Floating Solar Plants Gain Momentum In India

There’s a new trend on the solar energy harnessing front in India.

Like in China and a few of the Southeast Asian nations, India is seeing a spurt in what are called “floating solar plants.”

In late 2017, the country inaugurated its largest such floating plant, a 500 kw (kilowatt peak) by the Kerala State Electricity Board (KSEB). This one floats on 1.25 acres of water surface of a reservoir, and has 1,938 solar panels, which have been installed on 18 ferro cement floaters with hollow insides. The project uses high-efficiency solar panels and a floating substation has been set up on the reservoir itself to convert the output into 11 kV.

While the concept of floating solar plants in India is old — it was first mooted by Tata Power way back in 2011 – they caught the fancy of energy developers only now. The Tata plant is on the backwaters of a dam located close to Tata’s hydro-electricity plant.

A second pilot project was started on the banks of the Sabarmati river in the province of Gujarat in 2012. It was awarded to SunEdison at a cost of about U.S. $2.7 million. The pilot project was developed by Gujarat State Electricity Corporation (GSECL) with support from Sardar Sarovar Narmada Nigam Ltd. (SSNNL).

But it’s only in the last few months that the activity has picked up. The government has floated eight floating solar power projects of capacities ranging between 2 MW to 1,000 MW.

The floating plants tie in with the Indian Government’s overall, rather ambitious, renewable energy plan.

India and China are both leading in this race. In 2017, Asia accounted for nearly two-thirds of the worldwide increase in renewable energy generating capacity, according to a report published in April by the International Renewable Energy Agency. Renewable energy capacity has nearly doubled over the past five years, reaching 918GW in 2017.

According to media reports, renewable energy firm Avaada Power is now in talks with various provincial governments in India to set up floating solar projects.

The company wants to increase its installed solar capacity to 5,000 megawatts (MW) in the next four years, from 1,000 MW at present, and a major chunk will come from solar energy. The floating solar segment has a potential to generate 300 gigawatts (GW) of power across the country.

Many provincial governments are also expected to call for tenders in this space soon. Also, India’s National Hydroelectric Power Corporation (NHPC) has announced its plans to set up 600 MW of floating solar capacity at the 1,960-MW Koyna hydel power project in the State of Maharashtra.

Experts are optimistic that with India’s large network of water bodies, this trend of floating solar plants will become the norm soon, though care has to be taken while setting them up so that they do not affect marine life.

Source: Oil Price.com

No GST concession for solar contractors

BENGALURU: Though solar panels and related equipment attract goods and services tax (GST) at a concessional rate of only 5%, solar developers who employ contractors to supply the panels and set up their projects are getting a ‘service’ performed for them, and hence should pay 18% GST, the rate applicable for services, the Maharashtra Authority for Advance Ruling (MAAR) has ruled.

The agreements tendered … reveal that the transaction of setting up and operating a solar photovoltaic plant is in the nature of a ‘works contract’,” said the two member bench of B. V. Borhade, Joint Commissioner of Sales Tax, Maharashtra, and Pankaj Kumar, Joint Commissioner of Central Taxes, which was constituted last year to decide in advance on any matter relating to GST, in a recent judgment. “The rate of tax would be 18% under the IGST Act, or 9% each under the CGST and MGST Acts, aggregating to 18%.

Since solar developers hardly ever build their own projects but use contractors, the ruling, which is almost certain to serve as a precedent for other states as well, in effect takes away the advantage of the concessional GST rate for solar panels from them. It will increase their tax burden and in turn may well raise solar tariffs at future auctions.

The petition filed before MAAR by Fermi Solar Farms, a leading EPC contractor, had noted that setting up solar projects usually involve two separate contracts with the developer – one for supply of goods, which includes solar panels and related equipment , and the other for setting up the plant, erecting civil works, connecting transmission lines, etc. It had argued that the GST rate for the first contract should be 5% and for the second, 18%. MAAR’s ruling, however, concluded that both contracts should invite GST at 18%.

MAAR noted that a solar plant consisted of a host of equipment – solar panels and inverters merely being the most prominent – which were put together on the site by the contractor to form a solar power generating system (SPGS). “A solar power generating system is not available as a system as such,” its ruling said. “The agreement very clearly mentions that the buyer desires to purchase an end-to-end SPGS with various integral components. Thus the buyer has expressed a clear intent to purchase an SPGS with the various components and not the components merely… The supplier is appointed not merely to supply the equipment, but there is design and engineering work even before the supply of equipment… The agreement does not stop at supply of equipment but extends to implementation, operation and maintenance as well…. On what basis can such a contract be termed a contract merely for supply of goods.

Source: The Economic Times

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