Rajasthan Flouts Policy, Levies ₹0.60/kWh Electricity Duty on Captive Solar Projects
Developers write to the Chief Minister raising concerns over the electricity duty effective from April 1, 2021
July 22, 2021
The Chairman of the Rajasthan distribution companies (DISCOMs) and the Rajasthan Urja Vikas Nigam Limited have issued an order, levying electricity duty of ₹0.60 (~$0.00081)/kWh on the consumption of power from captive solar projects, rooftop solar, and grid-connected small solar projects with the net metering facility.
According to the order, on July 10, 2019, the Rajasthan Government’s Finance Department had offered electricity duty exemption on the consumption of power from captive solar projects. The notification was in effect until March 31, 2020.
The exemption covered captive solar projects and those set up under the Rajasthan Electricity Regulatory Commission (RERC) Connectivity and Net-Metering for Rooftop and Small Grid-Interactive System Regulation, 2015.
The state’s Electricity Department scrutinized the policy and, on April 27, 2021, issued the order levying electricity duty on captive solar projects and those set up under the RERC 2015 regulations. The order is effective from April 1, 2021.
The order further states that the amount outstanding for the period from April 1, 2021, to June 30, 2021 (billing month of May 2021 to July 2021), if any, can be recovered in three monthly installments from the billing month of August 2021 onwards.
Meanwhile, the Renewable Energy Association of Rajasthan (REAR) has written to the Rajasthan Chief Minister, Ashok Gehlot, requesting the state government to implement the incentives available to solar projects under clause 16 of the Rajasthan Solar Policy, 2019.
In December 2019, the Rajasthan government issued its Solar Energy Policy, 2019, which aims to target 30 GW of solar power by financial year (FY) 2024-25. Utility or grid-scale solar parks will account for 24 GW, distributed generation is expected to account for 4 GW, the solar rooftop will total 1 GW, and solar pumps will make up the remaining 1 GW.
The policy also talks about encouraging solar projects for captive use under various scenarios and the exemption of transmission and wheeling charges and electricity duty.
However, according to REAR, over 20 months have passed since the government approved the policy, yet the policy has not been fully implemented in the state. In several cases, government departments and the RERC do not refer to the new policy.
The REAR has claimed that the stakeholders are deprived of the incentives available to solar projects under the policy, particularly clause 16 of the policy, which covers various facilities, incentives, and relaxations related to banking, transmission, and wheeling charges, and electricity duty, among others.
In their letter to the Chief Minister, the association highlighted the letter issued by the Energy Department of Rajasthan, levying an electricity duty of ₹0.6 (~$0.00081)/kWh.
The letter further states that according to clause 16.4 of the Rajasthan Solar Policy 2019, the following are exempted from payment of electricity duty for seven years from commercial operation date – rooftop photovoltaic solar projects with net metering; solar projects within the premises of consumers in Rajasthan; solar projects outside the premises of consumer in Rajasthan; solar projects with a storage system for captive use; and charging station service providers who set up renewable energy generation projects within their premises for captive use.
Last month, The Maharashtra Electricity Regulatory Commission (MERC) had directed the Maharashtra State Electricity Distribution Company (MSEDCL) to provide the credit adjustment for the wrongful levy of electric duty to open access power consumer Mahindra Sanyo Special Steel Limited (MSSSL).
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Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.