Kerala Gets Approval to Set Up 50 MW of Rooftop Solar Projects

The projects will be developed under Phase II of MNRE’s rooftop solar program

March 16, 2020


The Kerala State Electricity Regulatory Commission (KSERC) has approved the proposal by Kerala State Electricity Board’s (KSEB) for implementing 50 MW of grid-connected solar rooftop PV projects under the Phase II of MNRE’s RTS program. These projects come with central financial assistance (CFA).

The Commission directed KSEB to modify the financial and the technical eligibility criteria in line with the bidding documents. The Commission also asked KSEB to file separate petitions for the approval of the empanelment of bidders under EPC (engineering, procurement, and construction) mode and the adoption of tariff for the hybrid model proposed by KSEB.

Earlier in August 2019, the Ministry of New and Renewable Energy (MNRE) had issued guidelines for the implementation of Phase II of the grid-connected rooftop solar program for achieving 40 GW of rooftop solar by 2022.

The significant components of phase II of the program:

  • Component A: Setting up 4 GW of grid-connected rooftop solar projects in the residential sector with Central Financial Assistance (CFA)
  • Component B: Incentives to DISCOMs based on achievement towards 18 GW of grid-connected rooftop solar projects

The guidelines say that a residential installer for a maximum of 3 kW capacity will receive a CFA of 40% of the benchmark cost. For capacity above 3 kW and up to 10 kW, the installer will receive a subsidy of 40% for up to 3 kW and 20% for projects above 3 kW and up to 10 kW. Group housing societies or residential welfare associations up to 500 kW will receive a subsidy of 20%.

As per the MNRE guidelines, CFA will not be available for other categories.  KSEB, in its submission, had said that under normal CAPEX (capital expenditure) model, the balance cost of the installation after the capital subsidy has to be borne by the consumer.

To target subsidized domestic consumers, KSEB had proposed four different business models:

  • Model-1A: For domestic consumers having monthly average consumption up to 120 units
  • Model-1B: For domestic consumers having monthly average consumption up to 150 units
  • Model-1C: For domestic consumers having monthly average consumption up to 200 units
  • Model-II: For all domestic consumers, irrespective of consumption level

For Model 1A, the consumer will have to pay 12% of the capital cost, whereas, for Model 1B, the consumer will pay 20% of the capital cost. Similarly, for Model-1C, the consumer will pay 25% of the capital cost, and for Model II, the consumer will have to pay the entire cost after meeting the CFA.

Regarding the financial eligibility criteria, the Commission noted that KSEB, in its petition, had proposed the solvency of ₹15 million (~$201,502)/MW of the quoted capacity and an annual turnover of ₹10 million ($134,335)/MW for three years in the last five years preceding the bid opening date.

The net worth of the bidder preceding the bid opening date should be positive. KSEB had further proposed that for ANERT-empaneled solar developers with grading SP1A, SP1B, SP1C, SP2A, SP2B, SP2C, SP3C, SP4A, SP4B, SP4C, SP5A, and SP5B, and startups, the financial eligibility criteria concerning the annual turnover and net worth should be waived.

After considering the above facts, the Commission stated that for the Agency for New and Renewable Energy Research and Technology (ANERT) empaneled solar PV developers, and startups, the bidder should meet the following financial eligibility criteria:

  • Solvency- ₹15 million (~$201,502)/MW
  • Net worth should be positive
  • Annual turnover- ₹5 million (~$67,167)/MW

Further, the Commission noted that there are no significant changes to the installation of ground-mounted and rooftop solar projects. Hence, the minimum eligibility criterion on installation on the rooftop capacity need not be separately insisted on the bidders. The Commission asked KSEB to modify the technical eligibility criterion accordingly.

The Commission also reiterated its decision that KSEB should ensure that in case bucket-filling is resorted to, all contracts awarded are precisely at the same price and on the same terms and conditions as that awarded to the L1 bidder.

Regarding the issue of enhancing the tender size from 50 MW to 150 MW, the Commission noted that as per the allocation of the MNRE and state government order, the Commission cannot approve the request for now. However, once the MNRE formally allocates additional capacity under its Phase-II Subsidy Program for the next financial year 2020-21, KSEB can file a separate petition.

Recently, the MNRE issued a clarification for the second phase of its rooftop solar program under which distribution companies—or its authorized agencies will invite Expressions of Interest for empaneling the agencies to supply, install, test, and commission rooftop solar projects in residential premises.

In June last year, KSEB had filed a petition with the KSERC to implement projects comprising a total capacity of 200 MW of solar rooftop systems during 2019-20 to meet its renewable purchase obligations. After examining the petition, the KERC had allowed KSEB to proceed with the tendering process for 200 MW of rooftop solar projects under the Soura Phase-1 program.