. The impact is particularly important for large installation above 100kWp. The government justifies this change by the fact that France is well on track on the development of its solar portfolio, and that the industry has reached a satisfying inertia. The government therefore now aims at stabilizing the yearly installation rate at 500MW (against expected yearly installation rates of 1000MW to 1500MW between 2011 and 2012). Large installations, above 100kWp, are not eligible for the feed-in tariff anymore. For smaller installations, the tariff has been reduced progressively from December 2009, and three categories have been created: integrated PV, partially integrated PV and ground based installations. As of January 1, 2011, larger projects (above 100kWp), or ground based projects will benefit from a reduced feed-in tariff (120 /MWh against a previously existing tariff of 328 /MWh). Full integration of PV panels requires the panels to take a vital role in the structure of the building (e.g.watertightness). A partially integrated installation requires panels to be fixed on an existing building. For these installations tariffs range from 460 /MWh to 288.5 /MWh. The table below details the different feed-in-tariffs.

4.7 AUSTRALIA COMPARITIVE STUDY OF SOLAR POLICIES 2500 SOLAR INSTALLED CAPACITY IN MW 2291 2000 1500 1000 500 0 1298 504 330 100 170 2007 2008 2009 2010 2011 2012 INSTALLED CAPACITY An Expanded Renewable Energy Target was passed by the Australian Parliament on 20 August 2009, to ensure that renewable energy obtains a 20% share of electricity supply in Australia by 2020. To ensure this the Federal Government has committed that the MRET will increase from 9,500 gigawatt-hours to 45,000 gigawatt-hours by 2020.The scheme lasts until 2030. The Australian Government provided a rebate program that offered up to A$8,000 rebates for installing solar panels on homes and community use buildings (other than schools), through the Solar Homes and Communities Plan.The Solar Flagships program sets aside $1.6 billion for solar power. Schools were eligible to apply for grants of up to A$50,000 to install 2 kw solar panels and other measures through the National Solar Schools Program beginning 1 July 2008, which replaced the Green Vouchers for Schools program. Applications for the program ended 21 November 2012. A total of 2,870 schools have installed solar panels. The output of each array can be viewed, and compared with that of up to four other schools. Feed in tariffs were introduced by a number of states to increase the amount of solar PV power generated. They can be classified by a number of factors including the price paid, whether it is on a net or gross export basis, the length of time payments are guaranteed, the maximum size of installation allowed and the type of customer allowed to participate. Many Australian state feed-in tariffs were net export tariffs, whereas conservation groups argued for gross feed-in tariffs. In March 2009, the Australian Capital Territory (ACT) started a solar gross feed-in tariff. For systems up to 10 kw the payment was 50.05 cents per kwh. For systems from 10 kw to 30 kw the payment was 40.04 cents per kwh. The payment was revised downward once before an overall capacity cap was reached and the scheme closed. Payments are made quarterly based on energy generated and the payment rate is guaranteed for 20 years.

4.8 UNITED KINGDOM COMPARITIVE STUDY OF SOLAR POLICIES 1800 1600 1400 1200 1000 800 600 400 200 0 SOLAR INSTALLED CAPACITY IN MW 1655 1014 18.1 22.5 26.5 71.5 2007 2008 2009 2010 2011 2012 INSTALLED CAPACITY The primary support mechanism for Renewable energy development in the UK is the Renewables Obligation (RO), a quota system with tradable green certificates known as Renewables Obligation Certificates (ROCs). The RO is periodically revised. The RO was introduced in England, Wales and Scotland in April 2002 and in April 2005 in Northern Ireland. The scheme was originally set to run until March 2027. In 2010, the previous Government administration extended the scheme until 2037 However in December 2010 the new Coalition Government proposed in the Electricity Market Reform (EMR). From April 2010, plants under 50kW will no longer qualify for support under the RO, but are instead eligible for support under the recently introduced FIT scheme. Maximum size limits are in place for specific technologies. Innovative funding programme has budget of 200 million pounds, of which 160 million have been allocated to various schemes. Funding help is provided to innovators / Entrepreneurs who develop and demonstrate low carbon technologies.they will be able to apply for 1 million pounds funding from government and can use that funding to leverage additional funds from private sector investors. They will also be able to get support from experts on how to bring their products to market. Of the 35 million, 20 million will initially support energy efficiency technologies and 15 million will expand the call into power generation at later stage.

