SEMINAR PAPER

ENERGY AND INNOVATION

TOPIC : Analysis of Solar Energy Policies across the Globe

SUBMITTED BY

Akash Rajouria

500062669

Batch – 2017- 2022

UNDER THE SUPERVISION OF

Mr. SIDDHARTH BALANI

AT

SCHOOL OF LAW

UNIVERSITY OF PETROLEUM AND ENERGY STUDIES DEHRADUN

 CERTIFICATE

This is to certify that Akash Rajouria enrollment number: R450217016 is a student

of University of Petroleum and Energy studies has completed his seminar paper, to be
submitted in partial fulfilment of the requirement for the degree of Bachelors of Law
bearing the title “Analysis of Solar Energy across the Globe”. To the best of my
knowledge the dissertation is a result of his research, is an original work carried out
by my student under by supervision.

Mr. Siddharth Balani

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 ACKNOWLEDGEMENT

With sincere regard, I Akash Rajouria, would like to thank Mr. Siddharth Balani, for his
proper and constant guidance in conducting this research titled “Analysis of Solar Energy
across the Globe “. I sincerely admit that without his invaluable advice and constant
guidance, this work would have been impossible. I must acknowledge that the effort which I
was able to strive towards this work would have never be possible but for the concerns,
guidance and well-wishes of him. And I could only hope that the lessons learnt during the
entire interaction would help me a great deal in establishing a better path and gain in depth
approach of topic involved herein. And I wish to emulate it with utmost sincerity.

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 TABLE OF CONTENTS

Sr. No. Particulars

Introduction

Chapter I:

Chapter II:

Chapter III:

Chapter VI:

Chapter V: CONCLUSION

References

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 LIST OF ABBREVIATIONS

& And
AIR All India Reporter
Art. Article
Bom. Bombay
C.L.R. Commonwealth Law Reports
Cal. Calcutta
Co. Company
Cr.P.C. Criminal Procedure Code
Del Delhi
D.L.R. Dominion Law Reports
ed. Edition
HC High Court
i.e. That is
I.P.C. Indian Penal Code
L.Ed. Lawyers’ Edition
Mad. Madras
MIB Ministry of Information and Broadcasting
Ors. Others
p. Page Number
P.C. I Press Council of India
PC Privy Council
pp. Pages
Pub. Publishing
S.C.R. Supreme Court Reports
SCC Supreme Court Cases
SCR Supreme Court Reports
TRAI Telecom Regulatory Authority of India
U.K. United Kingdom

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U.S. and U.S.A. United States of America
v. Versus
Vol. Volume

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 INTRODUCTION

Solar energy is the energy obtained by capturing heat and light from the Sun. Energy from the Sun is
referred to as solar energy. Technology has provided a number of ways to u lize this abundant
resource. It is considered a green technology because it does not emit greenhouse gases. Solar
energy is abundantly available and has been u lized since long both as electricity and as a source of
heat.
Solar technology can be broadly classi ed as −

• Ac ve Solar − Ac ve solar techniques include the use of photovoltaic systems, concentrated

solar power and solar water hea ng to harness the energy. Ac ve solar is directly consumed in
ac vi es such as drying clothes and warming of air.

• Passive Solar − Passive solar techniques include orien ng a building to the Sun, selec ng
materials with favorable thermal mass or light-dispersing proper es, and designing spaces that
naturally circulate air.

Renewable energy sources and technologies have poten al to provide solu ons to the
longstanding energy problems being faced by the developing countries like India. Solar energy
can be an important part of India’s plan not only to add new capacity but also to increase
energy security, address environmental concerns, and lead the massive market for renewable
energy. Solar thermal electricity (STE) also known as concentra ng solar power (CSP) are
emerging renewable energy technologies and can be developed as future poten al op on for
electricity genera on in India. In this paper, e orts have been made to summarize the
availability, current status, strategies, perspec ves, promo on policies, major achievements
and future poten al of solar energy op ons in India.

Power sector is one of the key sectors contribu ng signi cantly to the growth of country’s
economy. Power sector needs a more useful role to be played in de ning, formula ng and
implement- ing the research projects with close involvement of all u li es such that the
bene t reaches the ul mate consumer.

During the nine es decade, many electric u li es throughout the world have forced to change
their way of opera on and business, from ver cally integrated mechanism to open market
system. The increase in energy consump on, par cularly in the past several decades, has
raised fears of exhaus ng the globes reserves of petroleum and other resources in the future.
The huge consump on of fossil fuels has caused visible damage to the environment in various
forms. Every year human ac vity dumps roughly 8 billion metric tonnes of carbon into the
atmosphere, 6.5 billion tonnes from fossil fuels and 1.5 billion from deforesta on.

India also has followed the global change in power sector by establishment of the Regulatory
Commissions in 1998 under the Electricity Regulatory Commis- sions Act 1998 (Central Law) to
promote compe on, e ciency and economy in the ac vi es of the electricity industry and
applied restructuring to Orissa state electricity board rstly and a er that to many other
states.

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 SOLAR POLICIES IN INDIA

Solar energy status and current scenario in India

Solar energy is the energy derived from the sun through the form of radia on. India is endowed with
rich solar energy resource. The average intensity of solar radia on received on India is 200 MW/km
world especially Japan, Europe and the US where development and deployment of solar
technologies is maximum.

India’s installed solar power capacity of 39.6MW at the end of June 2010 was based en rely on PV
technology with approximately 20% of the capacity being used for o -grid applica ons .
Development of alternate energy has been part of India’s strategy for expanding energy supply and
mee ng decentralized energy needs of the rural sector. The strategy is administered through India’s
Ministry of New Renewable Energy (MNRE), Energy development agencies in the various States and
the Indian Renewable Energy Development Agency Limited (IREDA). These strategies is being
achieved through research and devolvement, demonstra on projects, government subsidy
programs, and also private sector projects and to promote the maximum u liza on of all forms of
solar power as well as to increase the share of renewable energy in the Indian market.

A number of solar thermal applica ons have been developed, which include water/air hea ng,
cooking, drying of agricultural and food products, water puri ca on, detoxi ca on of wastes, cooling
and refrigera on, heat for industrial processes, and electric power genera on. This technology route
also includes solar architecture, which nds u lity in designing and construc on of energy e cient
buildings.

In the solar energy sector, some large projects have been pro- posed, and a 35,000 km2 area of the
Thar Desert (Rajasthan) has been set aside for solar power projects, su cient to generate 700 GW to
2100 GW. India is ready to launch its Solar Mission under the Na onal Ac on Plan on Climate
Change, with plans to generate 1000 MW of power by 2013. India is planned to generate 1000 MW
of solar power every year by 2013. A complete package has been proposed to propel the power
sector into ‘solar reforms’ that could lead to annual produc on of 20,000 MW by 2020 if phase 1 of
the solar mission goes well. The country currently produces less than 5 MW every year.

Government ini a ves to promote solar energy in India

There are several electricity policies in the last few years have talked about the need and priority to
promote renewable energy. Foremost amongst them is the Electricity Act (2003) which de- licensed
stand-alone genera on and distribu on systems in rural areas. The Na onal Rural Electri ca on
Policy, 2005 and Na onal Rural Electri ca on Policy, 2006 also stresses the need for urgent
electri ca on. The New Tari Policy (2006) stated that a minimum percentage of energy, as speci ed
by the Regulatory Commission, is to be purchased from such sources. The details of direc ve
released by Indian government to promote renewable energy are discussed in later sec ons.

