Himachal Proposes Short-Term Green Energy Open Access Through InSTS Systems

Apraava, Jyoti Structures Commission Transmission Lines to Evacuate Renewables

Karnataka Revises Power Tariffs After Allowing DISCOMs’ Review Petition

Month in a Minute: Top Headlines from the Indian Renewable Sector in February 2026

IEX Power Trade Surges 30% YoY to 12,550 MU in February

Daily News Wrap-Up: Top Five States for Solar Open Access Installations

POWERGRID Floats Tenders to Set Up 300 MW/600 MWh Battery Storage Systems

Project Finance Brief: Arevon Energy Secures $183 Million for Solar Project

Funding and M&A Roundup: SolarAfrica Energy Secures $39 Million

UltraTech to Procure Solar Power from AMPIN SPV’s 30 MW Project

<table id="amazon-polly-audio-table">
						<tr>
						<td id="amazon-polly-audio-tab">
							<div id="amazon-ai-player-label">Listen to this article</div>
							<div id="amazon-ai-player-container">
			<audio class="amazon-ai-player" id="amazon-ai-player" preload="none" controls controlsList="nodownload" >
				<source type="audio/mpeg" src="https://cms.mercomindia.com/wp-content/uploads/2026/03/amazon_polly_91505.mp3?version=1772698455">
			</audio>
		</div>
							<div id="amazon-polly-subscribe-tab"></div>
							<div id="amazon-polly-by-tab"></div>
						</td>
						</tr>
					</table><a href="https://www.mercomindia.com/india-posts-historic-solar-growth-with-36-6-gw-installed-in-2025" target="_blank" rel="noopener">India recorded its highest-ever annual solar capacity addition in the calendar year 2025, installing 36.6 GW, a 43% increase over the 25.6 GW added in 2024</a>, according to Mercom India’s Q4 and Annual 2025 India Solar Market Update Report. This milestone underscores the sector’s strong growth momentum, supported by favorable policies, faster project execution, and improved market conditions.
<a href="https://www.mercomindia.com/rooftop-solar-growth-accelerates-in-india-with-7-1-gw-added-in-2025-a-123-yoy-jump" target="_blank" rel="noopener">India’s rooftop solar capacity grew to 7.1 GW in the calendar year 2025, an over 123% year-over-year (YoY) jump from 3.2 GW in 2024</a>, according to Mercom India Research’s newly released Q4 &amp; Annual 2025 India Rooftop Solar Market Report. Rooftop solar accounted for more than 19% of the total solar installations in the year. Residential consumers accounted for almost 76% of the total rooftop solar installations in 2025.
<a href="https://www.mercomindia.com/india-adds-7-8-gw-of-solar-open-access-capacity-in-2025" target="_blank" rel="noopener">India added 7.8 GW of solar open access capacity in 2025, a largely flat 0.5% YoY growth from 7.7 GW</a>, according to Mercom’s Q4 &amp; Annual 2025 India Solar Open Access Market Report. India’s cumulative installed solar open access capacity exceeded 30 GW as of December 2025. In the fourth quarter (Q4) of 2025, the country added open access solar capacity of 1.6 GW, down approximately 29% from 2.2 GW in Q3 and over 32% YoY from 2.3 GW.
<a href="https://www.mercomindia.com/led-by-solar-renewables-overtake-thermal-in-indias-power-mix" target="_blank" rel="noopener">Solar power accounted for 26.5% of India’s total installed power capacity and 52.7% of the total installed renewable energy capacity as of December 2025</a>. Solar installations rose 8.8% quarter-over-quarter and 39.6% YoY India’s renewable energy capacity, including large hydroelectric projects, reached 258.3 GW by the end of Q4 2025, accounting for 50.2% of the country’s total installed power capacity, based on data from the Central Electricity Authority (CEA), the Ministry of New and Renewable Energy (MNRE), and Mercom’s India Solar Project Tracker.
<a href="https://www.mercomindia.com/data-shows-policy-clarity-plays-critical-role-in-industrial-power-demand-expansion" target="_blank" rel="noopener">India’s top states fostering open access power have emerged as the core engines of industrial electricity demand growth</a>, driven by manufacturing clusters, rising captive generation, and accelerating adoption of renewable energy. Data from successive CEA reports over the past few years show that industrial electricity consumption and captive capacity have expanded in tandem, which mandates non-discriminatory open access to transmission and distribution networks.
<a href="https://www.mercomindia.com/maharashtras-rooftop-solar-policy-tweak-faces-heat" target="_blank" rel="noopener">Rooftop solar installers in Maharashtra are up in arms over a reported change in capacity approval criteria by Maharashtra State Electricity Distribution Company</a>, calling it a move to restrict system sizing. Multiple installers told Mercom India that rooftop solar approvals from February 13 are being processed based on the average electricity consumption over the past 12 months rather than the sanctioned load/contract demand.
<a href="https://www.mercomindia.com/solar-and-battery-storage-lead-ci-shift-toward-clean-power-procurement" target="_blank" rel="noopener">Commercial and industrial (C&amp;I) entities, large institutions, and residential complexes are increasingly turning to clean power solutions that offer greater cost efficiency</a> than conventional grid tariffs. Rooftop solar has long been an attractive option for reducing operating expenses and enhancing sustainability credentials. However, beyond on-site installations, solar open access is rapidly emerging as a scalable alternative, enabling businesses to procure renewable energy at larger volumes while optimizing long-term cost savings.
<a href="https://www.mercomindia.com/how-renewables-help-ci-businesses-cut-costs-while-future-proofing-operations" target="_blank" rel="noopener">Tamil Nadu’s C&amp;I renewable energy market is entering a more mature phase, where the discourse is shifting from simple tariff savings</a> to long-term strategy, infrastructure planning, and export competitiveness. As of December 2025, renewable energy accounted for 57.5% of Tamil Nadu’s power mix, with solar at 20% and wind at 29%, while thermal power contributes 39%.