5. INDIA S SOLAR POWER SCENARIO COMPARITIVE STUDY OF SOLAR POLICIES India is densely populated and has high solar insolation, an ideal combination for using solar power in India. Considering, Global perspective,india is 5 th largest contributor in wind energy sector. In the solar energy sector, some large projects have been proposed, and a 35,000 km 2 area of the Thar Desert has been set aside for solar power projects, sufficient to generate 700 GW to 2,100 GW. With about 300 clear, sunny days in a year, India's theoretical solar power reception, on only its land area, is about 5000 Petawatt-hours per year (PWh/yr) (i.e. 5000 trillion kwh/yr or about 600 TW). The daily average solar energy incident over India varies from 4 to 7 kwh/m2 with about 1500 2000 sunshine hours per year (depending upon location), which is far more than current total energy consumption. Assuming the efficiency of PV modules were as low as 10%, this would still be a thousand times greater than the domestic electricity demand projected for 2015. According to a 2011 report by BRIDGE TO INDIA and GTM Research, India is facing a perfect storm of factors that will drive solar photovoltaic (PV) adoption at a "furious pace over the next five years and beyond". The falling prices of PV panels, mostly from China but also from the U.S., has coincided with the growing cost of grid power in India. Government support and ample solar resources have also helped to increase solar adoption, but perhaps the biggest factor has been need. India, "as a growing economy with a surging middle class, is now facing a severe electricity deficit that often runs between 10 and 13% of daily need. SNO STATE INSTALLED CAPACITY(MW) 1 ANDHRA PRADESH 21.8 2 CHATTISGARH 4.0 3 DELHI 2.5 4 GUJARAT 654.8 5 HARYANA 7.8 6 JHARKHAND 4.0 7 KARNATAKA 9.0 8 MADHYA PRADESH 2.0 9 MAHARASHTRA 20.0 10 ORISSA 13.0 11 PUNJAB 9.0 12 RAJASTHAN 510.25 13 TAMIL NADU 15.0 14 UTTAR PRADESH 12.0 15 UTTARAKHAND 5.0 16 WEST BENGAL 2.0 TOTAL 1686.44

700 600 500 400 300 200 100 0 6. LEGISLATION EVOLVEMENT TO PROMOTE RENEWABLE ENERGY INCLUDING SOLAR POWER 6.1 ELECTRICITY ACT 2003 Electricity Act 2003 is considered the most transformational and dynamic act till date. The main focus of act was on de-bundling of the electrical utilities, but it also included guidelines for renewable energy. SECTION 4 The National policy on stand-alone system shall include renewable sources. SECTION 61 (h) The section states that while specifying term and conditions of tariff determination the commission shall consider the promotion of generation from renewable sources of energy along with other factors. SECTION 86 (1) (e) The section states that state commission shall promote generation of electricity from renewable sources of energy and also tells that it shall be done by providing suitable measures for connectivity with the grid and sale of electricity to anyone. A percentage of total consumption in distribution licensee s area shall be satisfied from renewable sources specified by the commission.

