RE Toolkit 2 – Policies 2017-03-21T13:14:59+00:00


Over the past 20 years India has adopted a number of new and innovative policy frameworks to reform its energy sector. The goal of achieving energy security and providing energy access to the entire population led to several new energy policies. The Ministry of New and Renewable Energy (MNRE), Government of India aims to deploy new and renewable energy across the country and sectors to ensure energy security and increase the share of clean energy. With this aim, the MNRE has formulated policies and various schemes and programmes to implement different renewable energy (RE) technologies.

At the level of States, policies and programmes for renewable energy technologies is usually designed by the State Nodal Agencies or the Energy Department. India also has a strong regulatory environment for the electricity sector in general. Electricity Act of 2003 serves the legal framework for renewable energy related projects along with conventional power plants. A number of other umbrella policies like National Tariff Policy and National Electricity Policy, Renewable Energy Procurement Obligation (RPO) shape the overall sector.

In the following sections we discuss government policies and programmes for different renewable energy technologies and highlight the financial assistance given by MNRE and states for deploying various RE technologies through different schemes and programmes.

For More Information Visit the Ministry of New & Renewable Energy Website

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Policies and Programmes of Solar Energy

Both at the Centre and State level governments of India have come up with policies to accelerate the deployment of rooftop solar PV projects. Both the central and state government institutions share responsibilities in governing the solar PV sector in India. A summary of governance level, relevant institutions and their respective regulatory orders for grid connected solar projects are summarized below.

An accelerated depreciation of 80% in solar energy devices and equipment had been applicable under the Income Tax Act vide notification No. 67/2005 dated 28.02.2005. However, in the budget 2017-18 the accelerated depreciation benefit is proposed to be 40% with effect from 1st April 2017.

The eligible solar energy devices, equipment and processes are listed below:

  1. Flat plate collectors
  2. Concentrating and pipe type solar collectors
  3. Solar cookers
  4. Solar water heaters and systems
  5. Solar air heating system
  6. Solar crop driers and systems
  7. Solar refrigeration, cold storages and air-conditioning systems
  8. Solar still and desalination systems
  9. Solar power generating systems
  10. Solar pumps based on solar thermal
  11. Solar pumps based on solar PV
  12. Solar PV modules and panels for water pumping and other applications

There is no separate procedure or specific form prescribed for claiming the accelerated depreciation benefit. The benefits can be availed through regular tax returns under the head “Profit and gains of business and profession” as per section 70 of Income Tax Act.

The MNRE provides capital subsidy for installation of Off-grid and Decentralized systems, including hybrid systems to meet/ supplement lighting, electricity/ power, heating and cooling energy requirements. Various off-grid solar photovoltaic systems / applications up to a maximum capacity of 100kWp per site and off-grid and decentralized solar thermal applications of any size would be eligible for being covered under the scheme. For mini-grids for rural electrification, applications up to a maximum capacity of 250kW per site would be supported. The off-grid decentralised solar thermal applications can be implemented in both urban and rural area.

The following are the typical solar systems equipments are eligible to avail capital subsidy.

  1. Standalone and hybrid solar photovoltaic systems up to 100kWp per site
  2. Mini-grid for rural electrification up to 250kWp per site
  3. Solar water heating system
  4. Solar air heating system
  5. Solar steam generation/ pressurized hot water/air systems
  6. Solar thermal refrigeration/cooling system
  7. Solar Thermal Power Pack (including hybrid with Solar PV)
  8. Solar stills
  9. Solar Cookers
  1. Under this scheme, capital subsidy of 30% would be given for the projects/ systems set up on open tender basis by State Nodal Agencies/ SECI/ PSUs/ Financial Institutions/ Government organizations or 30% of benchmark cost, whichever is lower.
  2. For solar thermal applications, capital subsidy of up to 60% of the benchmark cost would be available for special category states, viz. NE states, Sikkim, J&K, Himachal Pradesh, Uttarakhand, Lakshadweep, Andaman & Nicobar Islands and districts on India’s international borders.
  3. In case of project(s) setup through system integrator/channel partner; a correction factor will be applied so that subsidy outgo will not be more than absolute fixed value arrived at by the committee for fixing the benchmark cost and subsidy level/amount.
  4. Additional CFA up to 3% would be admissible as service charge to the State Nodal Agencies, SECI/ NHB/ IREDA or other govt. agencies etc. for preparation of DPR, providing technical assistance in implementation of the schemes and performance monitoring after installation.