<a href="https://www.mercomindia.com/developers-seek-almm-list-ii-extension-solar-manufacturers-push-back" target="_blank" rel="noopener">With the June 1, 2026, deadline for mandatory sourcing of solar cells from the Approved List of Models and Manufacturers List-II fast approaching, solar developers are urging</a> the MNRE to consider a time-bound extension, citing concerns over limited operational Tunnel Oxide Passivated Contact capacity and potential project delays.
<a href="https://www.mercomindia.com/china-export-rebate-cuts-may-raise-india-solar-bess-prices" target="_blank" rel="noopener">China’s recent decision to cancel value-added tax (VAT) rebates on exports of solar and related products from April 1, 2026</a>, is likely to increase project costs for India’s solar and battery energy storage system (BESS) developers. The export VAT rebate rate for battery products will be reduced from 9% to 6% from April 1 to December 31, 2026, China’s Ministry of Finance and State Taxation Administration announced in January.
<a href="https://www.mercomindia.com/aggressive-bidding-puts-indias-energy-storage-push-at-crossroads" target="_blank" rel="noopener">Aggressive bidding is rapidly becoming the defining feature of India’s energy storage tender landscape, raising concerns among stakeholders</a>. As competition intensifies and tender volumes rise, discovered tariffs for BESS have converged sharply, raising a critical question for the sector: are today’s prices truly reflective of bankable projects, or are they setting the stage for long-term instability?
<a href="https://www.mercomindia.com/industry-opine-budget-2026-marks-a-focus-shift-to-stable-renewables" target="_blank" rel="noopener">The Union Budget 2026 provided a new focus to India’s renewable energy strategy, moving from capacity addition to developing a</a> sustainable, resilient domestic clean energy ecosystem, with energy storage systems as the key pillar. Industry stakeholders across the renewable energy value chain have broadly welcomed the government’s emphasis on energy storage to manage intermittency and strengthen grid reliability.
<a href="https://www.mercomindia.com/renewables-growth-yet-to-shift-thermal-centric-state-procurement-strategies" target="_blank" rel="noopener">Despite record-low renewable energy tariffs, several states have entered long-term thermal power purchase agreements at significantly higher tariffs</a> of ₹5.38 (~$0.059)-₹7.27 (~$0.079)/kWh, reflecting concerns over supply security, baseload requirements, and renewable intermittency. In recent months, several states have signed multiple power purchase agreements for coal-based thermal power.
<a href="https://www.mercomindia.com/cea-calls-for-lowering-thermal-load-to-restrict-renewables-induced-duck-curve" target="_blank" rel="noopener">A committee constituted by the CEA called for operating thermal power plants at a minimum technical load (MTL) of 40% and adopting two-shift operations</a> to support grid stability amid increasing renewable energy integration. In a draft report on the wear and tear, operations and maintenance, and plant lifespan implications of coal-fired power plants due to flexible operations, the committee concluded that operating thermal plants at 55% MTL had not resulted in significant damage attributable solely to flexible operation, countering concerns raised by NTPC over wear and tear due to low-load running.
<a href="https://www.mercomindia.com/rajasthan-allows-hybrid-inverters-in-rooftop-solar-systems-to-support-grid-stability" target="_blank" rel="noopener">The Jaipur Vidyut Vitran Nigam issued an order allowing consumers to install hybrid inverters alongside their rooftop solar systems</a> under the net metering, gross net metering, and virtual net metering frameworks. The order highlights the growing importance of battery energy storage systems for grid stability, peak-load management, and power-quality improvement.
<a href="https://www.mercomindia.com/mnre-tells-states-to-identify-sites-for-floating-solar-project-development" target="_blank" rel="noopener">The MNRE sought feedback from the states on the draft reports prepared by the National Institute of Solar Energy and the Indian Institute of Technology Roorkee </a>on the potential of floating solar and the policy framework. The documents assess India’s floating solar potential and propose a policy framework covering site identification, project execution guidelines, stakeholder roles, approvals, scheduling, and measures to reduce risks for developers and investors.
<a href="https://www.mercomindia.com/cea-reviews-grid-forming-inverter-capacity-as-renewables-expand" target="_blank" rel="noopener">The CEA has begun assessing the manufacturing capacity of grid-forming inverters (GFM) in India, in light of the increasing share of solar</a> and wind energy in the country’s power mix. In a letter to GFM manufacturers, the CEA said GFM is necessary to ensure a stable, reliable electricity grid.
<a href="https://www.mercomindia.com/over-1-6-gw-of-solar-wind-projects-at-risk-of-losing-grid-connectivity" target="_blank" rel="noopener">Over 1,600 MW of renewable energy capacity is at risk of having its grid connectivity revoked due to non-compliance with General Network Access regulations</a>. According to a tentative list notified by the Central Transmission Utility, 15 solar, wind, and hybrid projects with a cumulative capacity of 1,622 MW have yet to declare commercial operation, with compliance dates falling between January and April 2026.
<a href="https://www.mercomindia.com/us-hits-indian-solar-cells-with-126-preliminary-countervailing-duties" target="_blank" rel="noopener">The U.S. Department of Commerce announced its preliminary determination of countervailing duties of up to 125.87% on crystalline silicon solar cells</a>, whether or not assembled into modules, imported from India. The preliminary duties were announced following an investigation after trade petitions were filed by the Alliance for American Solar Manufacturing and Trade last July.