6.2 NATIONAL ELECTRICITY POLICY 2005 (NEP) Section 5.2 This section states the importance of hydro power by notifying hydroelectricity as a clean and renewable source of energy. The section states that in upcoming time maximum emphasis would be laid on the full development of the feasible hydro potential in the country. It emphasises the importance of harnessing hydro potential for economic development and also reinforces government s commitment to cater huge capital requirements by making policy that will help debt-financing of viable projects. The section also talks about safeguarding environmental concerns & concerns of the families affected due to the projects through proper implementation of National Policy on Rehabilitation and Resettlement (R&R) and by suitable mechanism for monitoring of implementation of Environmental Action Plan. Section 5.12 The section states that there is urgent need to promote energy generation from renewable sources of energy because of their environmental friendliness. Efforts must be directed to reduce the capital cost of these projects. It also states that the share of electricity from non-conventional sources through competitive bidding would need to be increased as prescribed by State Electricity Regulatory Commissions and the Commission may determine an appropriate differential in prices to promote these technologies. 6.3 NATIONAL TARIFF POLICY 2006 (NTP) Section 6.4 The section states that in present stage the conventional and non-conventional technologies cannot compete at similar tariff and hence the power shall be procured from non-conventional sources at preferential tariff determined by the appropriate commission but it also states that in long term the non-conventional technologies have to compete with other sources in terms of full cost. It also states that appropriate commission will fix the minimum percentage of power to be procured from non-conventional sources with reference to section 86 (1) of electricity act 2003. 6.4 NATIONAL ACTION PLAN ON CLIMATE CHANGE On June 30, 2008, Honourable Prime Minister Manmohan Singh released India s first National Action Plan on Climate Change (NAPCC) outlining existing and future policies and programs addressing climate mitigation and adaptation. The plan identifies eight missions under National Missions running through 2017 and directs ministries to submit detailed implementation plans to the Prime Minister s Council on Climate Change by December 2008.

Emphasizing the overriding priority of maintaining high economic growth rates to raise living standards, the plan identifies measures that promote our development objectives while also yielding co-benefits for addressing climate change effectively. It says these national measures would be more successful with assistance from developed countries, and pledges that India s per capita greenhouse gas emissions will at no point exceed that of developed countries even as we pursue our development objectives. NATIONAL MISSIONS National Solar Mission National Mission for Enhanced Energy Efficiency National Mission on Sustainable Habitat National Water Mission National Mission for Sustaining the Himalayan Ecosystem National Mission for a Green India National Mission for Sustainable Agriculture National Mission on Strategic Knowledge for Climate

7. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION Jawaharlal Nehru National Solar Mission is a major initiative of the Government of India with active participation from States to promote ecologically sustainable growth while addressing India's energy security challenge. a. MISSION OBJECTIVE The objective of the Jawaharlal Nehru National Solar Mission is to establish India as a global leader in solar energy, by creating the policy conditions for its large scale diffusion across the country as quickly as possible. The Mission adopted a 3-phase approach, spanning the period of the 11th Plan and first year of the 12th Plan (up to 2012-13) as Phase 1, the remaining 4 years of the 12th Plan (2013-17) as Phase 2 and the 13th Plan (2017-22) as Phase 3. At the end of each plan, and mid-term during the 12th and 13th Plans, there will be an evaluation of progress, review of capacity and targets for subsequent phases, based on emerging cost and technology trends, both domestic and global. The aim would be to protect Government from subsidy exposure in case expected cost reduction does not materialize or is more rapid than expected. b. JNNSM CAPACITY ADDITION TARGET SNO. SEGMENT TARGET FOR CUMULATIVE CUMULATIVE PHASE I TARGET FOR TARGET FOR (2010-2013) PHASE II PHASE III (2013-2017) (2017-2022) 1 Utility Grid Power including 1100MW 10000MW 20000MW rooftop 2 Off grid solar application 200MW 1000MW 2000MW 3 Solar collectors 7 million sqmt 15 million sqmt 20 million sqmt c. PHASE I OF JNNSM Phase I of National Solar Mission was divided into two Batches i.e. batch I & II. In Batch I, capacity addition of 150 MW of grid connected solar PV plants and 500 MW of grid connected solar thermal plants was envisaged. Whereas in Batch II, the remaining targeted capacity for Solar PV i.e. 350 MW was awarded. Apart from these grid connected large scale plants, small rooftop plants of capacity less than 2MW each were also allotted under GBI scheme in Rooftop PV and small Solar Power Generation Programme (RPSSGP).

