Will A New Solar Policy Power Up Uttar Pradesh?

The Uttar Pradesh Government has come up with a new ‘Uttar Pradesh Solar Energy Policy 2022’ that aims to add 22-GW of solar power in the coming five years. It looks to attract an investment of Rs 40,000 cr in the solar sector in particular. The state wants to tap 14,000 MW through solar parks, 4,500 MW through residential rooftop installations, 1,500 MW through non-residential rooftop installations and 2000 MW through PM-KUSUM.

It says that all government buildings and educational institutions will have freedom to install rooftop solar panels on the net metering system.

The policy has all meaningful components like financial aid from the state, VGF for KUSUM C-2, subsidy for solarisation of on-grip agricultural pumps, capital subsidy on battery and storage systems, waiver of stamp duty on land purchase or leased for solar projects and so on. The policy comprehensively sets targets for the next five years. But the travesty is that the last five have been nothing short of a debacle, going by the reports from the ground.

A State That Has Repelled Solar

The state of Uttar Pradesh has the unwanted dichotomy of being one of the most power deficient states in the country, despite hosting a fifth of the population of the country, and lagging behind in the renewable energy growth. It’s one of the high solar irradiance states but the solar power generation in UP stands a mere 2-GW plus as of today, far behind Karnataka and Gujarat.

As far as solar power is concerned, UP had a target of 10.7 GW by 2022-end but its present capacity is 2GW – just 19% of the original target. Most of the power demand in the state is being met by coal fired plants – thanks to the expansion in Sonbhadra. Today, the demand for power is rising faster than other similarly situated states. According to a study by IEEFA, if Uttar Pradesh is able to generate 23.5 GW of solar power – which is its 2030 target – the demand would be easily met.

It’s easier said than done though! The state will need to add about 2.5 GW every year from here. UPNEDA has been mandated under the new solar policy as the nodal agency for implementation but the agency has not infused much confidence among investors and developers as far as solar projects are concerned. Uttar Pradesh New and Renewable Energy Development Agency (UNPEDA) cancelling a 1000-MW solar auction without even mentioning the reason behind the cancellation certainly doesn;t inspire any confidence.

Industry sources believe that there are many reasons behind the slow growth of solar power in UP. First, there has been a series of cancellation of PPAs by DISCOMS. The distribution companies suffer with high aggregate technical and commercial (AT&C) losses year after year. The poor financial health of DISCOMS must not be discounted and the state faces complex challenges with land acquisition. Developers on the ground have lamented the attitude of the discoms, and the outright corruption involved in making things move. That has killed margins and quality both, setting in place a vicious cycle of further lack of interest among many prospective users.

Experts also opine that Uttar Pradesh finds the import of renewable energy from other states to fulfill regulatory and statutory obligations more convenient.

The state has a target of achieving 14.1 GW of renewable capacity by the end of 2022 but it has delivered just 30% of it as the deadline nears. Gujarat, in comparison, has achieved 85%, Rajasthan 86% and Tamil Nadu 72%.

Governance in the state has strengthened in the past few years. But the lethargic move on solar and other renewables depicts that the government is not very much interested in renewables. A new policy is not a panacea unless the state machinery itself takes it seriously.