According to reports in Bangalore Mirror, the state government thought it had a win-win strategy when it announced the scheme to allow citizens to generate power by setting up roof-top solar plants in return for a subsidy. But just three months down the line, the grand plan has come a cropper with unscrupulous elements gaming the system to mint money.

Finding loopholes in the government order, power traders and middlemen started selling power purchase agreements (PPA) in the open market, making lakhs of rupees in profit. Alarmed by the trend, the energy department has now withdrawn its order that allowed setting up of roof-top solar units without a roof-top to show.

Following the response to its pilot plan of allowing individuals to set up roof-top solar plants of up to 1mw within various Escoms’ limits, the energy department, in its order dated December 10, 2015, gave individuals the green signal to install solar roof-tops even if they did not have an actual roof top or were yet to construct one.

Speaking to Bangalore Mirror, a senior official from the energy department said, “Initially, several land owners and individuals who were yet to construct a building had demanded the government allow them to sign PPAs with Escoms. In view of the larger interests, the government agreed and set a time limit of two years to construct a building and commission the solar plant.” To the benefit of individual players, Karnataka Electricity Regulatory Commission (KERC) ruled that even warehouses and greenhouses could be considered as roof-top and allowed them to set up solar plants too.

While Bescom harboured the illusion that the individuals would play fair and build houses and commission the plants, several started reselling the PPAs.

“Any individual could obtain subsidies from the government and set up a roof-top plant and sell excess power to the grid. Bescom had fixed `7.20 (with subsidy)/`9.56 (without subsidy) for every unit fed into the grid, while the actual cost of production was only `5.50 per unit. Hence, there was a profit of Rs 4 for every unit generated. Under the policy, individuals were allowed to set up solar plants up to 1mw only. For anything above that, one had to use the channel of tender process. But the order came as a blessing because it allowed one to sign a PPA in the name of roof-top solar plant without any tender process,” explained a senior Bescom official.

Higher returns

Sources in the energy sector revealed that all it cost to get a PPA was Rs 15,000 to Rs 20,000, but one could make lakhs in profit if one owned a few square feet land.

“By submitting a plan approved either by the local panchayat or corporation along with the architecture blueprint, one could enter into a PPA with Bescom. Accordingly, many submitted plans for warehouses and greenhouses and entered into PPAs,” said a senior engineer with Bescom.

He explained that though the energy consumption of a warehouse or greenhouse was minimal, PPAs for 1 mw were signed.

“A plant with a capacity of 1 mw can generate about 16 lakh units. If you multiply this with a profit of Rs 4, it runs into several lakhs. This was clearly a money-spinner scheme and saw several non-serious players enter the picture, diluting the actual intention of the government. We are not sure if these players would actually construct a house or not, but they had a PPA which they could resell in the open market for profits, creating a PPA market in the energy sector,” a Bescom official said. With tariffs changing every year and with the current lucrative price of up to Rs 9.56, many just chose to sign PPAs. They also got around the clause of constructing a roof-top by just building a warehouse or greenhouse.

Bescom estimates PPAs for nearly 150-200 mw have been signed. While the order, a copy of which is with BM, on allowing individuals to set up a solar plant without a house (rooftop) stands cancelled with immediate effect, Bescom has decided to wait and see if the signed PPAs are commissioned or not. “If they do not build a roof-top within two years, we will withdraw those PPAs,” the official said.

While the trend of selling PPAs hasn’t spelt any loss either to the government or for the Escoms, the entry of non-serious players spells trouble. The Escoms have appealed to KERC to regulate the practise and introduce checks and balances.

Top officials in the energy department revealed to BM that KERC is in the process of coming out with regulations to prevent misuse of the roof-top solar policy. “Our demand is no individual be allowed to set up a solar plant exceeding the sanctioned load of his house. If an individual’s sanctioned load is about 20 kw, he should be allowed to set up a roof-top plant only for that capacity. We have also requested the KERC to review the tariff orders on solar generation,” a senior bureaucrat revealed.

Source: Bangalore Mirror