BUNDLING OF SOLAR POWER COMPARITIVE STUDY OF SOLAR POLICIES In order to facilitate grid connected solar power generation under the first phase, without any direct funding by the Government, Government approved NTPC VidyutVyapar Nigam (NVVN) as the nodal agency to purchase 1000 MW of solar power from the project developers, bundle it with the unallocated power available from the NTPC coal-based stations and sell this bundled power to the Distribution Utilities. Bundling concept was introduced to keep the cost of bundled power approximately Rs 5/kWh. It was decided to select projects of 500 MW capacity each based on solar thermal and solar photovoltaic (PV) technologies. JNNSM Batch I BIDDING RESULT SUMMARY SOLAR PV SOLAR THERMAL CERC Approved tariff for Solar PV (Normal Depreciation) CERC Approved tariff for Solar Thermal (Normal Depreciation) 1791 Paise/kWh 1531 Paise/kWh Maximum discount Minimum discount Maximum discount Minimum discount offered(paise) offered(paise) offered(paise) offered(paise) 696 595 482 307 Total 30 SPV projects were selected after bidding process and subsequently 28 project developers signed PPAs for 140 MW capacity with NVVN. Similarly seven solar thermal projects were selected after bidding process and signed PPA with NVVN. Average tariff for selected SPV projects was 1216 Paise/kWh which was 32% lower than the CERC approved benchmark tariff of 1791 Paise/kWh. For solar thermal projects, average tariff for selected projects was 1141 Paise/kWh which was 25% lower than the CERC approved benchmark tariff of 1531 Paise/kWh for solar thermal plants. In batch-i, a total of 704 MW capacity grid connected solar power projects have been selected, which comprise of 500 MW capacity of solar thermal power projects and 204 MW of PV power projects. JNNSM Batch II BIDDING RESULT SUMMARY BATCH II SOLAR PV CERC APPROVED TARIFF FOR SOLAR PV (NORMAL DEPRICIATION) 1539 Paise/kWh Maximum discount offered(paise/kwh) Minimum discount offered(paise/kwh) 790 595 FINAL TARIFF AFTER DISCOUNT FOR SOLAR PV 749 944

Under Batch II of Phase I, the total aggregate capacity of grid connected Solar Projects was 350 MW for the deployment of Solar PV Power Projects.SPV projects worth 350 MW were awarded with an average tariff of 877 paise/kwh which was 43% lower than the benchmark tariff approved by CERC. d. STATE WISE COMMISIONING STATUS OF PROJECTS UNDER JNNSM (i) BATCH-1, PHASE-1 SOLAR PV S. NO STATE SolarPV capacityto be commissioned as per PPA (MW) SolarPV capacity actually commissioned (MW) 1 Andhra Pradesh 10.5 9.75 0.75 2 Chhattisgarh 4 4 0 3 Haryana 8.8 7.8 1 4 Maharashtra 5 5 0 5 Odisha 8 7 1 6 Punjab 8.5 6 1.5 7 Rajasthan 12 11 1 8 Tamil Nadu 7 5 2 9 Uttarakhand 5 5 0 10 Uttar Pradesh 8 7 1 11 Jharkhand 16 16 0 12 Madhya Pradesh 5.25 5.25 0 TOTAL 98.05 88.80 9.25 Balance capacityto be commissioned (MW) GRID SOLAR PV UNDER MIGRATION SCHEME S NO STATE SolarPV capacity allocated as per PPA (MW) Solar PV capacity actually commissioned (MW) 1 MAHARASHTRA 11 11 0 2 PUNJAB 2 2 0 3 RAJASTHAN 41 35 6 TOTAL 54 48 6 Balance capacity to be commissioned (MW)

