Solar Rooftop Project - Installation and Net-Metering

Solar Rooftop Project - Installation and Net-Metering

Solar Projects can be installed on open rooftop space, wherein generated green electricity can be consumed by the customer and excess electricity can be exported to the government grid. Best win-win proposition for consumer, grid, government and environment.

Main features of the Net Metering Policy for Rooftop Solar PV Plants:

1. “Eligible Consumer” means a consumer of electricity in the area of supply of the Distribution Licensee who uses or intends to use a Solar Photo Voltaic (“PV”) generating System having a capacity less than 1000 KW, installed on a roof-top or any other mounting structure in his premises, to meet all or part of his own electricity requirement, and includes a Consumer catering to a common load such as a Housing Society.

2. The capacity of the Roof-top Solar PV System to be connected at the Eligible Consumer’s premises shall not exceed his Contract Demand (in kVA) or Sanctioned load (in kW).

3. If the quantum of electricity exported exceeds the quantum imported during the Billing Period, the excess quantum shall be carried forward to the next Billing Period as credited Units of electricity. The unadjusted net credited Units of electricity as at the end of each financial year shall be purchased by the Distribution Licensee at its APPC as approved for that year. At the beginning of each Settlement Period, the cumulative quantum of injected electricity carried forward will be re-set to zero.

4. In case the Eligible Consumer is within the ambit of ToD tariff, the electricity consumption in any time block, i.e. peak hours, off-peak hours, etc., shall be first compensated with the quantum of electricity injected in the same time block.

Authored by :

CA Yogesh
Director
BWPM Co.

visit us at : www.Yogesh-CA.blogspot.com

Start-ups in India - Accounting & Legal Compliances

Startup entrepreneurs in India mostly working with business format of Company or Limited Liability Partnership (LLP) needs to be more particular on accounting, taxation and compliance procedures for better valuation. Most startups think that since they have no business transactions or accumulated losses, they do not need to file their tax returns. Every company / LLP in India has to comply with basic compliances irrespective of its business situation or profit / loss status.

1. Book Keeping and Accounting Procedure:

Recording the transactions and preserving bills and invoices to back financial statements is something that most business owners dread. Avoiding this leads to serious repercussions. For example, at the time of incorporation, a company pays the registration fees, name approval fees and stamp duty to RoC. Further, the promoters of the company also hire a professional firm to guide them through the entire incorporation procedure, which again involves cash outflow.

These expenditures, though pre-incorporation in nature, provides tax-saving benefits to the company, to the extent of one-fifth of such expenses every year. Further, invoices carrying break-ups of VAT and service tax is a boon, as far as claiming credit for both is concerned. The company should keep records of all expenses made specifically for business, since these are deductible against business revenues. Even if the company is suffering losses, it is advisable to maintain records in order to raise the losses and set it off with future profits.

In case of non-compliance, persons responsible shall, in respect of each offence, be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 5,00,000 or both in case of companies.

2. Income Tax Return & Compliance Filing

Filing of income tax return is the most authentic proof of the income earned as all are required to file it.  But many do not file tax returns as they are unaware of the procedure. Startups should appoint a tax consultant who will help them avail the benefits of filing tax return in time. Some of the benefits include:

· A business having losses can carry it forward and get it set-off with future profits.

· For making an investment, filing income tax return on time is essential.

· Tax refunds can be claimed only when income tax return is filed.

.Timely filing of ITR is necessary for smooth bank / debt funding for project.

The due date for filing Income Tax return is September 30 each year. Various procedures of penalty and interest are applicable for delayed filings.

3. Statutory Audit

It is mandatory to get accounts audited annually for all companies, whereas LLP has certain financial limits for statutory audit compliances. The LLP Act provides that the partners of such LLP if decided not to get audit of the accounts of the LLP then such LLP shall include in the Statement of Account and Solvency a statement by the partners to the effect that the partners acknowledge their responsibilities for complying with the requirements of the Act and the Rules with respect to preparation of books of account and a certificate in the Form 8. However no such relaxation is provided to companies.