Implementing Agency Approval procedure
State Nodal Agency (SNA) and Department
  • MNRE allocatestargets to the States/SNAs in the beginning of the Financial Year (FY).
  • MNRE releases 10% of eligible CFA in advance at the time of target allocation.
  • The SNAs receive applications from end users/ beneficiaries, certify them and submit to the MNRE.
  • MNRE releases up to 30% of CFA as advance after finalizing the tender.
  • MNRE releases balance amount after installation and verification of projects.
Solar Energy Corporation of India (SECI)
  • The SECI submits annual plan for implementation, depending upon the feasibility and availability of funds. The projects are setup on open tender basis by SECI.
  • 10% advance on allocation of targets and sanction of the preliminary proposal on programme mode.
  • 20% after submission of detailed proposal on the costs firmed up on tender basis.
  • 70% on completion/commissioning, performance report for about one month and due verification/third party inspection there of on submission of requisite claims.
MNRE empanelled Channel Partners /system integrator
  • MNRE empanelled Channel Partners based on certification by qualified rating agencies.
  • Empanelled Channel Partners will execute projects for the end users/ beneficiaries and get paid directly from the end user.
  • Beneficiaries will claim subsidy from MNRE on reimbursement basis on completion, commissioning and performance after due verification/third party inspection.
Financial Institutions/ Intermediaries
  • These are entities, which integrate different sources of finance including carbon finance, government assistance loans and other sources of funds to design financial products/ instruments and make these available to their clients at an affordable cost. These entities would tie up with manufacturers and service providers for supply of products.
  • This category will include NABARD, NHB, SEC/IREDA and other financial institutions. MNRE may draw up a scheme and place subsidy funds with the institution, which can then be disbursed along with loan to the beneficiaries. The advance to be given may depend on the expected volume of business.
Large PSUs/ Other Govt. agencies
  • Government departments/ agencies submit proposals directly to MNRE.
  • MNRE releases up to 30% of the eligible CFA and service charges at the time of sanction of proposal in the project and programme mode.
  • Balance 70 % CFA released after successful commissioning of the projects after sample verification on submission of requisite claims.

Policies and Programmes of Grid Connected Solar PV Projects

No Central Finance Assistance (CFA) is available for commercial and industrial establishments in the private sector as they are eligible for other benefits such as Accelerated Depreciation, custom duty concessions, excise duty exemptions and tax holiday.

For all other sectors, the CFA is 30% of benchmark cost for general category States/UTs and 70% of benchmark cost for special category States i.e., North Eastern States including Sikkim, Uttarakhand, Himachal Pradesh, Jammu & Kashmir and Lakshadweep, Andaman & Nicobar Islands.

The Domestic Content Requirement (for modules made in India) will be applicable only for those installations where CFA will be provided. No Domestic Content Requirement will be applicable to the commercial and industrial establishments in the private sector where CFA is not applicable.

Grid connected rooftop and small solar power plants of capacity 1.0 kWp to 500 kWp

The CFA will be provided through State Nodal Agencies, State Departments, Solar Energy Corporation of India (SECI), Indian Renewable Energy Development Agency (IREDA), Empanelled Government Agencies/ DISCOMs, PSUs of Central and State Government and participating Banks.

The government of India has been supporting implementation of 9000MW grid connected solar power plants through viability gap funding under phase II & phase III of National Solar Mission.

Target for viability gap funding (VGF) project is given in the table below.

Projects under viability gap funding will be implemented by SECI through open competitive reverse bidding process.

Accelerated depreciation benefit is also applicable to grid connected solar PV projects under the Income Tax Act vide notification No. 67/2005 dated 28.02.2005. This is illustrated in the table below:

This was announced in the budget for the financial year 2014-15. The 10 years income tax holiday (section 80 IA) on solar projects has been extended till March 2017. In addition, companies engaged in the business of generating power from grid connected solar PV projects should be exempted from payment of Minimum Alternate Tax under Section 115JB of the Income Tax Act.

The Reserve Bank of India has revised the priority sector lending norms, and has accorded priority sector lending status for renewable energy.

  • Provision of bank loans as a part of home loan/ home improvement loan
  • Loans for system aggregators from Indian Renewable Energy Development Agency at concessional interest rate (9.9% to 10.75%)
  • Loans available upto Rs.15 crore for renewable energy projects and upto Rs.10 lakhs for individual loans under Priority Sector Lending.