Electricity Act 2003

In this act provides that cogenera on and genera on of electricity from renewable sources would be
promoted by the State Electricity Regulatory Commissions (SERCs) by providing suitable measures for
connec vity with grid and sale of electricity to any person and also by specifying, for purchase of
electricity from such sources, a percentage of the total consump on of electricity in the area of a
distribu on licensee. Such percentage for purchase of power from these sources should be made

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 applicable for the promo onal tari s to be determined by the SERCs at the earliest. Progressively the
share of electricity from renewable energy sources would need to be increased as prescribed by
SERCs. Such purchase by distribu on companies shall be through compe ve bidding process.
Considering the fact that it will take some me before renewable technologies compete, in terms of
cost, with conven onal sources, the commission may determine an appropriate di eren al in prices
to promote these technologies.

Moreover with advent of SERCs in various states with restructured power sector every state has set
Renewable por olio obliga on (RPO/RPS) in their respec ve state. With such type RE policy and the
corresponding regulatory environment provide a framework for the pricing signals and projected
viability and sustainability of renewables. The sec ons of EA-2003 which emphasis for promo on of
renewable in India are give below:

(a) Sec on 86 (1) (e)—“The State Commission shall discharge the following func ons, namely:
promote cogenera on and genera on of electricity from renewable sources of energy by providing
suitable measures for connec vity with the grid and sale of electricity to any person, and also
specify, for purchase of electricity from such sources, a percentage of the total Consump on of
electricity in the area of a distribu on license”.

(b) Sec on 61 (h)—“The Appropriate Commission shall, subject to the provisions of this Act, specify
the terms and condi ons for the determina on of tari , and in doing so, shall be guided by the
following, namely: the promo on of cogenera on and genera on of electricity from renewable
sources of energy”.

7.2. Na onalElectricityPolicy2005

The Na onal Electricity Policy 2005 s pulates that progressively the share of electricity from non-
conven onal sources would need to be increased; such purchase by distribu on companies shall be
through compe ve bidding process; considering the fact that it will take some me before non-
conven onal technologies compete, in terms of cost, with conven onal sources, the commission
may determine an appropriate deferen al in prices to promote these technologies .

7.3. Na onalTari Policy2006

As per the Na onal Tari Policy 2006 the State Electricity Regulatory Commissions (SCRC) to specify a
Renewable energy Purchase Obliga on (RPO/RPS) by distribu on licensees in a me-bound manner.
The Policy announced in January 2006 has the important provision for renewable promo on such as
in pursuant to pro- visions of sec on 86 (1) (e) of the E’ Act 2003, the Appropriate Commission shall
x a minimum percentage for purchase of energy from renewable sources taking into account
availability of such resources in the region and its impact on retail tari s. Such percent- ages for
purchase of energy should be made applicable for the tari s to be determined by the SERCs. It will
take some me before non- conven onal technologies can compete with conven onal sources in
terms of cost of electricity. Therefore, procurement by distribu on companies shall be done at
preferen al tari s determined by the Appropriate Commission. Such procurement by Distribu on
Licensees for future requirements shall be done, as far as possible, through compe ve bidding
process under Sec on 63 of the E’ Act 2003 within suppliers o ering energy from same type of non-

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 conven onal sources. In the long-term, these technologies would need to compete with other
sources in terms of full costs of

genera on. The Central Commission should lay down guide lines with in three months of its
establishment for pricing non-farm power, especially from non-conven onal sources, to be followed
in cases where such procurement is not through compe ve bidding .

7.4. Na onalRuralElectri ca onPolicies(NREP),2006

The goals of NREP-2006, include provision of access to electricity to all households by the comple on
of year 2009, quality and reliable power supply at reasonable rates, and minimum lifeline
consump on of one unit/household/day as a merit good by year 2012 . For villages/habita ons
where grid connec vity would not be feasible or not cost e ec ve, o -grid solu ons based on stand-
alone renewable based systems may be taken up for supply of electricity. Where these also are not
feasible and if only alterna ve is to use isolated ligh ng technologies like solar photovoltaic, these
may be adopted. However, such remote villages may not be designated as electri ed. State
governments have to be prepared and no fy a rural electri ca on plan in their respec ve states,
which should map and detail the electri ca on delivery mechanism. The plan may be linked to and
integrated with district development plans. The plan should also be in mated to the appropriate
com- mission. Moreover, Gram Panchayat shall involve in it and issue the rst cer cate at the me
of the village becoming eligible for declara on as electri ed. Subsequently, the Gram Panchayat shall
cer fy and con rm the electri ed status of the village as on 31st March each year .

7.5. Ini a ves to promote solar PV in India

The NREP-2006 policy aims at providing access to electricity to all households in the country and a
minimum ‘lifeline’ level of consump on of 1 unit (kWh) per household per day. The policy also
men ons that o -grid solar PV solu ons may be deployed where the supply of grid electricity is
infeasible. The policy also men ons that o -grid solar PV solu ons may be deployed where the
supply of grid electricity is infeasible .

7.6. SemiconductorPolicy(2007)

The Semiconductor Policy is meant to encourage semiconductor and ecosystem manufacturing, of

which solar PV is also a component. It o ers a capital subsidy of 20% for manufacturing plants in SEZs
and 25% for manufacturing plants outside of Special Economic Zones (SEZs). The subsidy is however,
based on the condi on that the net present value (NPV) of the investment is at least US $212 mn (Rs.
10,000 mn at 1 US$ = Rs. 47) [25].

7.7. Solar PV genera on based incen ve

MNRE formed guidelines for genera on based incen ves for grid connected solar (both thermal and
PV) plants in January 2008. The scheme was extended to all exis ng registered companies, Central
and State power genera on companies and public/private sector PV power project developers. The
scheme promoted grid connected power plants in excess of 1 MW of capacity at a single loca on.
The scheme was limited to 5 MW per developer across India and a maximum of 10 MW per state.

According to this scheme, MNRE o ered to provide, through IREDA, a genera on-based incen ve of
a maximum of Rs. 12/kWh to eligible projects, which are commissioned by December 31 2009, a er
taking into account the power purchase rate (per kWh) provided by the State Electricity Regulatory
Commission or u lity for the project.

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 11. Future of solar energy in India

India, faced with twin challenges on energy and environmental front, has no op on but to work
towards increasing the role of renewable in the future energy systems. The objec ve of the JNNSM is
to establish India as a global leader in Solar Energy, by crea ng the policy condi ons for its di usion
across the country as quickly as possible.

• New project developers for 100MW capacity of grid (below 33 kV) connected solar projects (of 100
kW to 2 MW capaci es each) have also been selected. It is expected that 150–200 MW of solar
power will be installed in the country by December 2011.

• To create an enabling policy framework for the deployment of 20,000 MW of solar power by 2022.

• To ramp up capacity of grid-connected solar power genera on to 1000 MW within three years by
2013; an addi onal 3000 MW by 2017 through the mandatory use of the renewable purchase
obliga on by u li es backed with a preferen al tari . This capacity can be more than doubled –
reaching 10,000 MW installed power by 2017 or more, based on the enhanced and enabled
interna onal nance and technology transfer. The ambi ous target for 2022 of 20,000 MW or more,
will be dependent on the ‘learning’ of the rst two phases, which if successful, could lead to
condi ons of grid-compe ve solar power. The transi on could be appropriately up scaled, based on
availability of interna onal nance and technology.

• To create favourable condi ons for solar manufacturing capability, par cularly solar thermal for
indigenous produc on and market leadership.