GRID SOLAR THERMAL PROJECTS UNDER MIGRATION SCHEME COMPARITIVE STUDY OF SOLAR POLICIES S NO STATE Solar PV Solar PV Balance capacity capacity capacity actually to be allocated as per PPA (MW) commissioned (MW) commissioned (MW) 1 RAJASTHAN 30 2.5 27.5 (ii)batch-1, PHASE-2 S. NO STATE Solar PV capacity to be commissioned as per PPA (MW) Solar PV capacity actually commissioned (MW) 1 Rajasthan 295 285 10 2 Maharashtra 25 5 20 3 Andhra Pradesh 20 0 20 TOTAL 340 290 50 Balance capacity to be commissioned (MW) e. OFF GRID TARGETS The mission targets 200 MW of off-grid solar PV installed capacity by 2013 and 2,000 MW by 2022. Given the lack of electrification and access to clean energy sources in Indian villages coupled with T&D losses, decentralised distributed systems make very good sense. Therefore, the targets set for off-grid capacity could be bolder. A capital subsidy of `150 per Wp is available for rural microgrids as against `90 per Wp for other applications. Even if all the 200 MW was allocated to rural microgrids, the total subsidy would amount to only `30 billion (this outlay is expected from tax revenues). Even if the capacity is increased substantially (set aside for utility-scale PV), the total subsidy would work out to be still considerably less than the incentive offered for the utility scale. MICRO GRID BASED ON SOLAR POWER Number of villages 14290 Load per village with 150 households (kw) 35 (minimum load to supply lifeline support) Total capacity solar based micro grids(mw) 500 Current policy of Capital Subsidy(Rs/W p ) 150 If in addition a generation-based tariff offered(rs/kwh) 4.25 Annual outlay for GBI(Rs billion) 3.54 NPV of GBI over twenty-five years(rs billion) 32.1 TOTAL OUTLAY OF CAPEX+GBI(Rs billion) 107

8. REC MECHANISM OVERVIEW: According to EA, it is the mandate of SERCs to ensure that the electricity mix in their respective states has a fixed percentage of renewable energy. This mechanism is known as the Renewable Purchase Obligation or the RPO. But there is an inherent flaw in this mechanism. As each state has its own potential, different states have different RE potentials and thus supply mixes. Also as the RPO mechanism concentrates mainly on the intra-state use, a state devoid of any potential didn t have either incentive for using renewable energy nor was there any mechanism for inter-state sale of RE. Without such a mechanism, the entire effort can turn into a sham as RE would still be generated and used in isolated pockets only. Also, as RE is a costlier form of power, states would not want to generate any more than their respective RPOs and those states with a meagre RE potential also do not use any RE in absence of any mechanism promoting its inter-state purchase. To address all these challenges and to turn the environmental salubrity of renewable energy into a marketable entity, the concept of Renewable Energy Certificates was developed. Apart from facilitating inter-state RE transactions, RECs also have some other objectives as well, which can be identified as: a. Effective implementation of RPO obligations across all states b. Creating competition among competing RE technologies c. Protecting the local distribution licensee selling RE d. Overcoming geographical impediments to use RE e. Reduce the costs for RE transactions In the Indian context, generation of 1 MW of RE allocates a REC to the generator, which can be sold in an energy exchange to an obligated entity which cannot find a RE generator to fulfil its RPO obligations, thereby overcoming the geographical constraints the transaction of RE poses. There are some important points of note here. REC mechanism is not an incentive scheme. It is simply a market mechanism to enable various obligated entities to meet their RPO norms as set by their respective SERCs. The mechanism co-exists with all the current incentive schemes as, these schemes offer incentives for generation only. Also it is not related to carbon credits. The two mechanisms operate parallel to each other for the benefit of RE generators.

9. OPERATIONAL FRAMEWORK OF REC MECHANISM As can be seen from the figure above, the easiest route of selling RE to the obligated entities is through the grid, as established by the connection (1).The accounting of the RE produced by the generators is carried out by the SLDCs (1) the information of which is forwarded to the national registry (3). If the generator chooses to sell their RE electricity through the REC route, he makes an application to the national registry (2), after which a RECs is issued to the generators (4) as per the amount of power generated, which they can trade in the power exchanges. If these obligated entities cannot achieve their RPOs, they buy RECs in the exchange to make up for whatever is the deficit in their supply mix (5), which are redeemable at the national registry itself (6). The compliance reporting is done to the monitoring committee of each state (7), which submits a quarterly report to each state s SERC.