Central government in collaboration with state agencies provides financial assistance for development of solar parks in India as below. This scheme is being implemented from the year 2014-15 until 2018-19 and managed by the Solar Corporation of India (SECI).

  1. Conducting surveys and preparation of Detailed Project Report: Rs.25 lakh per park
  2. Rs.20 lakh per MW or 30% of the project cost, including Grid connectivity cost, whichever is lower.

The State Government will first nominate the implementing agency for the solar park and also identify the land for the proposed solar park. It will then send a proposal to MNRE for approval along with the name of the implementing agency. The implementing agency may be sanctioned a grant of up to Rs.25 Lakhs for preparing Detailed Project Report (DPR) of the Solar Park and conducting surveys etc. The DPR must be prepared in 60 days.

Thereafter, application may be made by the implementing agency to SECI for the grant of up to Rs.20 lakhs/MW or 30% of the project cost including Grid connectivity cost, whichever is lower.

For further details, please refer to the scheme document.

Policies and Programmes for Wind Energy

The wind power programme in India was initiated towards the end of the 6th Five Year Plan, in 1983-84. Total installed capacity of wind power in India as on 30 June 2016 is 27151MW with additional installed capacity of 4000MW during 2015-16. India sets a target of 75GW wind power installation by the year 2022.

Wind power regulatory regime emanates from the Electricity Act 2003 that mandated SERCs generation of renewable electricity by providing connectivity and creating purchase obligations.  This created wind market and volumes in wind resource rich states. Around this a policy eco-system was also created. Indian Renewable Energy Development Agency (IREDA) provides loan for setting up wind power projects. Support for wind power in India includes the following measures –

  • Concession on import duty on specified wind turbine components
  • 80% accelerated depreciation in the first year of commissioning
  • 10 year income tax holiday for wind power generation projects
  • Excise duty relief on wind turbine components
  • Feed-in-tariff determined on cost plus basis ranging from Rs.3.39–5.32 per kWh
  • Wheeling, banking and third party sales, buy-back facility by states
  • Competitive bidding is being initiated in this sector as well to drive the costs down even further
  • The Ministry of Environment and Forests has issued guidelines for diversion of forest lands for non-forest purposes, particularly to enable wind generation
  • Clearance of leasing and forest land for up to a period of 30 years for wind developers

The objective of the programme on “Small Wind Energy and Hybrid Systems” is to develop technology and promote applications of water pumping windmills and aerogenerators/ wind-solar hybrid systems. This programme  supports the following activities:

  • Financial support for setting up water pumping wind mills and aerogenerators/wind solar hybrid systems,
  • Field trials & performance evaluation,
  • Grid connected SWES on demonstration basis and
  • Research & Development.

The scheme offers the following benefits/ incentives to promote small wind energy and hybrid systems.

  • Financial outlay for the twelfth plan period under the scheme is Rs.50 Crore.
  • Central Financial Assistance (CFA) under the programme is available only to the community users.
  • CFA under the programme is Rs. 1.0 lakh per kW.
  • A minimum of 10% of the annual budgetary allocations will be used of Research and Development purposes.
  • Financial support for carrying out organization of seminars / symposiums/workshops/ training programme, undertaking studies, R&D activities etc. on case-by-case basis.

The scheme for GBI was introduced in December 2009. Under the scheme GBI is provided to wind electric producers @ Rs.0.50 per unit of electricity fed into the grid over and above the tariffs   fixed by the states, for a period not less than 4 years and a maximum period of 10 years in parallel with accelerated depreciation, with a cap of Rs.100 lakhs per MW. The GBI can be availed by only those investors who do not avail accelerated depreciation benefit. The total disbursement in a year will not exceed one fourth of the maximum limit of the incentive, which is Rs.25,000 lakhs per MW during the first four years.

The GBI would be implemented in parallel with the existing fiscal incentive for the grid connected wind power projects. The GBI will cover grid connected generation from wind power projects set up for sale of electricity to grid at a tariff fixed by SERC and/or State Govt. and also include captive wind power projects including group captive, but exclude third party sale, (viz. merchant power plants).

