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Delays and glitches mar Uttarakhand’s solar self-employment scheme

The Uttarakhand government started the ambitious scheme in September 2020 when migrant workers and youth were returning to the state due to COVID-19 and subsequent lockdowns, and loss of jobs.

-- In September 2020, Uttarakhand started a self-employment scheme to distribute small solar plants upto 25 kilowatt (kW) to 10,000 individuals by the end of March 2022.

-- The scheme has the potential to add 250 megawatts (MW) of additional solar power production in the northern Indian hill state.

-- However, it has received only 1,242 applications till August 31, 2021 out of which only 558 received allotment letters.

Sagar Rawat is a resident of Kot village in the hilly district of Pauri Garhwal in Uttarakhand. He settled in the village after losing his job in an information technology (IT) firm in New Delhi during the COVID-19 lockdown. In September 2020, when the Uttarakhand government launched a solar self-employment scheme, he decided to use his land in the village to produce solar energy.

He applied for the scheme in September 2020 and by the end of December 2020, Rawat got an allotment letter for the solar plant too. “In February 2021, I was also able to sign a power purchase agreement with the Uttarakhand Power Corporation Limited (UPCL). But now I am not getting the loan from banks. I don’t know what to do next. The Uttarakhand Renewable Energy Development Agency (UREDA) is also not giving any clear answers. They told me that my file is now stuck in the industry department,” Rawat told Mongabay-India.

Ashish Rawat from the same village has a similar tale to tell. Last year, he lost his job during the pandemic following which, in October 2020, he applied for the scheme.  In December 2020, his application was approved but he is yet to get approval for the solar plant.

“With a 25 kW solar plant, I can earn anywhere between Rs. 14,000-Rs. 15000. But I will have to spend around Rs. 7,000 as a monthly installment to banks to repay the loans. I cannot take care of my family with around Rs. 8,000. There was no need for a mandatory loan from banks for this system,” argued Ashish Rawat while emphasising that under the scheme only those who need a loan should have been asked to apply for it.

The Uttarakhand government started the ambitious scheme in September 2020 when migrant workers and youth were returning to the state due to COVID-19 and subsequent lockdowns, and loss of jobs. This scheme was aimed to cater to the interests of the jobless migrants returning to their villages. It envisaged a power purchase agreement between the UPCL and those setting up the plant for a period of 25 years.

The then chief minister of Uttarakhand, Trivendra Singh Rawat, launched the scheme aimed at allocating solar plants of 25-35 kW to around 10,000 beneficiaries by the end of March 2022. If achieved, the scheme would result in an addition of 250 megawatts (MW) of additional solar power production.

India has a target of installing 175,000 MW of renewable energy capacity by 2022, and, of that, 100,000 MW is targeted from solar power alone. A significant part of the 100,000 MW is targeted through decentralised solar power. According to the Central Electricity Authority (CEA) (by August 2021), Uttarakhand has a total installed power capacity of 3,923.68 MW which includes 1,975.89 MW from large hydropower projects whereas thermal energy from coal, lignite and other sources account for 1,011.26 Mw. The installed capacity of renewable sources in the state is 905.29 MW.

According to the estimates, for a 25 kW solar plant, the total cost is about one million rupees (Rs. 10 lakh) with a rate of around Rs. 40,000 per kW. According to the norms of the scheme, any interested party is required to deposit Rs. 300,000 and mandatorily take a bank loan of Rs. 700,000 from the banks. They are then required to repay monthly instalments at an interest rate of eight percent. Once the plant starts producing power, the beneficiaries are entitled to get a government subsidy of Rs. 200,000.

The scheme required connecting these solar projects to the nearby transformers to ensure that the renewable energy is easily distributed through the grid lines. The whole system works on the concept of ‘net metering’ where calculations are based on the amount of power produced, consumed and saved. The system for payment to the power producers has been fixed at an interval of every three months. Thus, if someone is not using the power for the household, it will go to the grid through the transformers on the basis of which the final calculation of power supplied to the grid is done.

The scheme was meant to stop migration in the state and create a self-employment opportunity within the state as the northern hilly state has a history of people migrating outside the state for better opportunities. But during the COVID-19 lockdowns, when the migrants were returning, the government wanted to ensure that they get opportunities and stay back.

