SPECIAL REPORT: UP’s Time To Shine In Solar

At a recent Solar Trailblazers event in Lucknow in July, organised by Saur Energy, Uttar Pradesh Deputy Chief Minister Brajesh Pathak told a hall-packed audience that this is the ‘best time’ in India to go for solar. He was referring to the higher subsidies given to the rooftop solar consumers under the ambitious PM Surya Ghar scheme and a number of other conductive state policies. UP has been under a BJP led government since 2017, with Chief Minister Yogi Adityanath in charge since then.

“India had never seen such a high subsidy for rooftop solar consumers till now. In Uttar Pradesh, we have also amended our solar policies to make it more conductive for the growth of the solar sector. There were issues in the extension of net-metering for several other categories which have now been sorted out through our UP Solar Policy 2022,” Pathak said.

 Uttar Pradesh (UP), the most populous Indian state and the fourth largest geographically, currently has 5,346 MW of renewable energy capacities. This makes the state among the top 10 Indian states with highest renewable energy capacities. It is currently ranked 8th after renewable rich states like Rajasthan, Gujarat, Karnataka, Maharashtra , Madhya Pradesh and others.  Of course, jumping ranks will be very tough when one considers the gap between UP and fifth placed Maharashtra, at 1.7 times. Or the ambitious renewable targets of Andhra Pradesh and Madhya Pradesh. The two states above it at number 6 and 7, respectively.

Notwithstanding its inherent challenges of dearth of large land parcels to host large solar parks and adverse conditions to host wind energy projects, UP has finally got around to finding other ways to add several forms of clean energy capacity to its energy mix.   

According to the latest data from the Ministry of New and Renewable Energy (MNRE), ground-mounted solar projects, biomass power and hydro projects are spearheading the growth of its green power capacities. On the other hand, its growth in rooftop solar (now under PM Surya Ghar scheme) has been dismal till now with a total capacity of only 265 MW.  

The latest State Budget of UP revealed that the state has moved from its total solar capacity of 288 MW in 2017 to 2,600 MW in 2024. The state is also working to establish solar parks in the Bundelkhand region with a total capacity of 4,000 MW.  

On the other hand, State Finance Minister Suresh Khanna in his budget speech said that works are now on to boost the works of its proposed Green Energy Corridor Project-II in UP to easily evacuate green power from the state.  The state is also working to make Ayodhya and Varanasi as India’s latest Solar Cities.  

An analysis by PRS Legislative said that UP in 2024-25 has earmarked 6.7% of its total budgetary expenditure for its energy sector which is higher than the average of other states of 4.8%. However, the state currently has the highest installed capacity of thermal power sources like coal and gas. However, experts opine that the it has done well on several alternative modes of clean energy and has the potential to do more in the days to come. Solar and thermal coupling for instance, which allows solar projects to be set up anywhere else, could be one option for the state.

Potential In UP 

Hamstrung severely by land related issues, advances in floating solar and agro voltaics might yet open up new avenues for the state.

Jaideep Saraswat, Associate Director (Energy) from climate and energy think tank Vasudha Foundation told Saur Energy that UP has a good potential in floating solar and agro voltaics.  

“UP has around 4,192 water bodies spanning in an area greater than 15000 sq-mts. Out of this 4,192 water bodies are perennial. UP has a floating solar potential ranging from 9.5 GW to 4.3 GW while it has 22 GW of total potential in utility-scale projects,” he said. He however, added that the lack of land in UP to host large utility-scale projects, limitations of discoms and lack of awareness on off-grid solar interventions in rural UP mar the avenues of the sector. 

Anubha Shukla, Chief Commercial Officer of Husk Power, however sees immense potential for mini-grids and off-grid solutions for the Medium, Small and Micro Enterprises (MSME) sector in the state. Her company already operates mini-grids in the state and works with the MSME sectors to provide energy security through these decentralised models. Speaking at the same Solar Trailblazers event in Lucknow, she pointed out that there are 90 lakh registered MSMEs in the state which are paying higher commercial tariffs to run their businesses successfully. 