4. Registrar of Companies Compliances & LLP Act

Every company (having or not having share capital) and LLP has to file its financial reports with the Ministry of Corporate Affairs annually. It constitutes a component of ‘Annual RoC Filing’ mandated by Companies Act, 2013. As a part of annual filing, Companies incorporated under the Companies Act 2013, are required to file the Balance Sheet, Profit & Loss Account and Annual return in prescribed format thru e-forms with the RoC. The penal provisions of RoC are so stringent that companies have been shut down due to this. The additional fees can be as high as upto 12 times of normal fees. Further, there also provisions where huge penalties are laid per day on officers as well as the companies simultaneously.

As a part of Annual Filing, LLPs are required to file Statement of Account & Solvency and Annual Return of LLP thru e-forms with the RoC.  Surprisingly, there are no slabs for late filing fee for LLPs. In this regard, the straight rule of computation of late filing fee is Rs 100 per day of delay in filing. The number of days of delay in filing is calculated from the due date of filing to the actual filing date.

As mentioned earlier, these compliances have to be adhered to irrespective of your business situation. Non-compliance of these provisions has the capacity to shut down a full-fledged business.

Authored by :

CA Yogesh
Director
BWPM Co.

visit us at : www.Yogesh-CA.blogspot.com

REC trade-ability and future of Solar Projects in India

Entrepreneurs, Investors, Industrialist and Capitive consumers are setting up grid connected Solar Power Generation Projects in India along with inbuilt REC certificate mechanism. Wherein along with every unit of electricity generated, project become liable for REC certificate earnings. Later on monthly interval, REC are traded on Power Exchanges in India with open trade options for buyers and sellers.

As a Project Professional and Financial Advisor for renewable energy projects, I have to reach on conclusion that, which one is bigger risk......... The Tariff or The REC revenue realisation. In my views, REC is proving itself as non-revenue earning certificate credits. As we cross the halfway mark of this financial year, there has not been any change in the pattern that has been observed during almost every trading month since April 2014 – ever increasing number of sell bids, but a very stable and extremely low levels of buy bids. The only difference this time is that the number of RECs available for sale has gone beyond the 1 Crore mark.

The monetary value of these unsold RECs at their floor prices (Rs. 9300) is calculated at Rs. 1816 Crore (including of Rs. 350 Crore for unsold Solar RECs and Rs. 1466 Crores for unsold non-solar RECs). If this does not lead to any action from the regulators and policymakers to protect the investors, nothing else will boost the solar energy development in our great India.

Authored by :

CA Yogesh
Director
BWPM Co.

visit us at : www.Yogesh-CA.blogspot.com

Lessons from the Past…….for betterment of FUTURE Solar Project

Lessons from the Past…….for betterment of FUTURE Solar Projects

Based on the experience of implementation and strategic consultancy for variety of solar projects, ranging from 1mw to 20mw grid connected Solar PV Projects.

Solar PV project implementation is a very complex mix of activities, including :

-Documentation,

-Timely submission and paper work,

-Govt. approvals,

-Planning,

-Designing,

-Land selection,

-Best mix of equipments and vendors,

-Engineering

-Financing etc.

Developers has to remain very alert about updates, since decisions at every stage is very crucial and important to life of the solar project, efficiency for 25 years generation, return on investment, performance ratio, operation & maintenance etc.

Solar Project success depends on raw material (Sun Rays) and accurate calculation of availability of solar radiation is very important. This can be classified under Resource Assessment and selection of optimum suitable location. Then decision regarding equipments, vendor, guarantee, warranty etc. has to be taken in proper decision matrix. After generation of power, it is essential to have proper planning for power evacuation and power transmission. This depends on synchronization between developer’s system and government transmission facilities. Any adverse situation or non-synchronization shall result in direct revenue loss to the developer.