10. STATE WISE RPO (SOLAR & NON SOLAR) In order to give thrust for solar development, states also come up with Solar Policy to attract the investor in this sector. S. STATE NO 1 ANDHRA PRADESH ORDER DATE 06 JULY 2010 2 ASSAM 21 JUNE 2010 3 BIHAR 16 NOV 2010 4 CHATTISGARH 9 NOV 2010 5 GUJARAT 17APRIL 2010 6 HARYANA NOV 2010 7 HIMACHAL PRADESH 12 MARCH 2010 8 JHARKHAND 31 MARCH 2010 9 KARNATAKA 16 MARCH 2011 10 KERELA 23 NOV 2010 11 MADHYA PRADESH 19 NOV 2010 12 MAHARASHTRA 7 JUNE 2010 13 MEGHALAYA 21 DEC 2010 TYPE 2010-2011 NON SOLAR 2011-2012 2012-2013 2013-2014 2014-2015 4.75% 4.75% 4.75% 4.75% 4.75% SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% NON 1.35% 2.70% 4.05% 5.40% 6.75% SOLAR SOLAR 0.05% 0.10% 0.15% 0.20% 0.25% NON 1.25% 2.0% 3.25% 3.50% 3.75% SOLAR SOLAR 0.25% 0.50% 0.75% 1.0% 1.25% NON 4.75% 5% 5.25% 5.50% 5.75% SOLAR SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% NON 4.75% 5.50% 6% 6.5% 7% SOLAR SOLAR 0.25% 0.5% 1% 1% 1% NON 1.25% 1.25% 1.25% 1.50% 1.50% SOLAR SOLAR 0.25% 0.50% 0.75% 1.0% 1.25% NON 10% 11% 12% 13% 14% SOLAR SOLAR 0.10% 0.10% 0.10% 0.10% 0.10% NON 1.75% 2.0% 3.0% 4.0% 5.0% SOLAR SOLAR 0.25% 0.50% 1.0% 1.0% 1.0% NON 7% 7% 7% 7% 7% SOLAR SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% NON 3.0% 3.30% 3.63% 3.99% 4.29% SOLAR SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% NON 0.80% 2.10% 3.40% 4.70% 6.0% SOLAR SOLAR 0.40% 0.60% 0.80% 1.05 1.20% NON 5.75% 6.75% 7.75% 8.5% 8.5% SOLAR SOLAR 0.25% 0.25% 0.25% 0.5% 0.5% NON 0.60% 0.80% 1.20% 1.40% 1.60% SOLAR SOLAR 0.20% 0.30% 0.40% 0.40% 0.40%

14 NAGALAND 20 OCT 2010 15 ORRISA 16 MAR 2010 16 RAJASTHAN 23 DEC 2010 17 TAMIL NADU 19 MAY 2011 18 TRIPURA 9 NOV 2009 19 UTTARAKHAND 6 JULY 2010 20 UTTAR PRADESH 17 AUG 2010 21 WEST BENGAL 10 AUG 2010 22 JERC FOR GOA 5 MAY 2010 24 JERC FOR MANIPUR 25 JERC FOR MIZORAM 5 MAY 2010 5 MAY 2010 COMPARITIVE STUDY OF SOLAR POLICIES NON 14.75% 15.75% 16.75% 16.75% 16.75% SOLAR SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% NON 4.50% 4.75% 5.0% 5.25% 5.50% SOLAR SOLAR 0.50% 0.75% 1.0% 1.25% 1.50% NON 7.75% 8.5% 6.35% 7.20% 8.5% SOLAR SOLAR 0.50% 0.75% 1.0% 1.25% 1.50% NON 10% 10% 10% 10% 10% SOLAR SOLAR 0.15% 0.25% 0.25% 0.50% 0.50% NON 0.90% 0.90% 1.90% 1.90% 1.90% SOLAR SOLAR 0.10% 0.10% 0.10% 0.10% 0.10% NON 4.0% 4.50 5.0% 5.5% 6.0% SOLAR SOLAR 0.0% 0.03% 0.05% 0.07% 0.09% NON 3.75% 4.50% 5.00% 5.25% 5.50% SOLAR SOLAR 0.25% 0.50% 1.0% 1.5% 1.5% NON 2.0% 3.0% 4.0% 5.0% 6.0% SOLAR NON 0.75% 1.70% 2.60% 2.60% 2.60% SOLAR SOLAR 0.25% 0.30% 0.40% 0.45% 0.50% NON 1.7% 2.75% 4.75% 4.75% 4.75% SOLAR SOLAR 0.25% 0.25% 0.25% 0.25% 0.25% NON 4.75% 5.75% 6.75% 6.75% 6.75% SOLAR SOLAR 0.25% 0.25% 0.25% 0.25% 0.25%

