Punjab Solar Energy Policy

Punjab Solar Energy Policy

punjab map


Objective of the state solar policy include:-

1.1 Punjab has considerable potential in NRSE sector which is being harnessed. With a view to maximize the utilization of these resources; this policy aims to achieve the following objectives:

  • To maximise and improve the share of new and renewable sources of energy to 10% of the total installed power capacity in the state by 2022. NRSE sector wise details are mentioned separately.
  • To promote renewable energy initiatives for meeting energy / lighting needs in rural areas and supplementing energy needs in urban, industrial and commercial sectors.

1.2 Further, in order to achieve the aforesaid objectives, the following shall bethe major strategic initiatives :-

  • To create conducive conditions for attracting private sector investment in NRSE projects along with broader participation by public community/civil society.
  • To provide decentralized renewable energy for agriculture, industry, commercial and household sector particularly in rural areas thereby improving the quality of power and reducing transmission & distribution losses.
  • To give support to specific NRSE projects and schemes for generating energy and conserving energy through energy efficiency.
  • To support research and development, demonstration and commercialization of new and emerging technologies in renewable energy sector such as fuel cell, hydrogen and chemical energy, alternate fuels for transportation etc.



2.1 NRSE are defined as Small hydro upto 25MW, Biomass including Cogeneration, Solar Photovoltaic, Solar Thermal, Urban, Municipal and Industrial solid / liquid Wastes, Biomethanation, Gasification, Wind and New NRSE sources like fuel cells/Hydrogen/Biofuels etc. of any capacity. This form of energy would mitigate carbon dioxide emissions and combat climate change. Given the geographical location of the State of Punjab, and its access to various sources of energy, the State would promote investment through private/public sector participation in the following areas:

2.2 Small/ Mini / Micro Hydel:

By virtue of its topographic location and agriculture base, the State has an extensive irrigation canal network with estimated total potential of over 250 MW. The State Government is committed to exploit the total potential by the year 2022.

2.3 Biomass/Agro residue:

Punjab is primarily an agrarian economy and holds tremendous potential for energy generation from agro- residues like Cotton stalks, Paddy Straw, Paddy Husk etc. It is proposed to achieve a target of 600 MW power generation in this sector by 2022.

Also the existing industries like Sugar, Paper and others have still an estimated unexploited potential of about 500MW of co-generation. Details are placed at Annexure-1A.

2.4 Urban, Municipal and Industrial Liquid / Solid Waste:

At present about 5000 Metric Tons of Municipal, Urban and Industrial solid waste is being produced every day in the urban areas of the State. Introducing scientific processing and treatment of this quantity of waste would add to power generation besides being environmentally benign. Such projects shall be supported on different waste streams in the State. It is proposed to achieve a target of 50 MW power generation in this sector by 2022.

2.5 Solar Power generation:

Punjab is endowed with vast potential of solar energy with over 300 days of sunshine in a year with insolation level varying between 4-7 Kw/sq.mtr. Solar Power Generation capacity is targeted at 1000MW by 2022. With these projects located closer to the load in distribution/ transmission network, distribution losses will be reduced considerably and voltage drop at peak day time load will be minimized. Details are placed at Annexure-1B.

2.6 Wind Power:

Wind power potential is low in the State as the necessary wind speed is not there. The state will support programmes to set up innovative technology based wind turbines.

2.7 Upcoming NRSE technology based projects:

Lot of research is going on around the world for efficient and economic transformation of available renewable sources of energy for usage by the society. Fuel cells, Hydrogen energy, geothermal energy, Bio fuels, Bioethanol etc. have great potential of becoming commercial RE technologies. Pilot, demonstration & commercial projects in these upcoming NRSE technology sector shall be encouraged to be set up in the state by PEDA. In addition PEDA shall take up R&D projects in the Biomass especially paddy straw combustion for power generation through Rankin cycle/gasification in pilot mode.GIS mapping shall be carried out for land, biomass and solar radiation and made available to project developers for project facilitation. PEDA shall also carry out Power transmission/distribution grid network study on 132/66 KV substations for assessing the location suitability of RE projects for max grid/power benefits in terms of voltage improvement, reduction in transmission/distribution losses, evacuation infrastructure/support and decentralized power supply.

2.8 Promotion of Green Technologies:

PEDA shall facilitate and promote the green technologies in the state for furthering the economic and industrial development. Technologies such as Electric Vehicles, Compressed Biogas for Transportation, Green battery technologies, energy efficient, carbon neutral building technologies shall be promoted.



Conservation of energy in domestic, commercial, agriculture, transportation and industrial sectors can lead to major savings in terms of reduced energy consumption thereby leading to bridge the energy demand supply gap in the state. There is a potential of saving of energy upto 20-25% in different sectors of the economy in the state. Energy Conservation Measures shall be implemented and enforced in the state in accordance with the provisions contained in the Energy Conservation Act2001 by PEDA, in consultation with Bureau of Energy Efficiency, Ministry of Power, Govt. of India. Punjab has issued notifications for mandatory use of CFL, Roof Top Solar Water Heating Systems, BIS approved & minimum BEE 4 Star Labeled pump sets and promotion of energy efficient buildings. Demo projects have been initiated for development of energy efficiency in municipal street lighting, water pumping & existing Govt. buildings. Use of BEE Star Labeled electrical appliances in all government organizations has also been mandated.

