The government has announced that it would install an additional 2,000 MW of solar power capacity by 2022.. This would be in addition to the potential 100s of megawatts of capacity coming from private project developers. Under the policy, the government would auction 1,600 MW capacity for utility-scale projects.
Some of these projects would be set up on farming land. The government has indicated in its policy document that while the projects may be built and operated by the project developers, the land may be leased to them instead of being sold by the farmers. If such an approach is adopted, it would be a significant step, as land acquisition has been a contentious issue in India. This approach would potentially reduce project cost and implementation time while providing a regular source of income to the farmers throughout the plant life.
About 400 MW capacity would be added in the form of rooftop grid-connected projects. The government plans to implement a net metering policy to complement this program and provide financial incentives to households and commercials buildings.
Additionally, projects under the Renewable Energy Certificate scheme and canal-top solar power projects would also be promoted. Industries would be allowed to set up unlimited solar power capacity to meet their own power demand. Projects where solar power is bundled with electricity from other sources, including coal, would also be encouraged so as to promote low-cost power generation.
The government plans to make sure that the power generated from this huge solar power capacity does find buyers. As a result, it has announced obligations for industries and power distribution companies to procure a set minimum percentage of their electricity from solar power projects. Starting from 2014, these obligated consumers would be required to procure 1.5% of their power from solar power projects. This minimum obligation would continue to increase by 25 bps every year until it reaches 3% in 2022.
With this policy, Karnataka has become among the first states to announce such an ambitious and comprehensive solar power policy that not only addresses the supply but the demand for solar power as well. The solar power purchase target of 3% by 2022 is inline with the recommendations of the central government, something that most of the other states are yet to follow. The enormity of the capacity addition target can be judged by the fact that it represents 10% of the total capacity currently envisaged under the National Solar Mission by India.