The Delhi government is sitting on the Draft Solar Energy Policy, which aims to popularise the use of renewable energy by giving various incentives to solar power manufacturers.

The state government had announced the policy in September last year. However, it is yet to be notified. As per the draft policy, it was supposed to come into effect on 1 October 2015 for a period of five years.

The idea behind the policy is to reduce Delhi’s reliance on unsustainable energy while increasing its energy security and lowering average energy prices in the long term and to promote rapid growth of rooftop solar power. By August 2015, Delhi’s total rooftop capacity was only 7 MW. Delhi is blessed with almost 300 sunny days and the rooftop space for solar panels is estimated to be 31 sq km, which makes Delhi’s solar energy potential 2.5 GW (2500 MW).

Some of the initiatives proposed by the solar policy are waiving VAT (Value Added Tax) on all solar plant components, including solar panels and solar inverters, for five years; generation based incentive of Rs 2 per solar energy unit in the domestic segment for three years; low cost financing options for all consumers and non-capital subsidy model for implementation of the targets outlined in the policy, strongly advocating performance-based incentives for domestic households coming forward for installation of solar panels.

“In the latest Delhi Cabinet meeting, the government announced VAT reductions on many items as Chief Minister Arvind Kejriwal claims to make Delhi a state with the country’s ‘lowest VAT regime’, but there was nothing for the renewable energy sector and solar power
in particular,” said environment activist Anil Sood, who has written a letter to the Chief Minister in this regard.

He said all over the world, solar power is being promoted. “In India, many states are developing policy initiatives to promote the adoption of rooftop solar power plants to reduce the pressure on electricity grid through the self generation of clean and affordable solar power,” he added.

As a result of policy indecision, businesses seeking to promote solar power are switching to other states with more favourable tax policies, resulting in revenue loss to Delhi’s exchequer. The states which have exempted levy of VAT on solar power generating systems include Karnataka, Uttar Pradesh, Rajasthan, Madhya Pradesh, Maharashtra, Gujarat, Andhra Pradesh and West Bengal.

The Centre, on its part, is pushing hard to promote renewable energy. The Power Ministry has set a target of 100,000 MW of grid connected solar power by 2022 all over the country. Union Power Minister Piyush Goyal, recently said in Rajya Sabha that public sector undertaking would contribute 10,000 MW of the total target. Nationally, the total commissioned capacity of solar energy is 5775 MW, out of which Rajasthan, Gujarat and Madhya Pradesh contribute 1264 MW, 1024 MW and 678 MW respectively.


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