11. STATEs SOLAR POLICIES COMPARITIVE STUDY OF SOLAR POLICIES 11.1 GUJARAT SOLAR POLICY 2009 A state specific policy dedicated to solar was first envisioned by Gujarat in 2009. The outlines were given under the policy titled Solar Power Policy -2009. The policy was the first solar specific policy introduced in the country predating the National Solar Mission. The Gujarat Solar Policy is operative till 31st March 2014.Any Solar Power Generator (SPG) commissioned during the operative period shall become eligible for incentives declared under this policy for a period of 25 years. SALIENT FEATURES CAPACITY Only new plants and machinery will be eligible under this Policy. No fossil fuel shall be allowed for Solar Thermal Project. The minimum capacity of for Solar PV and Solar Thermal projects will be 5 MW each. A total of 500MW SPG shall be allowed for installation during the operative period of this policy. CROSS-SUBSIDY CHARGE Cross subsidy surcharges shall not be applicable for Open Access obtained for third party sale within the state. WHEELING CHARGES As per determined by GERC. ELECTRICTY DUTY Exempted from payment of electricity duty for sale through all modes(selfconsumption/sale to third party/sale to licensee) Exemption from demand cut to the extent of 50% of installed capacity PPA PPA duration will be 25 years BANK GUARANTEE Developer to furnish a BG @Rs 50Lakhs/MW at the time of PPA signing with Distribution Licensee.BG to be refunded if the developer commissions the project in time as per PPA. METERING OF ELECTRICITY

COMPARITIVE STUDY OF SOLAR POLICIES Electricity generated would be metered jointly on a monthly basis by GEDA/GETCO. Metering to done at sending sub-station of 66 kv or above, located at the site. REACTIVE POWER CHARGES As per GERC order. TRANSMISSION INFRASTRUCTURE Transmission line from SPG switch yard to GETCO sub-station shall be laid by GETCO.SPG to inject power at 66kV. SHARING OF CDM BENEFIT SPG will pass 50% of CDM benefit to DISCOM with whom PPA is signed. FORECASTING & SCHEDULING SPG based generation shall not be covered under scheduling procedure for Intra-state ABT. NODAL AGENCIES FOR FACILITATION AND IMPLEMENTATION OF SOLAR POLICY-2009 Gujarat Energy Development Agency (GEDA) Gujarat Power Corporation Limited (GPCL) PROs The policy is very detailed and comprehensive and even describes CONs There is capacity cap of minimum 5 MW for SPG. the financial and technical Bank guarantee of 50 Lakhs/MW is requirements of SPG. on the higher side. The tariff allotted is very lucrative. The policy limits no. of players by Long Incentive period of 25 years providing stringent qualifying criteria. attract investors. The policy doesn t talk about land Wheeling charges of 2% are allotment which is a major comparatively lower than other requirement for solar projects. states. Banking of power is not allowed. The incentive programme is very good and a large no. of benefits are provided The policy is not supportive to budding entrepreneurs.