• To promote programs for o grid applica ons , reaching 1000MW by 2017 and 2000 MW by 2022.

• To achieve 15 million m2 solar thermal collector area by 2017 and 20 million by 2022.

• To deploy 20million solar ligh ng systems for rural areas by 2022. • JNNSM Mission has set a target
of 1000 MW by 2017, reaching million households. To meet this target, the Mission plans to pro- vide
solar ligh ng systems to over 10,000 villages and hamlets and also to set up stand alone rural solar
power plants in special category States and areas such as Lakshadweep, Andaman &

Nicobar Islands and the Ladakh region of Jammu & Kashmir.

• The State Government of Andhra Pradesh is developing a solar farm cluster called solar city on a
10,000 acre land at Kadiri in Anantapur district. Solar city is expected to a ract investments worth
Rs. 3000 crore in the rst phase. Four rms (Sun borne, Lance Solar, AES Solar and Titan Energy) have
signed a memorandum of understanding with the State to set up their units there. These companies
will be the anchor units in solar city and have a

combined capacity of 2000 MW.

• Karnataka Power Corpora on Ltd. has implemented two projects

– each of 3 MWp capacity and has awarded a third project of same capacity recently. The solar
plants, located in Kola and Chickadee districts, have been implemented under the Arunodaya
scheme for ensuring assured power supply to rural areas, especially irriga on pump sets. These PV
power plants are intended as tail end support/powering of irriga on pumps.

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 SOLAR POLICIES IN US

Solar power is more a ordable, accessible, and prevalent in the United States than ever before. From
just 0.34 GW in 2008, U.S. solar power capacity has grown to an es mated 97.2 gigawa s(link is
external) (GW) today. This is enough to power the equivalent of 18 million average American homes.
Today, over 3% of U.S. electricity comes from solar energy in the form of solar photovoltaics (PV) and
concentra ng solar-thermal power (CSP).

Since 2014, the average cost of solar PV panels has dropped nearly 70%(link is external). Markets for
solar energy are maturing rapidly around the country since solar electricity is now economically
compe ve with conven onal energy sources(link is external) in most states.

Solar’s abundance and poten al throughout the United States is staggering: PV panels on just 22,000
square miles of the na on’s total land area – about the size of Lake Michigan – could supply enough
electricity to power the en re United States. Solar panels can also be installed on roo ops with
essen ally no land use impacts, and it is projected that more than one in seven U.S. homes(link is
external) will have a roo op solar PV system by 2030.

CSP is another method for capturing energy from the sun, with about 1.8 GW of capacity in the
United States. The cost of electricity from CSP plants fell more than 50% from 2010 to 2020. If CSP
cost reduc on targets are met, studies show it could provide up to 158 GW of power to the U.S. by
2050.

Moreover, the solar industry is a proven incubator for job growth throughout the na on. American
solar jobs have increased 167%(link is external) over the past decade, which is ve mes faster than
the overall job growth rate in the U.S. economy. There are more than 250,000 solar workers(link is
external) in the United States in elds spanning manufacturing, installa on, project development,
trade, distribu on, and more.

Solar energy hasn’t reached its full poten al as a clean energy source for the United States, and
signi cant work remains to be done to drive deployment of solar technologies. Solar hardware costs
have fallen drama cally, but market barriers and grid integra on challenges con nue to hinder
greater deployment. Non-hardware solar “so costs”—such as permi ng, nancing, and customer
acquisi on—are becoming an increasingly larger frac on of the total cost of solar and now
cons tute up to 65% of the cost of a residen al PV system(link is external). Technological advances
and innova ve market solu ons are s ll needed to increase e ciency, drive down costs, and enable
u li es to rely on solar for baseload power.

In September 2021, the Energy Department released the Solar Futures Study, a report that explores
the role of solar energy in achieving these goals as part of a decarbonized U.S. electric grid.

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 The U.S. Solar Industry Strategy

The United States has successfully deployed solar energy, but its solar manufacturing has struggled
against Chinese imports and an inability to coordinate investments and integra on across the en re
solar supply chain.

▪ While the federal government does not have a dedicated solar strategy, the Biden
administra on has made clean energy manufacturing a priority and is inves ng heavily in solar
research & development (R&D).

▪ The Biden administra on sees solar as a priority for mee ng its ambi ous climate targets and is
suppor ng e orts at technological diversi ca on, especially in thin- lm solar, in part to counter
Chinese manufacturing dominance.

▪ The administra on’s Build Back Be er agenda includes a ra of policies that will likely provide a
signi cant demand-side signal for local solar manufacturing, as well as some dedicated tax
incen ves and public nancing ini a ves that could lead to more investment in the domes c
manufacturing supply chain.

▪ The government has no speci c geographic ini a ves with respect to solar manufacturing;
however, the na onal laboratory system and exis ng manufacturing facili es have created
emerging hubs that are well placed to take advantage of burgeoning interest in local solar
manufacturing.

Vision
The United States does not have a dedicated industrial strategy for its solar industry. Under the Biden
administra on, however, the federal government has a series of related policies and goals that
together form the broad contours of such a strategy. This includes its target of a “carbon pollu on-
free power sector” by 2035 and a net-zero emissions economy by 2050. According to a recent
Department of Energy (DOE) study, this implies solar power will meet about 37–42 percent of
electricity demand by 2035 and 44–45 percent by 2050—up from 3 percent today. Depending on
their chosen scenario, this implies a cumula ve deployment of 760–1,000 gigawa s (GW) of solar by
2035, up from just 80 GW in 2020.

The Biden administra on has also laid out pieces of what it calls a “twenty- rst-century industrial
strategy . . . to strengthen our supply chains [and] rebuild our industrial base across sectors,
technologies, and regions.” This strategy is as much a geopoli cal approach as it is an economic one,
focusing primarily on countering Chinese industrial dominance in strategically important sectors. The
administra on, for example, has retained tari s on Chinese-made solar modules, rst introduced by
the Obama White House, and cracked down on solar components manufactured in the Xinjiang
Province, where human rights concerns have dogged the industry.

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 Speci c to the solar industry, the DOE’s Solar Energy Technologies O ce (SETO) aims to increase new
U.S. photovoltaic (PV) manufacturing capacity by 1 GW per year and installed solar hardware to
contain at least 40 percent domes c value. The United States has lost roughly 80 percent of its global
market share in the produc on of components of the solar supply chain over the last decade. Solar
panel shipments in the United States grew 33 percent in 2020, 89 percent of which were imported,
mostly from Southeast Asian factories owned by Chinese companies. Solar developers plan to install
15.4 GW of new capacity in 2021, whereas total U.S. solar manufacturing capacity is just 2.2 GW per
year, growing to as much as 9.6 GW if all announced expansions come to frui on.

Though solar manufacturing is not an explicit focus of the administra on’s supply chain strategy, as
outlined in the 100-day supply chain review, the complementary industries of semiconductors and
energy storage are targeted for enhanced resilience and strengthening measures. Further, the full PV
supply chain looks set to receive a signi cant boost under the Build Back Be er Act (BBBA).

The most developed piece of the administra on’s solar strategy is its approach to technological
innova on. In March 2021, the DOE announced new ini a ves to cut the cost of solar energy by 60
percent within the next 10 years, from $46.5 per megawa -hour (MWh) to $20/MWh. These
ini a ves are notable not only for pushing solar prices down but for a emp ng to diversify away
from crystalline silicon technology, which currently represents over 90 percent of the global market,
and toward thin- lm or concentra ng solar power technologies, where the United States has a
greater compara ve advantage over foreign manufacturers and has fewer supply chain concerns.