  • The GBI would be implemented through Indian Renewable Energy Development Agency (IREDA). The MNRE will release budgeted fund as advance to IREDA to ensure timely release and flow of funds to the projects. The existing system with modification will be followed by various state utilities for wind power purchase from the wind power producers.
  • Wind power producers, will be required to register with IREDA.
  • The IREDA would disburse the GBI to the developers through their designated bank account on 6 monthly basis.
  • The Generation Based Incentive is over and above the tariff that may be approved by the State Electricity Regulatory Commissions in various States.
  • Activities of programme on “Small Wind Energy and Hybrid Systems” will be implemented in association with the State Nodal Agencies (SNAs), manufacturers of SWESs, R&DI academic autonomous institutions, NGOs, Govt. undertakings, and user organizations.
  • The programme will support deployment of water pumping windmills (wind pumps) and small aerogenerators/ wind-solar hybrid systems for water pumping applications and generation of electricity in off-grid mode, respectively.
  • All categories of users including individuals, farmers, NGOs, Central/State Government agencies, local bodies and Panchayats, Autonomous Institutions, Research Organizations, Cooperative Societies, Corporate Bodies, Business Establishments, Banks, etc. are eligible for having the systems installed for their use.
  • The proposals for CFA will be considered based on technical viability and availability of funds within overall targets for the programme. The decision of the Secretary, MNRE will be final & binding in this regard.
  • The following modes of implementation could be adopted under the scheme:

The manufacturers will identify suitable beneficiaries, prepare a bundled proposal having a minimum cumulative capacity of 30 kW and a minimum number of 3 systems and submit to MNRE.

The State Nodal Agencies could also submit proposals on a project mode to the Ministry (bundled proposal having a minimum cumulative capacity of 30 kW and a minimum number of 3 systems.

The manufacturers may also bundle the proposals for beneficiaries, who do not wish to avail the Bank Loan and submit to Ministry through SNAs (with an advance copy to MNRE). The SNAs may forward the same to MNRE.

Ministry may also consider the proposals in “Project Mode” directly from Govt. organizations based on the above-mentioned modalities.

Policies and Programmes for Bio Energy

The current availability of biomass in India is estimated at about 500 million metric tonnes per year. Studies sponsored by the MNRE have estimated a surplus biomass availability of about 120 – 150 million metric tonnes per annum covering agricultural and forestry residues corresponding to a potential of about 18,000MW. Additional power of about 5000MW could be generated through bagasse-based cogeneration in the country’s 500 odd sugar mills.

Besides the Central Financial Assistance, fiscal incentives such as 80% accelerated depreciation, concessional import duty, excise duty, tax holiday for 10 years etc., are available for Biomass power projects. The benefit of concessional custom duty and excise duty exemption are available on equipments required for initial setting up of biomass projects based on certification by Ministry.  In addition, State Electricity Regulatory Commissions have determined preferential tariffs and Renewable Purchase Standards (RPS). Indian Renewable Energy Development Agency (IREDA) provides loan for setting up biomass power and bagasse cogeneration projects.

Types of Biomass Resources

  • For biomass power project: Biomass will include Agro-based Industrial Residue, wood produced in Energy Plantations or recovered from wild bushes / weeds, wood waste produced in industrial operations; Crop / Agro Residues.
  • For bagasse cogeneration projects: Bagasse during crushing season

Financing Institutions

  • All registered financial Institutions Development / investment corporations; all nationalized bank, private banks, Central & State Cooperative Banks, State/Public Sector Leasing and Financing corporations.


  • Promoters includes individual / independent registered companies, Joint Sector / public sector companies / state agencies and private and public sector investors having technical and managerial capabilities for implementing Biomass Power / Bagasse cogeneration projects on BOOT / BOLT or IPP basis or State Govt. undertaking or Sate Govt. supported Joint Venture Company/SPV Company.

Grid connected Biomass Power and Bagasse Cogeneration Projects with the following capacity/parameters will only be eligible under the scheme;

  1. CFA for Biomass Power Project and Bagasse Cogeneration Projects by Private/ Joint venture/ Cooperative/ Public Sector Sugar Mills
  2. CFA for Bagasse Cogeneration Project in cooperative/ public sector sugar mills implemented by IPPs/State Government Undertakings or State Government Joint Venture Company / Special Purpose Vehicle (Urja Ankur Trust) through BOOT/BOLT model.
  3. CFA for Bagasse Cogeneration Project in existing cooperative sector sugar mills employing boiler modifications
  4. Fiscal Incentives for Biomass Power Generation

