Centre's subsidy terms inflate solar plant costs, Telangana Assembly told
Telangana's Energy Minister told the Assembly that central subsidy conditions raise solar plant investment costs, deterring developers from availing VGF.
The conditions attached by the Centre to subsidy and Viability Gap Funding (VGF) for solar power projects are proving a significant hurdle in reducing investment costs, Deputy Chief Minister and Energy Minister Mallu Bhatti Vikramarka told the Assembly on Thursday.
Responding to a question on floating solar plants on reservoir waters, he said such installations cost about ₹1 crore per megawatt more than ground-mounted plants. Ground-mounted solar projects in the country require investments ranging from ₹3.8 crore to ₹5 crore per MW, while floating plants add roughly ₹1 crore per MW to that figure.
The Centre has stipulated that developers can claim the ₹1 crore per MW subsidy or VGF only if they use indigenously manufactured solar panels and equipment; imported material does not qualify. According to the Deputy Chief Minister, using domestic components pushes up investment by about ₹1.3 crore per MW. Even after availing the ₹1 crore per MW support, the outlay would remain around ₹30 lakh per MW higher than for plants built with imported material. This mismatch, he said, explains why developers are not coming forward to claim the VGF.
Mr. Vikramarka informed the House that the Energy Department has written to the Irrigation Department regarding the installation of floating solar plants on reservoir waters. Sites such as the Lower Manair Dam, Mid Manair Dam and Mallannasagar were examined, but the high investment cost has emerged as a major obstacle.
The reply came during a discussion on supplementary questions and suggestions from Congress members K. Madanmohan Rao, P. Sanjeeva Reddy, T. Rammohan Reddy, Adi Srinivas and Makkan Singh Raj Thakur, who advocated floating solar plants on reservoir waters to curb evaporation losses that complicate drinking water supply. Mr. Sanjeeva Reddy said the Singur reservoir, which supplies drinking water to parts of Narayankhed, Zaheerabad, Andole and Sangareddy constituencies, loses 9 tmc ft of water annually to evaporation, with similar losses reported at Nizamsagar, Nallavagu, Pocharam and other projects in the region.
On the solarisation of agricultural pumpsets to ease the load on power utilities, the Deputy Chief Minister said a pilot project has been taken up in the Amrabad area of Achampet constituency. The government is planning mandal-wise independent micro grids with battery storage to meet local energy needs, which would also reduce the financial burden on the state. Telangana currently spends ₹14,000 crore a year on free power to agricultural pumpsets and ₹5,000 crore on supplying free electricity up to 200 units a month to 53 lakh households.