“If you look at the landed cost of electricity that these MSMEs are paying, it’s higher than what solar could deliver today. In India,

specifically we work in weak grid areas. They pay commercial tariffs for the government grid supply which is around Rs 8-Rs9 per unit range. However they are also using alternative power systems like diesels, inverters and others . So their cumulative landed cost of power is anywhere from Rs 25 to Rs 40 per unit. Thus, they are willing to pay a competitive rate if they can get a reliable source of power through solar mini grids,” she said.  

Shukla said that the company stopped treating power as a subsidized commodity and started selling clean power in weak grid areas at rates that were affordable to these MSMEs. “This model has worked fantastically for us. So for states like UP, instead of having centralised solar power system, we can have smaller decentralised solar mini grids to ensure reliable power which is also green,” she added. 

It is noteworthy that the UP New Energy Development Agency (UPNEDA) also used mini-grids to ensure energy security in many rural areas and recently issued a slew of tenders to revive many of these decentralised solar units.  

State Plans To Boost RE  

The state recently came out with its Solar Policy with an aim to boost its total solar capacity upto 22,000 MW by the end of 2026-27. This vision document of the government plans to do this by adding 14000 MW of utility-scale projects, 4500 MW of residential rooftop projects, 1500 MW of non-residential rooftop solar projects, 2000 MW of solar projects under PM-KUSUM. The state believes that with this, the state can generate 30,000 new jobs. 

The policy also talks about several incentives for solar project developers which can also propel the growth of solar projects in the state. One of the other key proposals in the policy was giving state subsidies for the rooftop solar projects and bringing several government buildings, government educational centres and others under the ambit of net-metering regime.   

Ajay Kumar, Senior Project Officer (SPO) of UPNEDA said that with the new policy, the government is giving land parcels at lease at the rate of Rs 15,000 per acre per year and government land at lease at Re 1 per acre per year to establish solar projects in the state. He also said that several joint ventures of the state entities with organisations like the Solar Energy Corporation of India (SECI), Tehri Hydro Power and with NHPC have been done to expedite the expansion of large solar projects.

“On the PM Surya Ghar scheme, out of the 1 crore household national target, UP has been given the target of 25 lakh households. We currently have around 1000 vendors registered with us for the rooftop solar programme and in the next few months, we expect the numbers to go upto 2,000,” he said.  

Not only solar projects, solar module manufacturing has also made inroads to the state. As per the latest Approved List of Models and Manufacturers (ALMM), Uttar Pradesh is home to five enlisted solar module manufacturers namely-Jakson Engineers, Alpex Solar, Bluebird Solar, Fujiyama Power and Integrated Batteries India with a cumulative capacity of 1,036 MW. Most of them are situated in Greater Noida region.  

Future ahead and challenges  

Arvind Semwal (Head, Sales and Marketing-North & East India) from Adani Solar said that with the high population in the state, the total power demand in the state is set to rise which offers new avenues for the solar industries to look towards the state. 

He said, “As the power demand will surge in the state, there are high chances of more people and industries shifting to clean power. Policies for the promotion of solar energy have also progressed in the state. Earlier there was some disconnect of the state nodal renewable agency, vendors and the discoms which have been narrowed down in years with the right conductive policies. I expect in the next 2-4 years UP is set to see a boom in solar power adoption.”

Solar industry associations from the state said that despite the growth of renewable energy, the role of discoms play a key role but these discoms themselves are mired in their own complexities. 

 “Discoms are under pressure. First, they have been obligated to fulfil their Renewable Purchase Obligations (RPOs), otherwise they are bound to pay a penalty. There are also cases where the senior officials from some discom divisions are transferred even after meeting the RPOs but the subsequent loss of revenues. In such situations, discoms are also in a dilemma on what to do under such circumstances (balancing RPOs and revenues). A lot of working hours of solar vendors are also often wasted in the paperwork for net-metering and other formalities with the discoms,” Sanchit Garg, Founder of the UP Solar Energy Development Association (UPSEDA) said. 