Strategy

The United States’ approach to developing its solar industry has tradi onally relied primarily on
demand-pull measures rst, while encouraging a supply-push through innova on policy. Its
innova on policy has mostly concentrated on basic research with rela vely li le coordinated support
for commercializa on of the ver cal supply chain. The Obama administra on introduced tari s in an
a empt to protect the nascent industry with li le e ect, and the sprinkling of tax credits and public
nancing for manufacturers has seen only marginal expansions in local capacity. The Biden
administra on is inves ng more in supply chain resilience, and the BBBA includes signi cant
provisions to support the industry.

Demand-Pull: Deployment

The U.S. federal government largely favors “carrots” over “s cks” when encouraging clean energy
deployment, including solar, preferring to encourage private investment rather than mandate speci c
targets. For reasons of poli cal expediency, the United States uses tax credits more than many other
countries to encourage the investment in and produc on of clean energy. Both the investment and
produc on clean energy tax credits are set to be extended and expanded under the BBBA, and for
the rst me, solar developers will be able to choose between the two. According to one study, this
exibility would double the emissions-reduc on impact of clean energy tax credits.

The BBBA also o ers a series of tax incen ves for complementary technologies, including energy
storage and electricity transmission, which should help solar deployment accelerate further. The tax
credits would also increase with a certain share of domes c content produc on, incen vizing local
solar manufacturing directly, as well as the indirect signal of stronger demand.

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 The federal government also provides some low-cost and low-risk public nancing op ons for clean
energy, improving access to capital for nascent markets and crowding in private investment. This
includes the Loans Program O ce (LPO), which is set to receive a signi cant boost under the BBBA
and historically has made solar a priority. Of the LPO’s $32 billion in ac ve and repaid loans and
guarantees, nearly two-thirds went to solar projects. The LPO guaranteed loans for the rst ve
u lity-scale solar projects in the United States, helping to kick-start the industry. The BBBA also
includes $29 billion for a Greenhouse Gas Reduc on Fund, which would help capitalize and incubate
green banks around the country. Depending on the investment priori es of these local green banks,
this funding could go toward accelera ng deployment or solar manufacturing investments.

Supply-Push: Manufacturing

Like deployment, the United States has also used a combina on of tax credits and loan guarantees to
encourage investment in solar manufacturing. However, where the solar installa on industry has
grown by orders of magnitude since 2010, the share of U.S.-manufactured solar panels in global
shipments has fallen from 13 percent in 2004 to less than 1 percent by 2021, sugges ng such
“carrots” have proved insu cient in the past. The United States produces just 5 percent of global
polysilicon supply, prac cally 0 percent of wafers, 1 percent of solar cells, and only 6 percent of solar
modules.

Included in the 2009 s mulus package, for example, was the 48C Advanced Manufacturing Tax Credit
which originally provided a 30 percent investment tax credit to 183 domes c clean energy
manufacturing facili es valued at $2.3 billion, approximately half of which went to solar component
manufacturers. The 48C tax credit is revived in the BBBA, with $5 billion in credits available per year
from 2022 to 2023 and $1.875 billion for each year from 2024 to 2031. The LPO’s success in
promo ng solar deployment has not extended to manufacturing and is best known for its $500
million loan to the thin- lm manufacturer, Solyndra, which went bankrupt in 2010 and failed to repay
its loan, which prompted congressional enquiries and a public outcry, chastening the new o ce.

The clearest indica on that solar manufacturing is a priority of Congress is a new Advanced
Manufacturing Tax Credit, included in the House version of the BBBA, that provides di eren al
produc on tax credits based on which component of the solar supply chain is being manufactured.
This tax credit may succeed where others have failed by promo ng ver cal coordina on and
integra on in domes c solar manufacturing. Chinese solar manufacturers, for example, incen vized
through tax credits, subsidized land, and preferen al lending to co-locate in regions where they can
share resources, minimize transport costs, and maintain close collabora ve rela onships. This has
not typically been true of U.S. policy, and while tax credits fall short of this sort of ver cal
coordina on, they could represent an important incen ve for industry and regional coordina on in
solar supply chain produc on.

Over the last 10 years, the United States’ primary means of suppor ng its solar manufacturing
industry has been a series of tari s on Chinese module produc on, which has helped its largest
manufacturer, FirstSolar, but has been insu cient to stem the overall decline of the industry. The
United States placed tari s on Chinese cells and modules in 2012 in an a empt to protect its local
manufacturers. In the years since, China has relocated some of its manufacturing capacity to
Southeast Asia to avoid the tari s, expanding its market share, while U.S. producers have con nued
to struggle. In 2014, it imposed an dumping tari s and countervailing du es on U.S. polysilicon
producers, leading U.S. produc on to fall by half between 2014 and 2018. China now dominates

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 global polysilicon produc on, growing from e ec vely zero produc on in 2010 to a commanding
posi on by 2020.

Much of China’s polysilicon produc on is located in the Xinjiang Province due to its cheap electricity
and, reportedly, low labor costs amid serious human rights concerns, which the United States now
calls “genocide and crimes against humanity.” Tension over the issue con nues to simmer between
the two countries, with Biden reportedly considering a “diploma c boyco ” of the upcoming Winter
Olympics as a show of condemna on. In July, the U.S. Senate passed a bill to ban the import of all
products produced in Xinjiang; however, it has not passed through the House.

Polysilicon produc on is being promoted through a range of new policies under the Biden
administra on. Its 100-day supply chain review, for example, highlights the risks of low U.S.
produc on in the context of the semiconductor industry, recommending a series of
recommenda ons for bolstering local polysilicon produc on, including fully funding the CHIPS for
America Act. Included as part of the broader United States Innova on and Compe on Act—so far
passed in the Senate but not the House—the $52 billion act would signi cantly increase domes c
demand for locally produced polysilicon, poten ally providing posi ve spillovers for the solar supply
chain as well.

Supply-Push: Innova on

Finally, the U.S. government provides signi cant support for R&D of new and improved solar
technologies. In 2012, the Obama administra on launched its SunShot ini a ve, which aimed to
reduce the costs of solar energy by 75 percent between 2010 and 2020, a goal it reached in 2017.
Since 2007, the DOE has distributed $2.2 billion in grants for solar research to nearly 1,400 projects.
Just 15 percent of these grants have been for “manufacturing and compe veness” research,
however, with the majority going to PV research or concentra ng solar power innova on. The
na onal laboratory system plays an outsized role in clean energy innova on—the Na onal
Renewable Energy Laboratory, for example, has received about a h of all DOE solar funding since
2007, and 41 percent has gone to Na onal Labs.

More recently, the White House has requested a 43 percent increase in funding for the DOE’s R&D
programs in the FY 2022 budget, including a 38 percent increase in solar R&D and a 64 percent
increase in the Advanced Research Projects Agency-Energy (ARPA-E) budget. The bipar san
Infrastructure Investment and Jobs Act, signed into law in November 2021, also includes $80 million
in solar R&D ini a ves, including reauthorizing the DOE’s commercial applica on program—though
technically this funding authorizes appropria ons for the Energy Act of 2020, which passed under
the Trump administra on.

The DOE SETO has also made concentrated solar power (CSP) and thin- lm solar technologies, such
as cadmium telluride (CdTe) and perovskites, a priority for R&D funding. These technologies are
rela vely underdeveloped in comparison to crystalline silicon (c-Si) modules, but are poten ally an
important source of supply chain diversi ca on and resiliency for the United States.

Since 2007, 22 percent of R&D grants have gone to CSP projects. Despite falling out of favor in recent
years and having only 2 GW installed na onwide, CSP o ers the promise of decarbonizing hard-to-
abate sectors like heavy industry and producing zero-carbon fuels like green hydrogen. The supply
chain for CSP is primarily composed of plen ful commodity materials such as steel, aluminum, and
glass, which are produced in rela ve abundance in the domes c market, unlike key components of
the c-Si supply chain. Both the infrastructure and reconcilia on bills likely to pass the Congress this

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 year also contain measures to increase demand for zero-carbon industrial processes, which could
raise the prospects of CSP produc on and manufacturing in the United States over the course of the
next decade.

While global solar manufacturing is dominated by c-Si modules, a rela vely high share of U.S.
produc on is in thin- lm modules, especially CdTe technology—37 percent as of July 2019, and as
much as 54 percent in coming years as new capacity comes online. To further promote U.S.
specializa on in thin- lm, the DOE has made thin- lm a research priority, especially the
development of perovskites. These e orts include research grants, prizes, and the development of
both CdTe and perovskite consor a for relevant industry actors. These industry groups will allow
greater coordina on, the development of shared roadmaps, and supply chain assessments. To date,
there are no demand-side measures to encourage speci c solar technologies.

Geography
The federal government has no dedicated place-based strategies for the development of geographic
solar hubs; however, concentra ons of solar industries have emerged in response to federal research
ins tu ons, state-level incen ves, and business investment decisions.

The Na onal Laboratories, which are federally funded ins tu ons, play an important role in the
geographic dispersion of innova on funding and subsequent emergence of solar start-ups and
complementary industries. The two most developed solar hubs in the United States are in the Bay
Area, California, which is home to the Berkeley Na onal Laboratory, and the Denver Metro Area,
where the Na onal Renewable Energy Laboratory is located. The Bay Area has received 13 percent of
all federal solar R&D funding since 2007 and the Denver Metro Area around a quarter. Approximately
17 percent of all solar industry jobs in the country are based in the Bay Area, which con nues to be
the home of solar energy startups and venture capital funding. In an a empt to encourage more
solar manufacturing in the area, the U.S. DOE in 2011 launched the Bay Area Photovoltaic
Consor um, an ini a ve involving the DOE, area universi es, and area solar rms, but the e ort
slowly dismantled and today there is li le to no manufacturing in the area.

The most signi cant solar manufacturers in the country are located in areas with complementary
manufacturing industries, such as Ohio and Georgia. Otherwise, jobs and investment in the solar
industry tend to correlate with state-level incen ves for solar produc on, such as renewable
por olio standards, net metering, and other demand-pull policies.

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 SOLAR POLICIES OF EUROPEAN UNION

Wind and Solar Electricity Incen ve Policies in Selected EU Countries

Renewable electricity policy history, evolu on, incen ves, nancial mechanics, and market impacts
are dependent on a par cular country’s situa on. Germany, Spain, and Italy are EU member
countries that have been quite ac ve in terms of renewable electricity policy, development, and
technology deployment. As of the end of 2012, Germany and Italy were the top two countries in the
world in terms of cumula ve installed solar PV capacity, with 32,000 Megawa s (MW) and 17,000
MW, respec vely. As recently as 2008, Spain was one of the most ac ve renewable electricity
markets in the world. Nearly 3,000 MW of solar PV was installed in Spain that year, more than in any
other country.

Each of these countries has employed di erent policy frameworks and incen ve mechanisms to
encourage investment in, and deployment of, renewable electricity genera on. In some cases,
renewable electricity policies were designed to be reviewed periodically in order to adjust incen ves
based on changes to economic and market condi ons. In other cases, governments made
unscheduled policy adjustments in order to respond to scal, economic, market, and poli cal
demands. Over the last decade Germany, Spain, and Italy have modi ed their policies on mul ple
occasions. An examina on of their respec ve renewable electricity policies provides some
perspec ve regarding how di erent countries implement and adjust policies based on changing
market, economic, and poli cal condi ons. The following sec ons provide a policy overview for each
country.

Germany

Germany’s binding EU 2020 renewable energy target requires that 18% of total energy be provided
by renewable sources by 2020. As required by the EU direc ve, Germany has published a Na onal
Renewable Energy Ac on Plan (NREAP) that outlines the country’s plan to achieve the renewable
energy target. Germany’s NREAP, published in June 2010, indicates that Germany plans to generate
38.6% of electricity from renewable energy sources by 2020. Since then, Germany developed its
Energy Concept, which aims to have 35% of electricity sourced from renewables by 2020, rising to
80% by 2050. This por on of the Energy Concept was included in Germany’s 2012 renewable
electricity policy amendments.

Na onal Policy Evolu on

Government support for renewable energy in Germany dates back to as early as 1985 with the
introduc on of various forms of policy support and nancial incen ves within certain German states.
The German federal government’s Electricity Feed-In Law of 1991 provided grid access for renewable
power generators and required u li es to pay premium prices, equal to 90% of retail electricity
rates, for renewable electricity. By some accounts, this was the rst applica on of FiTs as a means of
suppor ng deployment of renewable power genera on assets. However, while the 1991 law did
s mulate development of some wind and other renewable electricity genera on projects, it only
provided a single FiT value that was not high enough to mo vate deployment of solar PV and other
technologies at that me.

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 In 2000, the German government replaced the 1991 Feed-In Law by passing the Erneuerbare-
Energien-Gesetz (EEG), also known as the Renewable Energy Sources Act. The EEG shi ed electricity
purchase requirements to grid operators and set speci c tari s for individual technologies based on
their respec ve power genera on cost. The objec ve of technology- speci c tari levels in the EEG
was to provide renewable electricity projects a guaranteed investment return that would s mulate
development of renewable power capacity.

The German Bundestag (Parliament) passes binding EEG legisla on, while the Federal Ministry of the
Environment (BMU) and the Federal Grid Agency are responsible for implemen ng the
EEG.Addi onally, when making EEG policy decisions, the Environment Ministry consults with the
Ministry of Economics, which has responsibility for overall energy policy in Germany. Between 2000
and 2012, the EEG was modi ed and amended mul ple mes to change and eliminate quotas on
certain technologies, modify feed-in tari values, and make other policy adjustments. Finally the EEG
is generally credited with the expansion and growth of renewable power capacity in Germany,
especially solar PV capacity. However, the German government has indicated its desire to shi
renewable electricity incen ves from FiTs to market premiums. The goal of this shi is to be er
integrate—economically and opera onally—renewable electricity into the German power market.

Renewable Electricity Incen ves

To date, Germany’s primary incen ve mechanism for renewable electricity has been the FiT.
However, in 2012 Germany introduced a market premium op on for renewable power projects and
has indicated that the FiT support structure will likely shi to a market premium or some other
market-integra on incen ve over me. One of the reasons for this policy change is to encourage
renewable power projects to par cipate in the electric power market, thereby integra ng renewable
power with power market opera ons. Addi onally, Germany’s FiT/market premium incen ves are
designed to decline over me based on both pre-determined and market- responsive schedules.
Feed-in tari s, market premiums, and degression as applied in Germany are discussed further in the
sec ons that follow.

Feed-in Tari s for Onshore Wind and Solar PV Power

Feed-in tari s in Germany are provided for the rst 20 calendar years of project opera ons, plus a
par al year, based on the start-of-opera ons date, in which the project was commissioned.
Germany’s FiT incen ve design has several unique aspects. For example, the German EEG speci es
FiT payment levels for a wide range of renewable power technologies as well as for electricity
generated from mine gas. Each technology receives a speci c tari level based on its es mated
power genera on cost. Addi onally, onshore wind and solar PV FiT levels, provisions for project size
and loca on, and degression schedules are fundamentally di erent.

Wind power in Germany is currently incen vized through a two- ered tari structure. All wind
projects receive an ini al tari level for the rst ve years of project opera ons. At the end of ve
years the actual amount of electricity produc on from each project is compared against a reference
yield, and the ini al tari can either be extended for a certain period of me or the project may
receive a lower tari level for the remainder of the 20-year FiT availability period. Addi onally, the
EEG provides a system services—typically referred to as ancillary services in the United States—
bonus for projects that comply with requirements for wind projects to provide services such as
frequency and voltage control. These services are currently provided by conven onal power
generators. The systems service bonus aims to incen vize wind power generators to install technical
solu ons that can provide system services, which will be needed as Germany’s wind project por olio
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 grows.

Market Premium

In January 2012, revisions to Germany’s EEG included the op on for renewable electricity projects to
receive adjustable market premiums instead of FiT incen ves. One goal of introducing market
premiums is to encourage renewable electricity projects to par cipate in wholesale power markets,
thereby integra ng renewables with the broader power sector. The value of the market premium is
equal to the di erence between technology-speci c feed-in tari s and the average monthly
wholesale market price of electricity. In addi on to the market premium, renewable project
operators are also eligible to receive a management fee to compensate for administra ve costs
associated with par cipa ng in German power markets. While the market premium approach may
appear to serve the same func on as a FiT incen ve, there are several dis nct di erences. The
primary di erence is that the market premium incen ve requires renewable electricity projects to
par cipate in the wholesale power market, and project owners must sell their electricity either to
the electricity exchange or to a willing buyer through a power purchase agreement.

Since the introduc on in 2012, the market premium op on has been popular with many wind and
solar PV projects due to the addi onal revenue provided by the management fee. In fact, cost
concerns with the market premium op on caused the German government to reduce the
management fee star ng in January 2013. However, in an e ort to incen vize market integra on of
renewable electricity, higher management fees are available to wind and solar PV projects that can
be controlled remotely. This may result in wind and solar electricity produc on and distribu on to be
based more directly on demand, power prices, and other economic market condi ons.

A February 2013 joint proposal by the Federal Environment Ministry and the Federal Economics
Ministry suggested elimina ng FiT incen ves for projects larger than 150 kW and requiring such
projects to receive nancial support via the market premium incen ve. Implementa on of this
proposal could signal a shi from FiTs to market premiums, a possible indica on that integra ng
renewables into power markets is becoming more important than encouraging deployment.

Degression: Planned Reduc on of Feed-in Tari and Market Premium Incen ves

One fundamental policy design aspect of German feed-in tari incen ves for renewable electricity is
degression: the reduc on of FiT incen ves over me. Generally, the objec ve of degression is to set
feed-in tari s at a level that s mulates investment in project development and expands the market
for renewable electricity genera on, while at the same me avoiding windfall pro ts for project
owners and the poten al for over-deployment of renewable electricity projects. Ideally, the
incen ves for new projects are gradually reduced in order to mo vate innova on and economies of
scale that could result in renewable power becoming more economically compe ve in the absence
of subsidies or incen ves.

Germany’s EEG includes FiT reduc ons for all renewable power technologies. However, the rate at
which FiT levels decline for speci c technologies is modi ed from me to me. FiTs for all renewable
electricity technologies, with the excep on of solar, are reduced annually by a certain percentage.

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 For example, the 2012 EEG requires that onshore wind FiTs be reduced by 1.5% annually. Solar
power FiTs are subject to a unique degression approach that is designed to respond to solar PV
market dynamics. Solar FiT degression was designed as a way to limit and control the amount of
solar power installed each year, without having to ins tute quotas or caps. For example, Germany’s
2012 EEG indicates that the country is targe ng annual solar PV installa ons between 2,500 MW and
3,500 MW, levels consistent with Germany’s Na onal Renewable Energy Ac on Plan. However, this
target is neither a ceiling nor a binding limit. When annual solar installa ons reach base case levels
between 2,500 MW to 3,500 MW, FiTs are reduced by 9%. However, the degression rate is adjusted
either up or down based on the actual amount of annual solar PV installa ons.

Impacts on Wind and Solar Deployment

Feed-in tari incen ves are generally credited with the rapid deployment of renewable electricity
genera on in Germany, especially the deployment of solar photovoltaic (PV) systems. At the end of
2012 more than 32,000 MW of solar capacity and nearly 31,000 MW of wind capacity had been
installed. Total installed solar PV capacity was larger than any other country in the world, as of the
end of 2012. As discussed above, nancial incen ves for wind and solar electricity have evolved over
me. Ini ally, incen ves were set at a single rate and provided enough revenue certainty to support
some wind power development. A policy overhaul in 2000, along with subsequent modi ca ons,
created technology-speci c tari s with ers based on project size and loca on. Each policy change
a ected the economics and market demand for wind and solar power genera on.

U.S. and EU Energy Markets are Di erent

One of the stated objec ves for EU renewable policies is to improve energy security within the EU by
reducing the amount of energy imports. According to the European Commission, approximately 54%
of EU energy demand was supplied by energy imports in 2010.113 Energy imports to the United
States, on the other hand, supplied roughly 16% of U.S. energy demand in 2012—U.S. energy
imports con nue to decline.Import situa ons in the United States and EU are, therefore, quite
di erent. Energy supply mo va ons may be rela vely more compelling in the European Union.
Addi onally, energy resource endowments, ownership, and regulatory structures in the United
States and EU are also very di erent. These factors can in uence energy markets, resource
development, and policy decisions. Finally, some fuels used for power genera on are priced
di erently in the United States and EU. For example, natural gas, which typically sets the value of
electricity during peak demand periods, is much more expensive in the EU than in the United States.
In 2012, the average price of natural gas paid by U.S. electric power generators was $3.52 per million
Bri sh thermal units (MMBtu). However, EU industrial natural gas consumers were paying, on
average, more than $12.00 per MMBtu in 2012.116 The combina on of the above factors may
provide the EU with more economic mo va on to s mulate renewable electricity genera on
deployment when compared to other countries.

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 Electricity markets in the United States and EU countries are also di erent. While the United States
does not have a single na onal market—rather, mul ple regional markets with di erent opera ng
models and pricing structures—many EU member countries do have na onal electricity markets. In
some EU countries (i.e. Spain and Italy) the na onal government has ownership and/or control rights
of electricity markets and transmission infrastructure. Addi onally, EU na onal governments may
also control electricity rates charged to consumers. In the United States, there are mul ple regional
electricity/transmission markets with di erent opera ng models and pricing structures. Further,
some U.S. electricity markets are based on compe ve market dynamics and some are based on
cost-of-service models. Also in the United States, consumer electricity price levels are in uenced by
state-level commissions that regulate and monitor electric power u li es. These fundamental U.S.
and EU market structure and regula on di erences may result in di cul es—technical and poli cal
—associated with applying EU member-country incen ve policies to the United States at a na onal
level.

