Gujarat state, in India, has come up with its Solar Power Policy, 2009, aimed 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 new policy, the government has promised a lot of incentives to prospective developers desirable of setting up solar power projects in the state. The announcement comes ahead of Gujarat Global Investors Summit.

The benefits of the new 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 to be specified by Gujarat Urja Vikas Nigam Limited.

Gujarat has fixed a tariff of INR13 per unit for the first 12 years for the sale of energy by those photovoltaic solar projects commissioned before December 31, 2010, and INR3 per unit for the remaining 13 years.

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

As per the new policy, the wheeling of electricity generated from the solar power generators s to desired locations for self-use within the state will be allowed at a charge of 2% of the energy fed to the grid.

A maximum of 500 megawatt (MW) solar power generated will be allowed for installation during the operative period (upto March 31, 2014) of the policy. The minimum project capacity of an solar power generated, in the case of solar photovoltaic (SPV) and solar thermal (ST) will be 5 MW each.

Patel said that the 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 expected that the policy will provide clean development mechanism (CDM) benefits to solar power project developers. They would, however, have to pass on 50% of the gross CDM benefits to the licensee distributors with whom a power purchase agreeemnt is signed.

A four-member committee headed by the principal secretary of energy department has been set up to approve solar power projects on merits.