He however admitted that some of these works have now been eased out by the government. “One good thing that has happened is the shifting of load enhancement formalities from offline to online mode. This has saved the solar vendors from several other paper works, formalities and follow ups with the discoms,” he added.  

Shravan Gupta, Managing Director of Surat based Module maker Cosmic PV Power (based in Surat) said that buoyed by the pro-solar policies and expected rise of the solar industry in the state, his company has planned a warehouse for solar modules at Gorakhpur in UP. “I have tracked the Gujarat solar market for the past few years. Now I can say that in the next 2-3 years the scenario in UP is set to change with fresh changes in net-metering policies, more support to rooftop solar schemes through additional state subsidies. 

Tariq Hasan Naqvi, Chairman – National Solar & Bio- Energy Committee, IIA meanwhile said that some course corrections are needed to expedite the growth of PM-KUSUM in the state. He said, “Under the PM-KUSUM scheme, there are issues with the long PPAs with the farmers. Several farmers are reluctant to give away their land for a PPA which can go upto 25 years as land prices keep on increasing periodically and then find it a non-profitable business then. I think the government can consider amending the PPA norms where the PPA rates could be revised every five years.” 

Conclusion

In the last few years, UP seemed to be trying to amend some of the existing policy bottlenecks in the renewable sector to expedite its growth towards clean power. Provisions for land parcels for utility-scale projects, the recent expansion of solar parks in Ayodhya and proposed plans for Jhansi Solar park are new ways to boost utility-scale projects in the state. Post new policies from the Centre and State Solar Policy, even the UP State Electricity Regulatory Commission (UPERC) has also followed it up with the right regulations for solar projects in the state. One among these was the doing away of the Technical Feasibility Report (TFR) for rooftop solar projects below 10 MW and making it an automatic process.

However, despite issue of Standard Operating Protocol (SoP) by the UPPCL, its subsidiary discoms continue to flout these SoPs in terms of timeline compliance for solar projects related to net-metering, commissioning and other delays issues. A special focus on the MSME sector is likely to boost at least the rooftop solar segment in the state which had been underperforming in the state till now. Dropping battery storage costs also augur well for a state where clean RTC power is a huge challenge.

The Top 5 Challenges & Opportunities For Solar In UP So What Does UP have that is going for Solar? Opportunities: A Low installed base is its own opportunity, if you are an optimist. With PM-KUSUM and PM Surya ghar only coming into their own now after learnings, one has reason to believe the rooftop opportunity and agri sector opportunity is huge in UP. Floating solar. Even as floating solar has its own set of challenges and need to further check for environmental impact, UP’s many thermal stations could do well to replicate the large floating solar capacities already up at many thermal stations in India. Green Open Access, RPO obligations. Together, these will ensure a proactive approach to adding renewable energy to the  mix among large consumers as well as UP’s notorious discoms, which have hitherto been reluctant to embrace solar in the grid. Even though industry is limited, large MSME clusters in districts like GB Nagar, Moradabad, Aligarh etc offer opportunities to design specific packages that can lead to broader inclusion into the solar mission. Political Backing. As highlighted earlier, with a state government working in sync with the centre, UP at least doesn’t have the kind of political resistance many ither states have suffered from. Already, we are seeing solar make progress on government owned properties and institutions in a big way. Low Wind Potential. As one of the states with the least potential for wind energy, in many ways, UP doesn’t have any option but to consider Solar to meet its clean energy targets. Solar plus storage will also be a key part of this transition, as storage costs drop further, as widely expected. Challenges: For UP, almost all the challenges are dwarfed by the most basic one. Land. Other than the relatively arid Bundelkhand region that has been prone to droughts, land availability across the state for large projects of over 50 MW is a significant challenge.  Other than land, the state, as one of the poorest in India, will always face the twin issues of capital and affordability. Heavily dependent on subsidies and government backing, it will continue to do so to meet its ambitious 22 GW target. Discoms that are slow, inefficient and reluctant to change remain a key challenge, and need a lot of work to make an impact on ground.