<table id="amazon-polly-audio-table">
						<tr>
						<td id="amazon-polly-audio-tab">
							<div id="amazon-ai-player-label">Listen to this article</div>
							<div id="amazon-ai-player-container">
			<audio class="amazon-ai-player" id="amazon-ai-player" preload="none" controls controlsList="nodownload" >
				<source type="audio/mpeg" src="https://cms.mercomindia.com/wp-content/uploads/2026/01/amazon_polly_88966.mp3?version=1768225646">
			</audio>
		</div>
							<div id="amazon-polly-subscribe-tab"></div>
							<div id="amazon-polly-by-tab"></div>
						</td>
						</tr>
					</table>China will cancel value-added tax (VAT) export rebates for photovoltaic (PV) and other related products from April 1, 2026, the <a href="https://www.mof.gov.cn/en/" target="_blank" rel="noopener">Ministry of Finance</a> and the <a href="http://www.chinatax.gov.cn/" target="_blank" rel="noopener">State Taxation Administration</a> have announced.
The policy also targets battery exports. The authorities said the export VAT rebate rate for battery products will be reduced from 9% to 6% from April 1 to December 31, 2026.
From January 1, 2027, export VAT rebates for battery products will be canceled.
Export-related consumption tax policies will remain unchanged for products subject to consumption tax, and the existing refund or exemption policy will continue to apply.
The applicable rebate rate will be determined based on the export date stated on the customs declaration form, the notice said.
The policy applies to solar cells not assembled into modules as well as those assembled into modules.
Battery products covered by the adjustment include a wide range, such as alkaline zinc-manganese batteries, lithium primary batteries, silver oxide batteries, zinc-air batteries, and manganese dioxide batteries, as well as battery parts.
The list also includes rechargeable batteries, including lithium-ion batteries, nickel-metal hydride batteries, vanadium redox flow batteries, and other secondary batteries and related components.
Recently, China’s State Administration for Market Regulation (SAMR) <a href="https://cms.mercomindia.com/chinas-market-regulator-steps-in-to-stabilize-solar-pricing/" target="_blank" rel="noopener">issued</a> compliance guidance in Hefei, Anhui Province, to regulate the order of price competition in the PV industry. SAMR briefed participants on price-related violations and risk issues in the PV sector, noting that current problems, such as low-quality competition and homogeneous, repetitive capacity expansion, have led to widespread profitability issues.
SAMR emphasized that the entire industry must fully recognize the importance of rectifying involution-style competition in the PV sector. Solar companies must conduct production and business operations in accordance with laws and regulations, and are strictly prohibited from engaging in price collusion, price fraud, and other improper pricing practices.
China <a href="https://www.mercomindia.com/china-adds-28-gw-of-solar-capacity-in-q3-2025-down-52-yoy" target="_blank" rel="noopener">added</a> 28.06 GW of solar power capacity in the third quarter (Q3) of 2025, a 52% year-over-year (YoY) decrease from 58.4 GW, according to the National Energy Administration. The China Photovoltaic Industry Association had noted that solar installations will likely decline in 2025 with the introduction of market-based pricing reforms. China had relied on a feed-in tariff regime to ramp up renewable energy capacity at a staggering pace.
China recently <a href="https://www.mercomindia.com/china-files-case-against-indias-solar-subsidies-at-wto/" target="_blank" rel="noopener">filed</a> a complaint with the World Trade Organization against India’s solar PV subsidies, alleging that they provide an unfair competitive advantage to Indian companies and harm Chinese interests.

China to Scrap Export VAT Rebates for Solar Products from April 1, 2026

The Telangana Government has approved a payment of ₹73.76 million ($1 million) to three solar developers towards refund of State Goods &amp; Services Tax/Value Added Tax (SGST/VAT) on inputs used for developing solar projects under the Telangana State Solar Power Policy, 2015.
The three companies are &#8211; Neo Solren, Winsol Solar Fields (Polepally), and Arun Vidyuth. Neo Solren is a special purpose vehicle (SPV) promoted by the Mahindra Group to set up a 42MW solar project at Warangal District, Telangana. The plant is operational since October 2017. This SPV was in the news earlier as Mahindra was <a href="https://mercomindia.com/mahindra-terminates-sale-clp-india/" target="_blank" rel="noopener noreferrer">planning</a> to sell its stake to CLP India. The acquisition was later terminated.
Winsol Solar Fields operates a 75 MW solar project across three locations in the Mahabubnagar and Ranga Reddy districts of Telangana. It is 100% held by Vector Green Energy, an independent power producer. The 75 MW capacity has been in operation since December 2016.
Arun Vidyuth operates a 5 MW solar project in the Mahabubnagar district of Telangana. The project commenced operations in March 2016.
<a href="https://mercomindia.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds-1.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-23780" src="https://mercomindia.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds-1.png" alt="Telangana - Claims by Solar Project Developers as SGST and VAT Refunds" width="482" height="176" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds-1.png 482w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds-1-300x110.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds-1-480x176.png 480w" sizes="auto, (max-width: 482px) 100vw, 482px" /></a>
The Telangana government had earlier <a href="https://mercomindia.com/telangana-government-solar-developers-gst-vat-refunds/" target="_blank" rel="noopener noreferrer">approved</a> the release of ₹400.19 million (~$5.48 million) to Mytrah Agriya Power and six other solar developers toward SGST and VAT refund.
Back in December 2020, the state government, in a budget release order, had <a href="https://mercomindia.com/telangana-approves-refunds-solar-developers/" target="_blank" rel="noopener noreferrer">authorized</a> the release of ₹58.3 million (~$789,059) to two solar project developers as refunds under SGST and VAT. The state has approved an amount of ₹26.072 million (~$352,847) payable to Pratamesh Solarfarms Limited, a subsidiary of ReNew Power. It also allowed the transfer of ₹32.23 million (~$436,212) to SE Solar Limited, a Suzlon Energy subsidiary.
The refunds to solar developers against SGST and VAT come on the heels of the Central Electricity Regulatory Commission <a href="https://mercomindia.com/additional-costs-borne-solar-developers-gst-imposition-reimbursed/" target="_blank" rel="noopener noreferrer">declaring</a> that the introduction of GST to be falling within the scope of the ‘Change in Law’ clause for power purchase agreements. According to the clause, any additional costs borne by solar developers due to the imposition of GST are to be reimbursed.
Solar developers across various states are <a href="https://mercomindia.com/solar-companies-still-waiting-gst-clarity-refunds/" target="_blank" rel="noopener noreferrer">facing</a> delays in reimbursements. To address the issue, the Ministry of New and Renewable Energy has <a href="https://mercomindia.com/gst-safeguard-duty-solar-mnre-seci-ntpc/" target="_blank" rel="noopener noreferrer">ruled</a> that GST compensation to solar project developers should be paid within 60 days from the date of submission of claims.

Three More Solar Developers in Telangana to Receive GST and VAT Refunds

The Telangana government has approved the release of ₹400.19 million (~$5.48 million) to Mytrah Agriya Power and six other solar firms toward the refund of State Goods and Services Tax (SGST) and Value Added Tax (VAT) on inputs used for establishing solar power projects.
The refunds will be distributed among the seven solar power developers as follows:
<a href="https://mercomindia.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-23776" src="https://mercomindia.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds.png" alt="Telangana - Claims by Solar Project Developers as SGST and VAT Refunds" width="336" height="406" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds.png 336w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/01/Telangana-Claims-by-Solar-Project-Developers-as-SGST-and-VAT-Refunds-248x300.png 248w" sizes="auto, (max-width: 336px) 100vw, 336px" /></a>
The companies who will receive the refunds are Mytrah Agriya Power, Mytrah Akash Power, Mytrah Abhinav Power, RGS Solar Power, Mytrah Adarsh Power, Sunborne Energy Andhra, and Maheshwari Mining and Energy Private Limited.
The companies had claimed SGST and VAT refunds as per the Telangana Solar Policy, 2015. The Energy Department will arrange to credit the refunds in the solar developers’ accounts.
Last year, in a budget release order, the Telangana government <a href="https://mercomindia.com/telangana-approves-refunds-solar-developers/" target="_blank" rel="noopener noreferrer">authorized</a> the release of ₹58.3 million (~$789,059) to two solar project developers in SGST and VAT refunds. The state had then approved an amount of ₹26.072 million (~$352,847) to be paid to Pratamesh Solar Farms Limited, a ReNew Power subsidiary. It also allowed the transfer of ₹32.23 million (~$436,212) to SE Solar Limited, a Suzlon Energy subsidiary.
The Central Electricity Regulatory Commission has <a href="https://mercomindia.com/additional-costs-borne-solar-developers-gst-imposition-reimbursed/" target="_blank" rel="noopener noreferrer">declared</a> that the introduction of GST falls within the scope of the ‘Change in Law’ clause for power purchase agreements. Per the order, any additional costs borne by solar developers due to the imposition of GST are to be reimbursed.
The CERC also <a href="https://mercomindia.com/cerc-relief-solar-developers-gst-change-in-law/" target="_blank" rel="noopener noreferrer">ordered</a> government agencies to compensate solar power developers by giving them an upfront lumpsum payment, which they would have incurred as an additional capital expenditure after the introduction of the GST Law. It also asked them to make adjustments in the quoted tariff because of the additional operating and recurring expenditure that will incur for the entire term of the project.
Even after these orders being passed, developers across various states are <a href="https://mercomindia.com/solar-companies-still-waiting-gst-clarity-refunds/">facing</a> delays in reimbursements. To address the issue, Mercom had <a href="https://mercomindia.com/gst-safeguard-duty-solar-mnre-seci-ntpc/" target="_blank" rel="noopener noreferrer">reported</a> that MNRE in a circular stated that GST and safeguard duty compensation to solar project developers should be paid within 60 days of the submission of claims by the petitioner. The ministry had said that there was no need for the developers to approach the CERC for each case.
The CERC has also <a href="https://mercomindia.com/cerc-allows-solar-developers-claim-gst-cpmpensation-on-epc-cost/" target="_blank" rel="noopener noreferrer">ruled</a> for the additional tax burden on the engineering, procurement, and construction cost after the GST Laws to be reimbursed.