The Ministry of New and Renewable Energy is promoting biomass gasifier based power plants for producing electricity using locally available biomass resources in rural areas where surplus biomass such as small wood chips, rice husk, arhar stalks, cotton stalks and other agro-residues are available to meet the unmet demand of electricity inter-alia for lighting, water pumping and microenterprises including telecom towers etc. The MNRE supports biomass gasifier based power generation as mentioned below:

  • Biomass gasifier based distributed / off grid power systems in rural areas limited to 250 kW installed capacity, which have surplus biomass resources and unmet demand of electricity for inter-alia lighting, water pumping and microenterprises including telecom towers etc. will be supported.
  • Biomass gasifier based captive power plants will be supported in rice mills for meeting their captive needs and surplus power fed into the grid / distributed in local areas.
  • Biomass gasifier based MW level grid connected power plants with 100% producer gas engines will be supported. Besides, biomass based grid connected Boiler-Turbine-Generator (BTG) projects, preferably at tail end of the grid and having a decentralized distribution component would also be supported. The maximum installed capacity of each such project would be 2MW.
  • Support to activities such as awareness creation, publicity measures, seminars / workshops / business meets / training programme etc. and to expand local manufacturing capacity and also support service facilities under the programme.

Biogas can effectively be utilized for generation of power through a biogas based power-generation system after dewatering and cleaning of the gas. In addition, the slurry produced in the process provides valuable organic manure for farming and sustaining the soil fertility. The Ministry of New and Renewable Energy has started a scheme “Biogas based Distributed / Grid Power Generation Programme” from 2005-06 (4th January 2006) with a view to promote biogas based power generation, especially in the small capacity range, based on the availability of large quantity of animal wastes and wastes from forestry, rural based industries (agro / food processing), kitchen wastes, etc.

The programme would be implemented through nodal departments/ agencies of the States/ UTs, KVIC, institutions and NGOs. The projects to be taken up by any village level organization, institution, private entrepreneurs etc. in rural areas as well as areas covered under the Remote Village Electrification (RVE) programme of MNRE other than the industries and commercial establishments covered under Urban, Industrial & Commercial Applications (UICA) programmes for sale of electricity to individual/ community/ grid etc. on mutually agreeable terms.  Installation of projects will be encouraged only if specific responsibility is taken upright from the initiation of project by the institution including for operation and maintenance for the specified period as per DPR norms or otherwise for a minimum period of ten years.

The central financial assistance for such projects will be limited to a maximum of Rs. 30,000 to Rs.40,000 per kW depending upon capacity of the power generating projects in the range of 3 kW to 250 kW of different rating limited to 40% of the plant cost.

The programme also provides support for a variety of workshops, seminars, meetings, training programmers to the implementing agencies/specialized organizations/Biogas Development & Training Centers (BDTCs) for developing the required specifications and standards, discussions/deliberations on the performance of systems, setting up operation and maintenance mechanism, training of required manpower, capacity building, business meets for the prospective industries, etc. with the ultimate objective of promotion of power generation based on biogas in the country.

The NBCP envisages to support R&D, testing, development of standards and scale up demonstration of improved biomass cookstoves on cost sharing basis. The objective is to replace the existing traditional chullhas by improved biomass cookstoves for domestic and community cooking, hence to save fuel and address health hazard concerns due to inefficient combustion of Biomass in traditional chullhas. The community cookstoves will be deployed in Mid-Day-Meal Scheme in government schools, Anganwadis, Tribal Hostels, Forest Rest-Houses, Dhabas and Restaurants on national highways etc.

Kitchens of Mid-day Meal (MDM) scheme, Angwadis, Forest Rest Houses, Tribal Hostels and small business establishments (road side dhabas, small hotels and restaurants and a variety of cottage industries like textile dyeing, drying of spices etc. to be supplied with improved biomass cook-stoves unnat chulhas complying with improved standards.

The programme will be implemented through R&D/academic institutions, State Nodal Agencies/ State Departments of Education through District Coordinators of Mid-Day Meal Scheme, District Level Officer of Anganwadis, District Coordinators/Officers of ST/SC/Backward Class Hostels and similar departmental agencies where cook-stoves could be employed, NGOs/CSOs, manufacturers, business development organizations, etc. engaged in implementation of renewable energy projects at grass root level.

