Press "Enter" to skip to content

Rajasthan proposes hefty cess for upcoming inter-state solar projects

The proposed cess could unbalance the government’s plan to sell solar power across the country as the conducive locations for such plants are concentrated in only seven states.

Solar power plants which plan to sell electricity to consumers outside the state may have to pay the state Rs 5 lakh every year for every megawatt (MW) of generation unit being set up. According to the recently floated ‘Draft Rajasthan Solar Energy Policy 2019’, upcoming solar projects that would not sell power to the state “shall contribute towards Rajasthan Renewable Energy Development Fund, a sum of Rs 5 lac per MW every year or part thereof for the entire lifecycle of the project from the date of commissioning”.

Existing solar plants not supplying power to Rajasthan will have to “contribute a sum of Rs 1 lac per MW per year for entire life cycle of the project unless they have deposited upfront payment of Rs 10 lac per MW as per provisions of Rajasthan Solar Energy Policy, 2011”, the proposal released by the state-owned Rajasthan Renewable Energy Corporation said.

The proposed cess could unbalance the government’s plan to sell solar power across the country as the conducive locations for such plants are concentrated in only seven states. According to industry sources, such cess, if implemented, could raise solar power tariffs by Rs 0.20-0.25 per unit, depending on the location. Some are equating the proposal with Andhra Pradesh’s decision to revise solar and wind power purchase agreements.

Renewable energy developers find Rajasthan to be a conducive place for setting up solar plants as it receives very high solar radiation and houses abundant uncultivated land. The record low solar tariff of Rs 2.44/unit was first discovered in May 2017 for Rajasthan’s 500-MW Bhadla project. However, since all the power from the latter plant would be bought by the state, it will not face the proposed cess.

Source: Financial Express