11.2 RAJASTHAN SOLAR POLICY 2011 The policy aims at developing Rajasthan as a global hub of solar power of 10,000-12,000 MW capacity in next 10-12 years to meet energy requirements of Rajasthan and India. To achieve grid parity in next 7-8 years, the State will encourage the Solar Power Developers to establish manufacturing plant of their technology in Rajasthan. SALIENT FEATURES The Policy will come into operation with effect from 19.4.2011 and will remain in force until superseded or modified by another Policy. To achieve the objectives of this Policy, the targets under the policy are mentioned below: 1. The State Government has sanctioned two Solar Power Projects of 5 MW capacity under the GOI guidelines for Generation Based Incentive scheme for Grid Interactive Solar Power Generation Projects issued by MNRE. The power evacuation transmission line from generating plant sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as per the prevailing orders of RERC. 2. The Rajasthan State has sanctioned 66 MW solar power projects in compliance of the RERC s orders. These sanctioned projects were migrated to National Solar Mission by the State Government. The power produced from these solar power plants shall be procured by NVVN as per mechanism provided under National Solar Mission Phase-1. The Discoms of Rajasthan shall purchase this solar power from NVVN along with the equivalent amount of MW capacity from the unallocated quota of NTPC stations allotted to NVVN by Ministry of Power, GoI. The power evacuation transmission line from generating plant sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as per the prevailing orders of RERC. 3. The Rajasthan State will develop 50 MW SPV and 50 MW Solar Thermal Power Plants through selection of developer(s) by the tariff based competitive bidding process on concept of bundling of Solar Power with equivalent amount of MW capacity of conventional power. The successful bidder will set up Solar Power Plant in Rajasthan and supply equivalent amount of MW capacity of conventional power from Conventional Power Plants located anywhere in India. The power evacuation transmission line from generating plant sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as per the prevailing orders of RERC. 4. The Rajasthan State will promote setting up of Solar Power Plants connected at 33 kv & above level under the guidelines of National Solar Mission (NSM). The minimum/maximum capacity allocation to each Solar Power Producer will be as per MNRE guidelines. The power evacuation transmission line from the Generating plant sub-station to the RVPN/Discom receiving Sub-station will be laid as per provisions of the orders of appropriate Commission.

5. The state government will support setting up of 100 MW solar photovoltaic power plants and 100 MW solar thermal power plants under phase I of the Rajasthan Solar Energy Policy 2011 for direct sale of power to discoms in the state. Under phase II (2012-2017), the state governmentplans to add another 400MW of solar power through tariff based competitive bidding process. The power evacuation transmission line from generating plant sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as per the prevailing orders of RERC. The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants of unlimited capacity for captive use or sale of power to 3rd party/states other than Rajasthan. There will be no upper ceiling for power projects. The power evacuation transmission line from the Generating plant sub-station to the RVPN/Discom receiving Sub-station will be laid as per provisions of the orders of appropriate Commission. 7. The Rajasthan State will promote deployment of Roof-top and Other Small Solar Power Plants connected to LT/11kV Grid as per guidelines of MNRE under Rooftop PV & Small Solar Generation Programme (RPSSGP) of NSM. The minimum/maximum capacity for power project sanctioned under this category will be as per the guidelines issued by MNRE. The power evacuation transmission line from generating plant sub-station to the receiving RVPN/Discoms of Rajasthan sub-station will be laid by STU/Home Discom as per the prevailing orders of RERC. 8. The State will promote setting up of small solar power plants connected at 11 kv grid of 1 MW capacity each for direct sale to State Discoms of Rajasthan. The total capacity under this category will be 50 MW. The selection of the projects will be through tariff based competitive bidding process. There will be no upper ceiling for power projects. 9. The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants of unlimited capacity for sale through RE (Solar) Certificate mechanism. The power evacuation transmission line from the Generating plant sub-station to the RVPN/Discom receiving Substation will be laid as per provisions of the orders of appropriate Commission 10. The Rajasthan State will promote Solar Power Producers to set up Solar Power Plants along with Solar PV manufacturing plants in Rajasthan. The target under this category will be 200 MW up to 2013. 11. The Rajasthan State will also promote decentralized and off-grid solar applications, including hybrid system such as solar water heaters, solar cooling systems, air drying, steam cooking, power generation, sterling engine. The off-grid solar applications shall be promoted for replacement of diesel based generators sets. The Rajasthan State will also consider incentives for promotion of decentralized and off grid solar applications. 12. Rajasthan also intends to set up Pilot Demonstration Projects under National Solar Mission s R&D initiatives in Phase 1 of Solar Mission. This will include: