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Home » Solar Photovoltaic » Benefits of solar PV project for Government
Benefits of solar PV project for Government
An important fact and Very Good Benefit for Government and hence Nation :
a). For a 7 Cr/MW solar PV project, the interest subsidy of (7-2 = 5) 5% for 12 years = Rs. 182 lakhs for a debt of Rs.560 lakhs (80% of 700). Please note that the payment (Cash out to Government every year in lakhs is given below which after deflated rupee will be nothing i.e Discount factor for rupee while paying the Interest subsidy, which is a good mechanism to control the tariff too).
Year 1 - 28.00 Year 2 - 25.67 Year 3 - 23.33 Year 4 - 21.00
Year 5 - 18.67 Year 6 - 16.33 Year 7 - 14.00 Year 8 - 11.67
Year 9 - 9.33 Year 10 - 7.00 Year 11 - 4.67 Year 12 - 2.33
However, if Government pays 30% Capital subsidy (for Roof top) as per MNRE at rs.160/w for a 500kw = 160000x500x 0.3 = Rs. 2.4 Crore, but, for 1 MW solar PV it will be = Rs. 4.8 Crore/MW (upfront paid within 2 years(!) whereas our proposal of Interest subsidy costs only Rs. 1.82 Cr/MW, hence, we are losing huge amount of money through Capital subsidy or Viable Gap Funding as proposed by MNRE !!!
Even, if we assume that only 30% of 7 Crore is given (in 2 years mainly with a Viability Gap Funding), then also it will be = 0.3 x 7 = Rs. 2.1 Crore/ MW, which is much higher (considering the discounted value of interest subsidy cash out) than Interest subsidy.
Needless to say: The Accelerated Depreciation along with VGF will make Government to suffer a further loss of Rs. 0.8 x 7 = Rs. 5.6 Crore/MW, thus, for a MW solar PV, under the present policy, the Government is loosing a minimum of (2.1+5.6 = Rs. 7.1 Cr/MW which is more than the investment !!..... with residential or off grid roof top it will be (4.8 + 5.6 = rs.10.4 Cr/MW i.e rs. 3.4 Cr/MW higher than the investment !!)
Hence, I say no to Capital subsidy and Viability Gap Funding, which will not hold the promoter responsible for bad equipment, if noticed after the receipt of Capital subsidy, which happened in many Biomass projects for reasons which can't be accepted....
NB: Government of Gujarat has paid the first instalment of Rs. 45 Crore for a total SOFT Loan of Rs. 2100 Crore (Investment made) to TATA NANO at 0.1% interest rate for a tenure of 20 years!. If the same facility is extended to NEW and FIRST GENERATION ENTREPRENEURS, with 5% equity and 95% Debt at 0.1% interest rate for 20 years term, the Total Cost of Generation works out to be : Rs. 4.18/kwh, out of which the Normal Depreciation’s contribution is = Rs. 2.71/kwh, thus, the small Entrepreneurs can give up few of the Depreciation costs and sell the power at low cost. However, our Endeavour in the article is to compare low cost funding cases or EXIM Bank case while comparing with few exceptional cases of low cost interest subsidy already provided as SOFT LOANS by Indian State Government(s).
Let us be innovative to create low cost energy generation costs while creating many small entrepreneurs to avoid tariff cartel, to boost GDP of rural INDIA with sustainability and good low cost service and also to distribute the wealth and natural resources to many small new generation entrepreneurs instead of playing in the hands of Capitalists / Large corporate companies who will become Super Rich and there may be a day wherein we simply have no choice to pay huge costs for the necessary infrastructure related services. Let the new generation small Entrepreneurs increase the GDP of INDIA in a more transparent and sustainable way.
a). For a 7 Cr/MW solar PV project, the interest subsidy of (7-2 = 5) 5% for 12 years = Rs. 182 lakhs for a debt of Rs.560 lakhs (80% of 700). Please note that the payment (Cash out to Government every year in lakhs is given below which after deflated rupee will be nothing i.e Discount factor for rupee while paying the Interest subsidy, which is a good mechanism to control the tariff too).
Year 1 - 28.00 Year 2 - 25.67 Year 3 - 23.33 Year 4 - 21.00
Year 5 - 18.67 Year 6 - 16.33 Year 7 - 14.00 Year 8 - 11.67
Year 9 - 9.33 Year 10 - 7.00 Year 11 - 4.67 Year 12 - 2.33
However, if Government pays 30% Capital subsidy (for Roof top) as per MNRE at rs.160/w for a 500kw = 160000x500x 0.3 = Rs. 2.4 Crore, but, for 1 MW solar PV it will be = Rs. 4.8 Crore/MW (upfront paid within 2 years(!) whereas our proposal of Interest subsidy costs only Rs. 1.82 Cr/MW, hence, we are losing huge amount of money through Capital subsidy or Viable Gap Funding as proposed by MNRE !!!
Even, if we assume that only 30% of 7 Crore is given (in 2 years mainly with a Viability Gap Funding), then also it will be = 0.3 x 7 = Rs. 2.1 Crore/ MW, which is much higher (considering the discounted value of interest subsidy cash out) than Interest subsidy.
Needless to say: The Accelerated Depreciation along with VGF will make Government to suffer a further loss of Rs. 0.8 x 7 = Rs. 5.6 Crore/MW, thus, for a MW solar PV, under the present policy, the Government is loosing a minimum of (2.1+5.6 = Rs. 7.1 Cr/MW which is more than the investment !!..... with residential or off grid roof top it will be (4.8 + 5.6 = rs.10.4 Cr/MW i.e rs. 3.4 Cr/MW higher than the investment !!)
Hence, I say no to Capital subsidy and Viability Gap Funding, which will not hold the promoter responsible for bad equipment, if noticed after the receipt of Capital subsidy, which happened in many Biomass projects for reasons which can't be accepted....
NB: Government of Gujarat has paid the first instalment of Rs. 45 Crore for a total SOFT Loan of Rs. 2100 Crore (Investment made) to TATA NANO at 0.1% interest rate for a tenure of 20 years!. If the same facility is extended to NEW and FIRST GENERATION ENTREPRENEURS, with 5% equity and 95% Debt at 0.1% interest rate for 20 years term, the Total Cost of Generation works out to be : Rs. 4.18/kwh, out of which the Normal Depreciation’s contribution is = Rs. 2.71/kwh, thus, the small Entrepreneurs can give up few of the Depreciation costs and sell the power at low cost. However, our Endeavour in the article is to compare low cost funding cases or EXIM Bank case while comparing with few exceptional cases of low cost interest subsidy already provided as SOFT LOANS by Indian State Government(s).
Let us be innovative to create low cost energy generation costs while creating many small entrepreneurs to avoid tariff cartel, to boost GDP of rural INDIA with sustainability and good low cost service and also to distribute the wealth and natural resources to many small new generation entrepreneurs instead of playing in the hands of Capitalists / Large corporate companies who will become Super Rich and there may be a day wherein we simply have no choice to pay huge costs for the necessary infrastructure related services. Let the new generation small Entrepreneurs increase the GDP of INDIA in a more transparent and sustainable way.
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