According to the Uttarakhand Rural Development and Migration Commission, between the lockdown in March 2020 and September 2020, around 357,000 migrants returned to their original habitations and it was reported that around 30 percent of them expressed their desire to stay back and work.

Dark clouds over the solar self-employment scheme

Since the launch of the scheme , the applications received by the state government for the scheme stood at 1,242 (end of August 2021) against the plan of giving solar plants to 10,000 individuals by March 2022.

Neeraj Garg, who is the chief project officer with the UREDA, informed that of the total applications, allotment letters for 558 have been issued. While, he said that according to the report of the UPCL’s technical feasibility assessment, the “industry department has sent 348 applications to banks for approval of loans.”

Priya Baludi from Ufalda village, another beneficiary of the scheme, is now waiting for the completion of the whole process. Baludi, who is pursuing post-graduation from a college in Uttarakhand’s capital city Dehradun, initially wanted to work in cities such as Delhi or Dehradun. “But when I found out about this scheme, I decided to apply for it and become part of the self-employment mission.”

Her father Ratan Baludi, a teacher, said: “My daughter is educated but even then completing the online form for the scheme took her 10-15 days. There are several educated youths from the village who want to apply online but are struggling on that front. The government should have thought about offline applications as well.”

Ratan Baludi also informed about the loss of interest among individuals due to the condition regarding the deposit of Rs. 300,000 that a beneficiary needs to submit. “We encouraged the Self Help Groups (SHGs) to be a part of the mission and pursued them for applications but many were reluctant due to the massive deposits required under the scheme.”

During a visit, Mongabay-India found that several villages in the hilly areas of the Pauri Garhwal region were not aware of the scheme. In fact, many applicants point out that the process – starting from applying for the scheme to final power generation – is filled with multiple formalities and requires the involvement of multiple agencies ranging from UREDA, the UPCL, state government’s industry department, banks and many others which leads to delays.

“The applications for solar plants are first sent to UPCL. A transformer within a distance of 300 metres from the land of the beneficiary is mandatory. After completing the technical feasibility assessment, the UPCL sends its report to the district committee. This committee comprises the collector or his/her representative, industry department, officials of the UPCL, banks and the project officer of UREDA. After the approval from this committee, allotment letters are given,” explained Shiv Singh Mehra, who is Pauri District Project Officer, UREDA.

He said following this a power purchase agreement is signed between the UPCL and the beneficiary. “The file is also sent to the industry department for subsidy disbursement. After all these steps, banks are contacted for loans and solar panel firms for the installation of solar panels,” Mehra said.

What are the glitches?

While the scheme is good there are several glitches that are hampering the smooth execution of the scheme aimed at encouraging clean energy in the state.

Mehra of UREDA told Mongabay-India that for a 25 kW solar plant there is a requirement for a minimum of 63 kV transformer but several hilly regions in the state host transformers which have the potential of only 25-30 kV range. After the launch of the scheme, this glitch was noticed and the required amendments were done.

Chief Project Officer of UREDA A.K. Tyagi told Mongabay India that to “ensure distribution of solar power in hilly areas, the UPCL needs infrastructure which requires more investments.”

“Under the CM Solar Self Employment Scheme, for a 25 kW solar plant, the cost comes at around Rs. 1 million (Rs 10 lakhs) whereas the distribution costs come to around Rs. 2.5 million (Rs. 25 lakhs). For the UPCL, it becomes too costly. So, we have made a rule that only those plots are qualified which are 300 meters from the transformers,” Tyagi said.

This is not the first time that Uttarkhand has tried to promote solar power in the state. In 2016, the Uttarakhand government had come up with Suryodaya Self-Employment scheme.

Sudhir Sundreyal, a resident of Dabra village in Pokhra block in Pauri district, explained how the single-phase line affected the early experiments of the government under this scheme.

“At that time, there were plans of installing 5 kW rooftop solar plants with an investment of Rs. 320,000. But when the time for the installation came, instead of 5 kW, only 4 kW panels could be installed. UREDA didn’t know that in such areas there were only single-phase connections. Due to a single line, the potential is reduced by 1 kW,” he said.

He said that the scheme should not be called a self-employment scheme as even after five years he was able to receive only around Rs.12,000 but admitted that he didn’t need to pay his bills for electricity due to the concept of net metering.

This story was first published on Mongabay, click here to access it.