EU Countries Contributed to Global Solar PV Cost Declines, to the Bene t of the United States

Arguably, EU countries and electricity consumers paid for a large part of the development and scale-
up of the global solar PV industry. As a result, signi cant equipment and system cost declines have
been realized since 2008. Germany, Spain, and Italy set incen ves at high enough levels to support
adequate investment returns based on solar equipment and installa on costs using a baseline set of
assump ons. Incen ves in some countries were generous enough to support high investment
returns, which created opportuni es for manufacturers to o er value- based pricing in order to
capture substan al pro t margins from the sale of PV equipment. These margin opportuni es
caused the manufacturing base to expand rapidly as more companies, many of them located in Asia,
entered the market. Due to a number of circumstances—including scal and economic challenges
and declining policy support for renewable electricity—the solar module manufacturing market
reached an over-supply situa on (i.e., manufacturing capacity exceeded solar PV demand) and prices
began a precipitous decline in 2009.

Renewable Electricity Incen ves in the EU and U.S. are Similar, but Reversed

Both the EU and the United States o er a number of incen ves that support deployment of
renewable electricity genera on. Some policies are at the EU and U.S. na onal level and some
policies are available only in speci c EU member-countries and individual U.S. states. Generally, the
European Union sets binding renewable electricity requirements for each member, and each
member country provides a unique set of nancial incen ves to mo vate deployment of renewable
power systems that will achieve the EU-level targets. In the United States, the federal government
provides nancial incen ves for renewable electricity—produc on tax credits for wind and
investment tax credits for solar, for example—and some states have established renewable por olio
standards that mandate a certain percentage of electricity be generated from renewable energy
sources. As of June 2013, 29 states and the District of Columbia had binding renewable electricity
targets. Details of the policy landscape in both the EU and U.S. are much more complicated than this
general descrip on. Addi onally, an analysis of the rela ve success and e ec veness of each
renewable electricity support model is beyond the scope of this report. However, it should be noted
that the U.S. and EU member-countries, to date, have consistently been two of the world’s largest
markets for renewable electricity deployment.

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 WASTE MANAGEMENT OF SOLAR WASTE

According to a report by the Na onal Solar Energy Federa on of India (NSEFI), India could generate
over 34,600 tonnes of cumula ve solar waste in India by 2030.

▪ India does not have a solar waste management policy, but it does have ambi ous solar power
installa on targets.

▪ NSEFI is an umbrella organisa on of all solar energy stakeholders of India. Which works in the
area of policy advocacy and is a Na onal Pla orm for addressing all issues connected with solar
energy growth in India.

It is likely that India will be faced with solar waste problems by the end of this decade, and
solar waste will end up being the most prevalent form of waste in land lls soon.

• Solar panels have a life of 20-25 years, so the problem of waste seems distant.

◦ While photovoltaics generate only about 3 % of global electricity, they consume 40 % of the
world’s tellurium, 15 % of the world’s silver, a substan al chunk of semiconductor-grade
quartz and lesser but s ll signi cant amounts of indium, zinc, n and gallium.

◦ The market value of raw materials recovered from solar panels could reach USD 450 million by
2030.

◦ The value of recoverable materials might surpass USD 15 billion by 2050, which would be
enough to power 630 GW with two billion solar panels.

• Globally, it is expected that End-of-Life (EoL) of solar panels will drive the solar panel
recycling business in the next 10-20 years.

Other Countries Handling Solar Waste:

◦ European Union:

• The Waste Electrical and Electronic Equipment (WEEE) Direc ve of the EU

(European Union) imposes responsibility for the disposal of waste on the
manufacturers or distributors who introduce or install such equipment for the
rst me.

• PV (Photovoltaic) manufacturers are solely responsible for the collec on,

handling and treatment of modules at the end of their lifecycle, according to
the WEEE Direc ve.

◦ UK:

• The UK also has an industry-managed “take-back and recycling scheme”,

where all PV producers will need to register and submit data related to
products used for the residen al solar market (Business-to-Consumer) and
non-residen al market.

◦ USA:

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 • While there are no federal statutes or regula ons in the US that talk about
recycling, there are some states who have proac vely de ned policies to
address end-of-life PV module management.

• Washington and California have come up with Extended Producer

Responsibility (EPR) regula ons. Washington now requires PV module
manufacturers to nance the take-back and reuse or recycling of PV modules
sold within or into the state at no cost to the end-user.

◦ Australia:

• The federal government In Australia has acknowledged the concern and

announced a USD 2 million grant as part of the Na onal Product Stewardship
Investment Fund to develop and implement an industry-led product
stewardship scheme for PV systems.

◦ Japan and South Korea:

• Countries such as Japan and South Korea have already indicated their resolve
to come up with dedicated legisla on to address the PV waste problem.

▪ Recommenda ons:

◦ Strong e-waste or Renewable Energy Waste Laws: EPR for the manufacturer and
developers to take responsibility for end-of-life the solar panel.

• PV modules were the rst to be included in the EU’s WEEE regula ons. It
includes op ons for nancing waste management.

◦ Infrastructure: To bring down the cost of recycling infrastructure investment is

required, coordina on between the energy and waste sector to e ciently handle the
renewable energy waste and build more recycling plants to avoid solar panels ending
up in land lls.

◦ Environmental Disposal and Recycling: Environmental disposal and recycling of solar

waste could be part of the power purchase agreement SECI / DISCOMS / government
signs with project developers.

◦ Ban on Land lls: Solar panel waste is harmful to the environment as it contains toxic
metals and minerals that may seep in the ground.

◦ Business Incen ves: New business models, incen ves or issues of green cer cates to
be provided to encourage the recycling industry to par cipate more.

◦ Research and Development: Innova on in design may have an impact on the type of
waste they generate; technology advancements will be signi cant in reducing the
impact of renewable energy waste. New panels, for example, use less silicon and
produce less waste during the manufacturing process.

▪ Related Indian Ini a ves:

◦ Dra EPR No ca on: Plas c Packaging Waste.

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 ◦ Plas c Waste Management Amendment Rules, 2021.

◦ E-Waste (Management) Rules, 2016.

◦ E-waste (Management) Amendment Rules, 2018.

◦ Central Pollu on Control Board.

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 TAX ON SOLAR ENERGY

India, with its ini ates in the eld of renewable energy is trying hard to secure the future of its
coming genera on to ful ll its energy needs. With the support of Government and other private and
public sector enterprises/companies, Solar Industry is le ng itself grow in a very big manner. Though
the targets set by Government for its solar energy genera on for future seems to be very ambi ous,
but we are sure that we’ll be able to reach the target.

India is slowly building upon its installed solar power capacity and in the nancial year 2014-15 itself
it had added almost 950 MW of solar power capacity making it to more than 3000 MW of installed
solar capacity in the country ll date. Thanks to the Na onal Solar Mission, state solar policies and
rela vely increased enforcement of the Renewable Purchase Obliga on

Worldwide, India has the h-largest power genera on por olio. Further, India is the h largest
producer of wind energy. The country has an installed capacity of 245 GW, as of March 2014. India
has a massive poten al to generate electricity from solar energy – the country‟s annual photo voltaic
installed capacity has grown at a CAGR of 49.5% between 2010 and 2014. The Jawaharlal Nehru
Na onal Solar Mission aims to generate 20,000 MW of solar power by 2022.

Deprecia on

It is de ned as ‘the monetary value of an asset decreases over me due to use, wear and tear or
obsolescence. This decrease is measured as Deprecia on’.The various assets that can be considered
for deprecia on is classi ed into tangible and intangible assets.