The funds for the demonstration of biomass cookstoves will be released directly to the implementing organizations which will be the State Nodal Agencies, NGOs, SHGs, concerned State Government Agencies dealing with NRLM of Ministry of Rural Development, industries, companies, project developers etc., who will pass on the benefit to the beneficiaries’. Effectively, the implementing agencies will charge the total cost minus the MNRE subsidy/support from the beneficiaries, excluding in the case of NRLM.

The following fund flow mechanism will be followed for projects:

  • In the case of implementing agencies from the state governments, SNAs, etc. 40% of the cost of the project with technical assistance and overhead charges will be released with the sanction letter of the project.
  • For private organizations, such as industry, NGOs, SHGs, etc. the 30% of the cost of the project will be provided with the sanction letter subject to the condition that the organization will furnish bank guarantee.
  • On successful dissemination and use of cookstoves/chulhas by beneficiaries, the implementing agencies will be required to get the beneficiaries including the details of identity verified by the Gram Pradhan/Gram Panchayat followed by endorsement by the concerned State Nodal Agency.
  • The balance funds in both the cases will be released after successful field performance monitoring and evaluation done by third party and followed by submitting the final completion report of the project with utilization certificate and audited statement of expenditure incurred as per the sanction of the project.

Policy for Waste to Energy Programme

The MNRE is promoting all available options on various technologies in setting up projects for recovery of energy from urban wastes. While incineration and bio-methanation are the most common technologies, pyrolysis and gasification are also emerging as preferred options. The major advantage of adopting technologies for recovery of energy from urban wastes is in the efficient disposal of wastes, which leads to lowering the environmental pollution levels; besides generating a substantial quantity of energy for use.

The main objective of the MNRE programme is to promote setting up projects on recovery of energy from urban, industrial and agricultural wastes; and to create conducive environment with fiscal and financial regime, to develop, demonstrate and disseminate utilization of wastes and residues for recovery of energy.

Central Financial Assistance (CFA) for projects of different categories would be given in the form of capital subsidy to the promoters and in the form of Grants in Aid for other activities, as given in the table below.

Sl. Wastes/Processes/Technologies Capital Subsidy
1 Power generation from Municipal Solid Waste Rs.2.00 crore/MW (Max. Rs.10 crore/ project)
2 Power generation from biogas at Sewage Treatment Plant or through biomethanation of Urban and Agricultural Waste/residues including cattle dung or production of bio CNG Rs.2.00 crore/MW or bio CNG from 12000m3 Biogas/day (Max. Rs.5 crore/project)
3 Biogas generation from Urban, Industrial and Agricultural Wastes/residues Rs.0.50 crore /MWeq. (12000m3 biogas /day) (Max Rs.5 crore/ project)
4 Power Generation from Biogas (engine / gas turbine route) and production of bio CNG for filling into gas cylinders Rs.1.00 crore/MW or bio CNG from 12000m3 biogas (Max. Rs.5 crore/project)
5 Power Generation from Biogas, Solid Industrial, Agricultural Waste/residues excluding bagasse through Boiler + Steam Turbine Configuration Rs.0.20 crore/MW (Max. Rs.1.0 crore/project)

Policies and Programmes for Small and Micro Hydro Projects

Ministry of New and Renewable Energy has been vested with the responsibility of developing Small Hydro Power (SHP) projects up to 25MW station capacities. Hydro power projects are generally categorized into two segments i.e. small and large hydro. In India, hydro projects up to 25MW station capacities have been categorized as Small Hydro Power (SHP) projects. While Ministry of Power, Government of India is responsible for large hydro projects, the mandate for the small hydro power (up to 25MW) is given to Ministry of New and Renewable Energy. Small hydro power projects are further classified into:

The SHP programme is now essentially private investment driven. Projects are normally economically viable and the private sector is showing a lot of interest in investing in SHP projects. The viability of these projects improves with increase in the project capacity. The Ministry’s aim is that the SHP installed capacity should be about 5000MW by the end of 2022. The focus of the SHP programme is to lower the cost of equipment, increase its reliability and set up projects in areas which give the maximum advantage in terms of capacity utilisation.

CFA for Private Sector Developers

The financial support would be released in two installments.  The first installment which is 50% of financial support will be released to the financial institution/ bank, after placement of order for electro-mechanical equipment and disbursement of 50% loan during execution of the project and the balance 50% of financial support after successful commissioning of the project, commercial generation & performance testing. In case a project is set up by a developer (such as tea garden, captive power projects etc.) fully through its own financial resources, the total financial support will be released directly to him after successful commissioning of the project & performance testing.