Telangana Government to Pay ₹400 Million to Solar Developers in GST and VAT Refunds

The <a href="https://www.telangana.gov.in/" target="_blank" rel="noopener noreferrer">Government of Telangana</a>, in a budget release order, has authorized the release of ₹58.3 million (~$789,059) to two solar project developers as refunds under State Goods and Services Taxes (SGST) and Value Added Taxes (VAT).
The state has approved an amount of ₹26.072 million (~$352,847) payable to Pratamesh Solarfarms Limited, a subsidiary of ReNew Power. It also allowed the transfer of ₹32.23 million (~$436,212) to SE Solar Limited, a subsidiary of Suzlon Energy. Both companies are based at Wanaparthy in the district of Mahabubnagar, Telangana.
The companies had previously claimed SGST and VAT refunds as outlined in the Solar Power Policy, 2015, for setting up solar power projects in the state. The funds are to be transferred to the respective bank accounts of the companies.
In a previous budget release order issued on October 21, 2020, the state government had ordered for ₹58.3 million (~$789,059) to be issued to the companies to reimburse them for their VAT expenses by way of reappropriation in the relaxation of treasury control orders and quarterly regulation orders under the state’s Solar Energy Program.
Subsequently, the state government directed the assistant secretary to the government, Energy Department, Hyderabad, to draw and disburse the amount and credit it to the respective bank accounts of the companies.
In April, the Central Electricity Regulatory Commission <a href="https://mercomindia.com/additional-costs-borne-solar-developers-gst-imposition-reimbursed/" target="_blank" rel="noopener noreferrer">declared</a> that the introduction of Goods and Services Tax fell within the scope of the “Change in Law” clause for power purchase agreements. It stated that any additional costs borne by solar developers due to the imposition of GST were to be reimbursed.
Earlier, solar power developers <a href="https://mercomindia.com/solar-developers-pay-gst-safeguard-letter/" target="_blank" rel="noopener noreferrer">aired</a> their grievances about having to pay GST on Safeguard Duty (SGD) reimbursements. They said that it was unfair that solar power companies have to pay GST &#8211; a tax on the value of goods and services in India &#8211; on safeguard duty, a specific measure under trade remedies. In March, the Ministry of New and Renewable Energy <a href="https://mercomindia.com/gst-safeguard-duty-solar-mnre-seci-ntpc/" target="_blank" rel="noopener noreferrer">released</a> a circular stating that Goods and GST, and SGD compensation to solar project developers should be paid within 60 days.

Telangana Approves ₹58.3 Million in GST & VAT Refunds to Two Solar Project Developers