Tangible assets include both xed assets, such as machinery, buildings and land, and current assets,
such as inventory. Nonphysical assets, such as patents, trademarks, copyrights, goodwill and brand
recogni on, are all examples of intangible assets.

The Sec on 32A of IT act, 1961 describes the details of permissible deprecia on rates. Under
comprehensive Table A – Tangible Assets – Machinery and Plant – are all applicable for a
deprecia on of 80%.Renewable energy devices being:

• Flat plate Solar collectors

• Concentra ng and pipe type Solar collectors

• Solar cookers

• Solar water heaters and systems

• Air/gas/ uid hea ng systems

• Solar crop driers and systems

• Solar refrigera on, cold storages and air-condi oning systems (h) Solar steels and
desalina on systems

Solar power genera ng systems

• Solar pumps based on Solar-thermal and Solar-photovoltaic conversion

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 • Solar-photovoltaic modules and panels for water pumping and other applica ons

• Windmills and any specially designed devices which run on wind-mills installed on or before
March 31, 2012

• Any special devices including electric generators and pumps running on wind energy
installed on or before March 31, 2012

• Biogas plant and biogas engines

• Electrically operated vehicles including ba ery powered or fuel-cell powered vehicles

• Agricultural and municipal waste conversion devices producing energy – Equipment for
u lizing ocean waste and thermal

Accelerated Deprecia on

Deprecia on is 20 % on plant and machinery for any business and in the case of Solar power
genera on, in order to incen vize the entrepreneurs to enter into the Solar power genera on
market, the Government of India has allowed claiming 80% deprecia on in year one of the
commissioning of the Solar power genera on plant.

For example:

Assuming that the total current project cost is Rs7crores.

If a Solar power genera on plant costs Rs7crores, the company se ng up that plant can claimn 80
% deprecia on in the rst year itself. Deprecia on of 80 % is allowed on plant and machinery of the
Solar power plant.

Deduc ng Rs20 lakhs (approximately) from the project cost for land costs, which are eligible for only
10 % deprecia on, we get Rs6.80crores.

80 % of this is Rs5.44crores. This can be depreciated in a new Solar power genera ng plant in year
one itself. This is why they call it Accelerated Deprecia on (deprecia ng 80% in one year instead of
20%).

33.99% of Rs5.44cr is about Rs1.85 cr.

So, in a Solar power genera on plant of Rs7crores, Rs1.85cr is the tax saving that the company gets
using Accelerated Deprecia on.

AD bene t in year one is Rs1.85 cr.

So, the actual project cost of solar power plant for an AD client is Rs5.15cr

In fact the Accelerated Deprecia on or AD client will be able to depreciate 20% of the wri en down
value of the project, next year. Thus the saving in taxes will be nearly Rs2.1crores. Thus making the
investment as low as Rs4.69 cr.

LAW

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 • Under Sec on 32(1) Solar Energy Tangible Assets quali es for a deprecia on of 80%. Under
Appendix 1, Rule5, Part-A, Tangible Assets III.8.XIII.(i) Solar Power Genera ng Systems is
men oned and applicable for an Accelerated Deprecia on of 80%.

• Income tax Act, 1961 allows solar power genera ng companies a tax waiver on 100% of
pro ts for 10 Assessment years (from ini al assessment year) under sec on 80-IA (sub
sec on 4) during rst 15 years of its opera onal life. The same is valid for the plants
commissioned ll 31st March, 2017.

GST regime

GST is based on the founda on of providing a one tax regime, seamless credit chain (through cross
u liza on of credits inter se goods and services) and reduc on of exemp ons. However, electricity is
expected to con nue to be an exempted product under GST regime. Considering the same, for
renewable energy projects, the GST paid on inputs, capital goods and services would con nue to be
a cost. Therefore, if exemp ons/ concessional rates are pruned under the GST regime, there would
be a substan al increase in the cost of procurements.

Since electricity duty would be outside GST, the GST paid on such procurements would con nue to
be a cost and would have an adverse impact on the cost of renewable energy. Similarly, taxes
charged on bio-fuel would become a cost to OMCs (as they would be outside GST).

Further, it is impera ve to note that the adverse impact of tax cost would vary from project to
project (as well as from one source of renewable energy to another) based on the procurement
pa ern (import vs. domes c purchase) as well as extent of exemp ons available currently (For eg –
Solar has more exemp ons currently than Small Hydro plants. Hence, impact on Solar would be more
adverse that on Small Hydro plants).

For the purpose of computa on, it has been assumed that all exemp ons available currently would
be removed and the BCD rate would con nue to remain as in current regime (whether concessional
or otherwise).

INCREASE IN TAX RATES

Current regime

Currently, di erent tax rates are applicable depending on the nature of procurement. For example,
generic Excise duty rate is 12.5%, Service tax is 14.5% and VAT is 5%-14%. All such rates could be
reduced/ exempted basis the actual nature of goods and purpose.

GST regime

GST aims to provide a single rate for goods and services. The Select Commi ee has recommended
that the standard GST rate should not exceed 20%. For the purpose of computa on, it has been
assumed a CGST rate of 10%, SGST rate of 10% and IGST rate of 20% (for inter-State transac ons).
Further, an addi onal tax 1% may be levied for 2 years on inter-State sales/ purchases.

A GST rate of 20% would also be substan ally higher than the rates applicable currently on
procurement of goods and services in the renewable energy sector. For example:

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 • Concessional rates (both excise duty as well as VAT) are available on procurement of goods
within India. GST rate of 20% would be substan ally higher than the taxes which are paid on
domes c procurement of goods currently

• Service tax is paid at 14.5% currently while GST would be applicable at 20%. This clearly
shows a signi cant increase in tax costs which would be paid on procurement of services such
as installa on, transporta on etc

• Opera on and Maintenance – Both VAT and service tax is applicable currently on opera on
and maintenance ac vi es. However, concessional rate and valua on provisions are provided
for under VAT as well as Service tax laws. Accordingly, the e ec ve tax generally is lower than
the proposed GST rate of 20%

Hence, an increase in tax rate would have an adverse impact on the taxes which would be paid on
procurement as the same would increase the tax cost burden for the renewable energy sector.

13. Conclusion

India has a severe electricity shortage. It needs massive addi ons in capacity to meet the demand of
its rapidly growing economy. Development of solar energy, which is indigenous and distributed and
has low marginal cost of genera on, can increase energy security by diversifying supply, reducing
import dependence, and mi ga ng fuel price vola lity. Solar energy development in India can also
be an important tool for spurring regional economic development, par cularly for many
underdeveloped states, which have the greatest poten al for developing solar power systems which
is unlimited and clean source of energy. It can provide secure electricity supply to foster domes c
industrial development. So it can be concluded that photovoltaic power systems will have an
important share in the electricity of the future not only in India, but all over world.

Both the EU and the United States o er a number of incen ves that support deployment of
renewable electricity genera on. Some policies are at the EU and U.S. na onal level and some
policies are available only in speci c EU member-countries and individual U.S. states. Generally, the
European Union sets binding renewable electricity requirements for each member, and each
member country provides a unique set of nancial incen ves to mo vate deployment of renewable
power systems that will achieve the EU-level targets. In the United States, the federal government
provides nancial incen ves for renewable electricity—produc on tax credits for wind and
investment tax credits for solar, for example—and some states have established renewable por olio
standards that mandate a certain percentage of electricity be generated from renewable energy
sources.

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