  • The request on application form along with documentary proof, for the grant of financial support for SHP project, complete in all respect from the developer should be submitted to the Ministry within six months from the commencement of project work at the site or 1st disbursement of loan from Financial Institution / Bank whichever is earlier.
  • The financial institutions (FIs) such as IREDA, PFC, REC, IDBI, IDFC, ICICI, IFCI, and State / Nationalized / Scheduled Banks, controlled / governed by the RBI, or any other FI / Bank as may be acceptable to the Ministry from time to time, shall be eligible under the Scheme.
  • Defaulter in repayment of loan will not be eligible for financial support.
  • The projects where the existing capacity has been enhanced/ uprated by adding more new units after obtaining the specific approval of the competent authorities will also be eligible for financial support limited to the new additional units only.

CFA for Government Sector Developers

  • As a 1st installment 25% award of Work Orders & signing of Contract Agreement with submission of copies as documentary proof.
  • As a 2st installment 30% Progressive release on achieving 25% progress and submission of physical & financial progress reports, Statement of Expenditure (SOE), Utilization Certificate (UC) for released funds & photographs.
  • As a 3rd installment 35% Progressive release on achieving 50% progress and submission of physical & financial progress reports, SOE, UC for released funds & photographs.
  • As a 4th installment 10% Submission of ‘Completion Report’ with SOE, UC, generation data, audited accounts statement based on actual total expenditure on the project etc. after successful commissioning of project, six months generation data.
  • Two copies of approved DPR (conforming to the MNRE/AHEC/CEA/CWC/AHEC guidelines covering various aspects of project implementation and based on recent/present cost estimates).
  • Approval from the State Government or any other concerned competent authority (as the case may be) for the implementation of the project, mainly for capacity & total cost of project.
  • Commitment to meet the balance cost of the project over & above the proposed financial support, with details of provisions made in the State Plan of the State Govt. or any other concerned competent authority (as the case may be) and/or financial tie-up with financial institutions/banks, if any, documentary proof.
  • A copy of the detailed implementation schedule of the project.
  • Copies of Statutory clearances, as applicable:
  • Clearance from Irrigation Department,
  • Clearance from the State Electricity Board/Power Department/State Agency
  • Environmental clearance
  • Forest clearance
  • Any other statutory clearance
  • Proof for availability of required land for the project and its acquisition & physical possession before the start of project execution, as applicable.

CFA of Rs.1.00crores/MW limited to Rs.10.00 crores per project will be provided for renovation and modernization of government sector small hydro projects.

  • 10% as a 1st installment on award of Work Orders & signing of contract agreement with submission of copies as proof.
  • 25% as a 2nd installment on achieving 25% progress and submission of physical & financial progress reports, SOE, UC for released funds & photographs.
  • 40% as a 3rd installment on achieving 50% progress and submission of physical & financial progress reports, SOE, UC for released funds & photographs.
  • 10% as a 4th installment on submission of ‘Completion Report’ with SOE, UC, generation data, audited accounts statement based on actual total expenditure on the project etc. after successful commissioning of project, Six months generation.
  • The scheme will be applicable for Renovation & Modernization of existing SHP projects up to 25 MW capacities which were commissioned for a minimum period of seven years prior to the date of submission of the proposal to the Ministry.
  • The projects where the existing capacity has been enhanced/uprated with Renovation & Modernization by adding more new units after obtaining the specific approval of the competent authorities, will also be eligible for financial support as per above support.
  • The past performance of the station w.r.t. DPR performance projections and factors which have led to the lower generation / non-functioning of the plant shall be kept as the guiding factor in selection of the R & M projects.
  • Costs involved in renovation & modernization and the benefits thereof would be a major consideration in supporting the project. The costs should be optimized with expected generation from the project. This would also form basis for determining the quantum of R & M works and financial support under the scheme. The support will be linked to factors such as additional capacity proposed to be installed and raising equipment performance in terms of PLF etc.
  • Improved and effective institutional support for the project will be essential criteria in supporting the projects.
  • The replacement of minor items which could otherwise be covered under the routine and preventive maintenance of SHP project shall not be covered under this scheme.
  • Release of 25% of CFA along with sanction as advance
  • Release of 65%of CFA on achievement of 25% of physical progress and after placement of order for equipment & submission of their physical/financial progress reports, photographs, utilization certificate & SOE on project cost.
  • Release of 10% of CFA after successful commissioning of the project and submission of generation report of three months verified by State Nodal Department/SNA or any other organization engaged by MNRE and submission of completion report, photographs, utilization certificate & audited SOE of total project cost.