India’s Finance Minister, Arun Jaitley, <a href="https://mercomindia.com/breaking-news-official-finance-minister-arun-jaitley-confirms-5-percent-gst-solar/" target="_blank" rel="noopener noreferrer">confirmed</a> a solar goods and services tax (GST) rate of 5 percent at the 15th meeting of the GST Council with the official order to the effect still to come. After initial <a href="https://mercomindia.com/revenue-secretary-says-solar-module-gst-rate-5-percent/" target="_blank" rel="noopener noreferrer">confusion</a> whether the GST rate for solar was 5 percent or 18 percent due to a misprint, the industry is relieved that it was finalized at 5 percent.
The effect of a 5 percent GST rate on a solar project will be between 3.5 &#8211; 4.5 percent depending on certain variables unique to the projects and location, a much more manageable situation compared to the initially expected 18 percent rate.
“Developers, manufacturers and suppliers will have to rework their strategies and work the 5 percent GST into their cost structures. Having clarity and certainty without any shred of ambiguity from the government side is key for the sector to move forward without skipping a beat,” said Raj Prabhu, CEO of Mercom Capital Group.
After the rollout of the GST, the current tax exemptions, subsidies, and holidays will end. Key contributors to the increase in solar tariffs after GST will include an increase in operations and maintenance (O&amp;M) costs, component costs and civil and work contracts. The increase in solar tariffs will also vary across states. They will be higher for states such as Rajasthan and Haryana, where the Value Added Tax (VAT) and Entry Tax exemptions are currently provided for solar equipment, as opposed to Andhra Pradesh and Gujarat where VAT and Entry Tax exemptions are not provided.
What Developers, Manufacturers and Suppliers are Saying
In some states, the GST impact will be greater than others. For example, Haryana made solar equipment exempt from the VAT some time ago, but now the 5 percent GST will be applicable. We expect project costs to go up by about 4 percent, stated an Adani Executive.
<img loading="lazy" decoding="async" class="aligncenter" src="https://mercomcapital.com/assets/images/Comparison_Between_Tax_Rates_for_Supply_of_Items_Contract.png" alt="" width="635" height="292" />
Mercom’s source at ReNew Power said, “We are sure there will be a significant impact in project costs.” When asked about the effect on its current project pipeline, the Executive added, “for projects with signed power purchase agreements (PPAs), there is a clause which says that they can appeal to the off-taker for some benefits if taxation laws are changed, like in the case of GST.”
Executives at Sterling &amp; Wilson told Mercom, “Project costs are going to spike by a few percentages but refrained from stating an exact number.”
An Executive at Oriano solar said, “Total taxes will be around 4.8 percent of the project cost. With this, the net impact on project costs will increase by 3.5 percent.”
<img loading="lazy" decoding="async" class="aligncenter" src="https://mercomcapital.com/assets/images/Comparison_Between_Tax_Rates_for_Civil_Contract_(Work_Contract_Tax).png" alt="" width="460" height="96" />
“The present effective tax rate for equipment and solar projects is zero &#8211; the 5 percent GST rate will impact project costs marginally,” stated Anurag Garg, Vice-President, Solar &amp; Energy Storage Business, Schneider Electric India in an interview to The Hindu.
A source at Sukra Solar commented that they are expecting an increase in the range of 4-5 percent, while a Rays Power Expert Executive believes that project costs will now increase by a minimum of 5 percent and could go up as high as 7 percent. “This is because everything from modules to inverters and cables will have a minimum increase of 5 percent. Now project costs will go up and tariffs are hitting lows &#8211; this is not an ideal situation. Let’s see how the government implements the tax, then we can see the long-term effects, added the Rays Power executive.
<img loading="lazy" decoding="async" class="aligncenter" src="https://mercomcapital.com/assets/images/Comparison_Between_Tax_Rates_for_Service_Contract_(Installation_and_Commissioning).png" alt="" width="558" height="98" />
“Over the long term, the GST might be beneficial to Indian module manufacturers as only the GST will be applied while many other variable taxes will be eliminated. Many developers are complaining about increases in project cost, but project costs might not increase by a huge amount. Also, the advantages of GST are removing delays and corruption from the system. So, we might also see a decrease in project completion timeframes,” stated a Jakson Solar Executive.
When GST is implemented, large-scale projects will see an increase in project cost by 5-7 percent, all segment of the market will be affected equally. Tariffs will increase due to GST implementation by Rs.0.5/kWh, stated Mercom’s source at Madhav Infra.
What Government Officials are Saying
Officials from the government are generally of the opinion that the effect of the GST on the solar industry will be minimal.
“Solar and coal have been treated on par with both incurring a 5 percent GST rate,” stated an official at Ministry of New and Renewable Energy (MNRE). “The 5 percent GST is a good move as in many states there were multiple duties applied; now there will be a parity in project costs too.”
Regarding the clean environment cess being <a href="https://mercomindia.com/clean-environment-cess-funds-clean-energy-programs-india-will-now-used-towards-gst-compensation-fund/" target="_blank" rel="noopener noreferrer">utilized for GST compensation fund</a>, the MNRE official said, “We are lobbying in the best interests of the solar sector in India, the government will find a way as renewable energy is critical for India’s growth.”
The MNRE official further added, “Project costs are expected to increase marginally, but it is not going to affect many developers. Most developers make project cost assumptions by taking into account such eventualities.”
Another MNRE official told Mercom, “All solar equipment will be under the 5 percent GST tax slab.” This includes, inverters, modules, cells, cables, mounting structures and anything that is utilized in the development of a solar project. When it comes to projects that are under development, “there is clause wherein the project developers can appeal to the off-taker if there is change in tax laws.”
The Indian solar industry is now waiting for official confirmation from the government on all issues and fine print so that work can move ahead with complete clarity and certainty.
&nbsp;

