State-run Gujarat Urja Vikas Nigam Limited (GUVNL) has withdrawn subsidy to small-scale distributed solar projects, affecting about 4000 projects with an aggregate capacity of around 2500 MW signed power.
The purchase price of power produced was fixed at Rs 2.83 per unit which was already far lower than other states like Rajasthan and Maharashtra, where they set Power Purchase Agreements (PPA) tariff rates at higher than Rs 3.15.
In March 2019, the ‘Policy for Development of Small Scale Distributed Solar Power Projects’ was first announced by the government with the aim of encouraging the distributed generation of solar energy. This scheme was intended to support Prime Minister Narendra Modi’s ambitious renewable energy goals.
In effect, distribution generation to Gujarat state power companies was expected to help reduce transmission losses, farmers would get electricity during the day, the environment would benefit and the Center and the State governments would benefit from GST revenue.
As stated in the policy, any eligible entity can set up a solar power plant with capacity ranging from 0.5 MW to 4.0 MW and supply the solar power produced to the nearest GETCO substation.