Gujarat Relaxes its Solar Policy to Benefit MSMEs

The changes in the policy will help MSMEs to set up larger rooftop solar and open access projects, helping them to reduce power costs and enabling them to procure solar energy from the third parties

September 20, 2019


In a welcome move, the Gujarat government has relaxed the state’s solar policy to allow micro, small, and medium enterprises (MSME) to install solar projects that are more than 100% of their sanctioned load or contract demand.

Before this announcement, the Gujarat Solar Policy (2015) allowed commercial and industrial clients to install only 50% of their sanctioned load.

The state government stated that the MSMEs would benefit from this decision as they are currently procuring power at ₹8 ($0.11)/kWh, by allowing them to install larger capacities they could make a profit of ₹3.80 ($0.054)/kWh, if they produce solar power on their own land. In case the company uses leased land for their solar projects, they would get a profit of ₹2.75 ($0.039)/kWh.

In addition, the changes in the solar policy would allow MSMEs to procure solar power from third parties as well. Further, these companies will be able to sell the excess solar energy to state government at a cost of ₹1.75 ($0.025)/kWh. However, MSMEs in the state would still be liable to pay the electricity duty and wheeling charges.

The policy change is expected to encourage around 3.3 million MSMEs to adopt clean energy.

In May 2019, Mercom reported that serious policy push was needed to bring India’s rooftop solar market to the next level. Many rooftop solar developers had expressed to Mercom their concerns regarding the patchy implementation of rooftop solar policy and net metering regulations in the country, especially in Gujarat.

The Gujarat government has over the year announced several measures to encourage adoption of clean energy projects in the state. Earlier this year, in a positive development, the state government modified its land laws relating to the development of wind and hybrid (wind and solar) parks in the state.

Shaurya is a staff reporter at with experience working in the Indian solar energy industry for the past four years in various roles. Prior to joining Mercom, Shaurya worked with a renewable energy developer and a consulting company. Shaurya holds a Bachelors Degree in Business Management from Lancaster University in the United Kingdom.