The Gujarat government, on Tuesday, announced its Solar Power Policy, 2009, ahead of the Vibrant Gujarat Global Investors’ Summit. The policy aims at tapping the vast potential for solar energy in the state and transforming it into an “integrated solar generation hub” of the country.

Under the policy, the first of its kind being introduced in Gujarat, the government promises a slew of incentives to prospective developers who may want to set up solar power projects in the state. However, the benefits of this policy will not be available to projects set up under the Union Ministry for Natural and Renewable Energy’s (MNRE) incentive scheme for solar power generation.

Announcing the new Solar Power Policy, Minister of State for Energy, Saurabh Patel, said the developers will be allowed to sell for 25 years energy generated from their projects to licensee distributors in the state under a Power Purchase Agreement (PPA) to be specified by the state utility, Gujarat Urja Vikas Nigam Limited (GUVNL).

The government has fixed a tariff of Rs 13 per unit for the first 12 years for the sale of energy by those photovoltaic solar projects commissioned before December 31, 2010, and Rs 3 per unit for the remaining 13 years.

The tariff fixed for other projects commissioned before March 31, 2014 is Rs 12 per unit for the first 12 years, and Rs 3 per unit for the remaining 13 years.

Patel said exemption from the payment of duty will be given for electricity generated from solar power generators (SPGs) used for self-consumption, or sold to the third party or distribution licensees.

Under the policy, the wheeling of electricity generated from the SPGs to desired locations for self-use within the state will be allowed at a charge of two per cent of the energy fed to the grid.

A maximum of 500 MW SPG will be allowed for installation during the operative period (upto March 31, 2014) of the solar power policy. The minimum project capacity of an SPG, in the case of solar photovoltaic (SPV) and solar thermal (ST) will be five MW each.

The minister said distribution licensees in the state are mandated to purchase solar power as per limit/sub-limit specified by the Gujarat Electricity Regulatory Commission (GERC) from time to time. The Gujarat Energy Development Agency (GEDA) and Gujarat Power Corporation Ltd (GPCL) will be the government's nodal agencies for facilitation and implementation of the policy.

It is envisaged in the policy to provide clean development mechanism (CDM) benefits to solar power project developers. They would, however, have to pass on 50 per cent of the gross CDM benefits to the licensee distributors with whom a PPA is signed.