Government Regulations Making Megawatt Solar Projects Better What Investors Need to Know Right Away

By 2030, the Indian government wants to have 500 GW of non-fossil fuel energy capacity, and solar power is a key component of this ambition. Megawatt solar projects and utility-scale solar systems have emerged as key components of this ambition, drawing interest from both EPC contractors and investors. Large scale solar deployment across the nation is made possible by the dynamic policy environment that has been established by the mix of federal government initiatives and state-level support systems. However, what precisely is causing this increase? Let's examine the main laws that are influencing the situation.

The Production Linked Incentive (PLI) Scheme is one of the most revolutionary initiatives for the Indian solar ecology. Under this program, which is overseen by the Ministry of New and Renewable Energy (MNRE), the government is providing ₹24,000 crore in financial incentives to increase local production of high-efficiency photovoltaic modules. The Significance of This for Solar Installation Companies and EPC Contractors • Less reliance on imports: By promoting domestic production, the PLI program lowers the price of essential parts, increasing the cost-competitiveness of megawatt solar installations. **• Increased supply stability: **EPC contractors gain from a more robust local supply chain, which cuts down on project delays caused by overseas sourcing. <br> **• Improved quality control: **The PLI plan frequently requires domestic producers to fulfill strict performance and efficiency standards, raising the standard for solar systems.

Launched to expedite large-scale solar deployment, the Development of Solar Parks and Ultra Mega Solar Power Projects Scheme is another key strategy. The government encourages the development of solar parks under this scheme, which are sizable tracts of developed land where 500 MW and larger solar projects may be built with all required infrastructure (land, transmission, water, and road access) in place.

• Plug-and-play infrastructure: Without the high upfront costs associated from land development, EPC contractors and solar developers can start megawatt solar projects more quickly. • Economies of scale: Large projects have lower per-megawatt costs due to contiguous acreage and centralized transmission lines. • Risk mitigation: The government lowers obstacles that usually cause project execution to be delayed by controlling approvals and grid connectivity.

**Financial Support and Central Subsidies ** The federal government continues to provide capital subsidies that drastically reduce initial project investments in an effort to increase the use of solar, particularly in commercial installations. The government has increased the financial viability of commercial solar projects by introducing a 23% capital subsidy in recent legislation.

Additionally, the government has kept the tax structure for renewable energy projects favourable: • The cost of modules and equipment is lowered by the relatively low Goods and Services Tax (GST) on solar components. • A number of budgetary initiatives have lowered import taxes on solar modules and associated components, promoting production and installation. These tax breaks boost project IRRs and boost competitiveness in captive and open-access markets for solar installation firms and EPC contractors.

• The Pradhan Mantri Surya Ghar: Muft Bijli Yojana and other distributed generation initiatives are changing the larger solar ecology, even if utility-scale projects are still essential. With the help of fixed subsidies and up to 300 free units of power each month, this flagship project seeks to install solar rooftop solar systems in one crore households. Despite focusing on smaller systems, this initiative has significant effects on the solar value chain: • A rise in demand for solar installation businesses as a result of rooftop adoption's broad reach. • An increase in qualified solar installers and suppliers, which broadens the pool of potential EPC contractors. • The creation of net-metering ecosystems, which aid in balancing the power produced by massive megawatt solar farms. Millions of homes have already had rooftop solar systems installed, according to progress reports, proving the potent attraction of government-led incentives and rising consumer demand.

In addition, dynamic state efforts that support central programs are part of India's energy policy environment. For instance, in order to encourage installations in both the residential and commercial sectors, governments like Haryana have loosened the capacity restrictions on solar facilities and implemented sizable incentives. Typical state policies consist of: • More capital grants for solar that is linked to the grid. • Electricity duty waivers for a specified amount of time. • Special consideration for renewable energy initiatives in terms of transmission and open access. • Frameworks for net metering and virtual net metering that promote distributed and large-scale solar deployment. These state incentives can significantly increase project viability and return on investment for investors assessing megawatt solar projects.

To guarantee dependability and efficiency in solar systems, the government has tightened quality control standards. In an effort to bolster investor trust and guarantee long-term asset performance, new standards mandate that PV modules, inverters, and other essential components adhere to the Bureau of Indian Standards (BIS). Benefits for EPC Contractors and Solar Installation Businesses • Lower maintenance and operational risks are associated with higher standards. • Securing funding from banks and institutional investors is facilitated by improved performance measures. • EPC businesses may expedite procurement and installation procedures by standardizing across projects.

Open access frameworks, which enable customers with high load demands to directly purchase electricity from solar producers, have contributed to the growing adoption of renewable energy by commercial and industrial (C&I) consumers. Megawatt solar project sales have increased dramatically as a result of the Green Energy Open Access regulations, which have made it simpler for renewable energy purchasers to sign long-term Power Purchase Agreements (PPAs) without incurring exorbitant fees.

• One essential component of project finance is the provision of steady, long-term revenue streams, which PPAs offer • By targeting corporate clients with medium- and long-term contracts, solar developers may help defend the cost of investing in significant EPC deployments. • Open access models assist solar installation businesses in expanding into utility-scale projects in addition to rooftop and distribution systems.

What does the solar investment community actually stand to gain from current policy environment? Good Growth Opportunities India's solar business is poised for substantial growth, particularly in megawatt solar capacity categories, thanks to fiscal incentives, favourable tax regimes, and infrastructure programs like solar parks.

Increased Returns on Investments Better project returns and shorter payback periods for investors are the result of lower capital costs, guaranteed revenue through PPAs, and favourable regulatory frameworks. Decreased Operational Risk Reliability across installations is fostered by standardized quality standards and local manufacturing activities, which lower long-term risks for EPC contractors and solar installation firms. Increased Market Confidence Investor confidence has grown dramatically as a result of government pledges supported by finance allotments and streamlined procedures, drawing both local and international direct investment into solar projects.