Mercom Exclusive: Effects of 5 Percent GST on Solar in India

The state government of Haryana has exempted solar materials and equipment from value added tax (VAT) in the state. The order was issued by the Excise and Taxation department, Government of Haryana, with immediate effect on May 8, 2017.
With this order, solar lantern, solar home system, standalone street lighting system, solar water heating system, solar water pumping system, solar cooker (box as well as dish type), solar charger/inverter, solar photovoltaic (PV) modules, solar collectors, solar dishes, its inverters or PCUs (Power Conditioning Units), energy meters and alternators purchased for the installation of solar power generation projects (both rooftop and ground mounted) are exempt from VAT.
This action has been taken in public interest, according to a Haryana government <a href="https://haryanatax.gov.in/HEX/DownloadPDF?formName=/d01/PORTAL/SPLAPP/pdf/Notifications/VAT/2017/notification_solar_final.pdf" target="_blank" rel="noopener noreferrer">release</a>. Mercom <a href="https://mercomindia.com/mnre-exempts-solar-rooftop-materials-equipment-customs-excise-duty/" target="_blank" rel="noopener noreferrer">reported last month</a> that Ministry of New and Renewable Energy (MNRE) exempted solar rooftop materials and equipment utilized for rooftop solar projects (grid-connected) from customs and excise duty.
Image Credit: 123RF.com

State Government of Haryana Exempts Solar Material from Value Added Tax

Solar tariffs are expected to see a rise of 10 percent once the Goods and Services Tax (GST) is rolled out, according to a <a href="http://ceew.in/newsDetails.php?id=357" target="_blank" rel="noopener noreferrer">study</a> by the Council on Energy, Environment and Water (CEEW). The Council also found that the GST will give a boost to the government’s “Make in India” initiative, improving competitiveness of Indian manufacturers of solar cells, panels and modules, eliminate the cascading effect of the existing tax structure and introduce an input tax credit. Increased competitiveness of domestic solar manufacturers could create an additional 37,000 new jobs in the solar manufacturing sector by 2022, according to the report.
After the rollout of GST, the current tax exemptions, subsidies, and holidays will end. Key contributors to the increase in solar tariffs after GST would include an increase in operations and maintenance cost, panel costs, and financing costs. The increase in solar tariffs would also vary across states. They would be higher for states such as Rajasthan where Value Added Tax (VAT) and Entry Tax exemptions are currently provided for solar equipment as opposed to Andhra Pradesh and Gujarat where VAT and Entry Tax exemptions are not provided. Solar deployment hurdles need to be ironed out as early as possible in order for the country to reach its anticipated solar capacity levels of 12 GW by 2018. While the GST offers long-term benefits, the short-term negative impacts need to be addressed quickly by the governing bodies. “If current tax exemptions are curtailed, the impact of the increase in solar tariffs could be partially offset by policy instruments, such as Accelerated Depreciation benefits or Viability Gap Funding for projects incurring increased capital investments,” said Dr. Arunabha Ghosh, CEO, CEEW.
Image credit: http://www.cgpgrey.com, <a href="http://creativecommons.org/licenses/by/2.0)">CC BY 2.0</a>, via <a href="https://commons.wikimedia.org/wiki/File:DK-84_-_Kobenhavn_-_Copenhagen_-_Denmark_-_Shipping_Containers_-_Intermodal_Containers_(4890885214).jpg">Wikimedia Commons</a>

vat

Get the most relevant India solar and clean energy news.

RECENT POSTS