The State Government departments / State Nodal Agencies, Local bodies, Co-operatives, NGOs & Individual Entrepreneurs intending to avail CFA are required to submit the application as per MNRE format along with the following documents:

  • Two copies of Project Report covering various aspects of project implementation, completion schedule, O&M and cost estimates.
  • State Government approval for the implementation of the project (including statuary clearances as applicable, if any).
  • Commitment of funds to meet the balance project cost.
  • Proof of land availability required for the project

50% CFA will be released as advance on allocation of target. Balance 50% CFA will be released on completion of projects against submission of completion report and utilization certificate.

The CFA for watermills and micro-hydel projects under the Scheme is applicable for the projects to be implemented by the State Government Department / State Nodal Agency/ local bodies/ Co-operatives / NGOs/Tea Garden & Individual Entrepreneurs.  The concerned project developers intending to avail CFA are required to submit the application as per MNRE format along with the following documents:

  • Two copies of Project Report covering various aspects of project implementation, completion schedule, O&M and cost estimates.
  • State Government approval for the implementation of the project (including statuary clearances as applicable, if any).
  • Commitment of funds to meet the balance project cost.
  • Proof of land availability required for the project

Development of Solar Cities Programme

This programme is at city level to promote the use of Renewable Energy in Urban areas by providing support to the Municipal Corporations. A total of 60 cities/towns were proposed to be developed as Solar Cities during the 12th Plan period, which includes the already sanctioned 45 Solar Cities.

The Ministry will support at least one city in each State to a maximum of seven cities for the interested States on merit. The population of the cities will be between 0.50 lakh to 50 lakh including the floating population. Cities with less population will be considered in North Eastern and hilly states, Islands and UTs.

The financial assistance will be available to those cities which fulfill or have taken actions on at least three conditions out of all the listed below.

  1. The city has created a solar city cell and a Stakeholders’ Committee.
  2. The city has taken actions or initiatives for making the use of water heating systems in the building bye-laws.
  3. The city has taken actions or initiatives to provide rebate in property tax through Municipal Corporations/ Municipalities or in electricity tariff though Utilities/ Electricity Boards to the users of solar water heaters especially in domestic sector.
  4. The city has taken action or initiative to promote National Rating System for construction of energy efficient Green Buildings in particular to commercial and institutional buildings. The city has issued G.O. as regards to construction of Green buildings in compliance with approved National Rating Systems like GRIHA particularly in Government/ PSU buildings.
  5. As per MSW Rules notified by the MoEF, the city has initiated/taken actions for proper MSW management and for setting up set up projects of suitable capacity for generating energy from the waste collected from the city/town.
  6. The city has initiated actions in amending/has amended the byelaws or makes new byelaws for promoting the renewable energy options for avoiding use of diesel and petrol gen-sets in markets, public places, schools, offices etc.
  7. The city has taken action initiated/taken for reduction of electricity consumption in street light/garden lights, traffic lights, blinkers, hoardings etc. and in schools, commercial buildings, offices, institutional buildings and other establishments by using energy conservation and renewable energy devices.
  8. The Municipal Corporation/ Municipality/ SNA have established at least one Akshay Urja Shop along with the repair and maintenance facilities either in their campus or at some prominent place in the City.
  9. The Master Plan has been prepared and the installation of at least 2 to 3 Major Projects of Renewable Energy have taken place/ sanctioned/commenced.

The funding is applicable for all the 60 solar cities including pilot solar cities and model solar cities.

City Council/ Administration/ Municipal Corporation/ Municipalities/ Developers/ Institutions can submit proposals through State Nodal Agency as per the prescribed format for financial assistance for solar city. The proposal submitted must be accompanied by the resolution of Municipal Corporation/ Municipality/ Nominated agency indicating the commitment of proving the matching funds up to Rs. 2.50 crore.

Proposals as per the prescribed format can be submitted by the developer, builder, institution and RWA along with the commitment in a bond paper that the installations of the projects/systems/devices will be undertaken after preparation of Master plan and DPR.



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