Expertise of developer’s team / consultant (owner’s engineer) shall be into right mix of technology, right mix of equipments, right mix of local situation, right mix of own system and government system. All these factors are more important, rather just opting for a Turnkey Contractor or EPC company on lowest price quotes. Since accurate project planning is going to survive your solar project for the life of 25 years operations and revenue and business interest of Turnkey Contractor or EPC is limited upto the commissioning of your solar project. It is crucial to make prudent investments after incorporating risk control measures.

In the interest of Solar Power business development in India………………

Authored by :

CA Yogesh
Director
BWPM Co.

visit us at : www.Yogesh-CA.blogspot.com

Financing of Solar PV projects in India

Financing Solar PV Projects in India:

Solar Projects installations in India begin in year 2008. Most of the projects are located in the State of Rajasthan and Gujarat. Indian solar market is regulated by Government FIT, Own consumption and REC mechanism.Financing a Solar PV project is a challenging job for any financial consultancy firm. Wherein following options may be availed:

• Corporate Financing
• Lease Financing
• Project Financing

Decision Matrix criterions for Lender institutions……Screening of a Solar PV project:

Following parameters to be simulated for minimum DSCR for different FIT and irradiations.

• Calculation of minimum promoter’s equity required to achieve minimum DSCR
• Calculation of maximum Capex required to achieve minimum DSCR.
• Light business approach with minimum DSCR as key parameter
• Maturity 5-8 years
• Standard down payment 20%-30%
• Mandatory insurance coverage as per banking policy
• Mandatory O&M agreement
• Due diligence by external appraisers
• Performance monitoring agency

How do we structure debt/equity deals for our clients:

• Screening of EPC contracts with various standard and subjective parameters
• Screening of Govt. schemes and FIT regulations
• Payback calculations with FIT, Depreciation benefits, Cost of Debt, Equipment sourcing etc.
• We validate each transaction with a separate financial evaluation team representatives.
• Project financing bankable set of finance contracts with a set of covenants as standarised by Banks and Rating agencies.
• Financial Model goes through several audit checks.

Authored by :

CA Yogesh
Director
BWPM Co.

visit us at : www.Yogesh-CA.blogspot.com

Anti-dumping duty on Solar cells and modules in India

India might impose anti-dumping duty on four major importers of Solar Cells and Solar Modules in the country after listening to the grievances of domestic manufacturers.

Local producers have filed a case last year, alleging that countries such as the USA, China, Malaysia and Taiwan were exporting solar equipment to India at "ridiculously low prices" which was "bleeding the local industry".

Authored by :

CA Yogesh
DirectorBWPM Co.

visit us at : www.Yogesh-CA.blogspot.com

REC Market updates in India :

REC Market updates in India:

At present there is very weak enforcement action by electricity regulators of different states, which has widened the demand supply gap of REC (Renewable Energy Certificates).

As per a news published in the Business Standard, Mr. Tarun Kapoor (Joint Secretary of MNRE) said “ we have realized that few state discoms and private companies are not following regulations of RPO and not complying with minimum RPO targets for the year. To make it mandatory, we have proposed an amendment to the Electricity Act.”

It will be a big push to strengthen the REC market in India, as this will be the strong driving force of RPO, being regulated by this enforcement. At times, state regulators tend to postpone enforcement of RPO obligations. Considering law is being amended, state regulatories would have to strictly enforce it and a penalty could be imposed for non-compliance, which in turn would put pressure on discoms to meet their obligation properly, during the year.

REC mechanism can be installed properly only by Government make it mandatory and enforce binding provisions to meet RPO on timely intervals. If Solar REC certificates are not sold, their incentive for setting up of Solar Power Project declines and make it totally unviable financial project for developers. State discoms are largely benefited by REC, as they are real beneficiaries due to availability of electricity on pooled cost under 25 years PPA with solar project developers. This availability of solar power is going to reduce their dependency on environment harmly pollutive electricity being generated by coal, gas, lignite and other sources.

Authored by :

CA Yogesh
Director
BWPM Co.

visit us at : www.Yogesh-CA.blogspot.com