Energy Conservation Building Code (ECBC) has been launched by Bureau of Energy Efficiency, MOP, GOI on 27th May, 2007 to be implemented on voluntarily basis. The code is applicable to buildings / building complexes that have a connected load / contract demand of 100 kW / 120 KVA or moreand is being amended as the Punjab Energy Conservation Building Code (PECBC) to be applicable in the state of Punjab which falls in the composite climate zone within the provision of the EC Act-2001. Three types of Green building rating are also available i.e. Leadership in Energy and Environmental Design (LEED), Green Rating for Integrated Habitat Assessment (GRIHA) & BEE Star Rating of Buildings. An energy conservation action plan team has been constituted under the chairmanship of Principal Secretary, Science & Technology, Environment and NCES which reviews implementation of various energy conservation programmes in the State.



4.1 Govt. of Punjab shall provide assistance for setting up of NRSE projects in the state. In addition the Govt. shall also provide fiscal and technical assistance to encourage setting up of these projects.

4.2 NODAL AGENCY: Punjab Energy Development Agency (PEDA) is the nodal agency for the implementation of the NRSE Policy on behalf of the Govt. of Punjab. PEDA will be responsible for laying down the procedure for inviting of proposals from NRSE project developers i.e. preparing bid documents, managing the bid process, evaluation of project proposals and its award to successful bidder, project approvals and scrutiny of DPR, project implementation and monitoring. All NRSE project developers in the state (including Captive, Cogeneration, IPP and merchant power developers) will be required to submit their project proposals with PEDA for approval and validation for sale of power in or outside the state.

4.3 SINGLE WINDOW CLEARANCE: Setting up of NRSE projects involves sanctions/clearances from a number of Government Agencies/Departments. The State Government shall provide the clearances in a time bound manner through a single window mechanism within a period of 60 days after the submission of complete application along with necessary enclosures, fees/charges and DPR. The Detailed procedure for according approvals/clearances is placed at Annexure-II.

4.4 FISCAL AND TECHNICAL ASSISTANCE: These have been detailed out in annexure on “FISCAL AND TECHNICAL ASSISTANCE” attached at Annexure-III.

4.5 ALLOTMENT OF PROJECTS: All NRSE Projects including Small Hydro Projects upto 25 MW capacity, Biomass IPP, MW scale Solar PV & Solar Thermal Projects, Waste to energy projects under IPP mode and MW scale roof top solar PV for net metering/sale of power shall be allocated through competitive bidding by PEDA. The project developers shall sell all the energy generated from the projects to PSPCL/Licensee at the tariff arrived after competitive bidding. Financial eligibility Criteria for NRSE projects to be allocated through competitive bidding is given at Annexure-IV.

Projects under REC mechanism may be allocated through competitive bidding based on the percentage share of REC price. For any project to be set up under REC mechanism, the first right to purchase power will lie with PSPCL/LICENSEE at APPC tariff. On their refusal, the bidding will envisage sale of power in open access.

Self-identified projects in the field of Small Hydro, ,waste to energy based on cattle dung/ vegetable waste / poultry waste projects& Biomass Power Projects Based on Energy Plantation & Rice Mill Integrated shall be allocated on the recommendation of the project allocation committee on case to case basis. Surplus Power from NRSE Co-generation Projects shall be procured by signing of Implementation Agreement (IA). In case of upcoming NRSE technology demonstration projects, the MOU route may be considered.

All NRSE projects of capacity upto 1 MW shall be allocated on the recommendation of PEDA, whereas all NRSE projects of capacity more than 1 MW shall be allocated on the recommendation of the Project Allotment Committee consisting of following members:-

Principal Secretary to Government of Punjab,

Department of Science, Technology,

Environment and Non-Conventional Energy

Principal Secretary to Government of Punjab,

Department of Power

Principal Secretary to Government of Punjab,

Department of Finance

Chief Executive, Punjab Energy Development


Chairman cum MD, Punjab State Power

Corporation Ltd.

Director, PEDA. Member
Jt. Director (Projects), PEDA Convener


The Committee shall examine/evaluate the techno-commercial conditions in the bidding documents for projects to be allocated through competitive bidding/detailed project report for project proposals under MOU route & shall grant approval to the offers/project proposal after considering the financial capability, technical capability, status of technical collaboration with proven technology suppliers, status of land identification and its availability etc.


5. RE Tariff

The NRSE projects shall be provided tariff for sale of power as per PSERC RE tariff orders and shall be governed by RE regulations.

5.1 The preferential tariff of sale of power to the PSPCL/licensee from NRSE projects to be set up under this Policy shall be as notified by the PSERCfor the financial year in which PPA is signed but shall be revised as per tariff notified for the financial year in which the scheduled date of commissioning of the project falls except in case of Solar PV and Solar Thermal power projects in which the tariff applicability is for two years and three years respectively inclusive of the Financial year in which PPA is signed in accordance with the CERC RE regulations. Likewise, in case of NRSEprojects allocated through tariff based competitive bidding / discount on preferential tariff, the tariff arrived after competitive bidding / discounted tariff shall be applicable in accordance with CERC RE regulations.

5.2 The developer in technologies/resources where tariff has not been notified by the PSERC shall be required to submit petition to the Commission for determination of tariff.

5.3 To maximize the availability of NRSE Power for PSPCL/LICENSEE and to meet its RPO, NRSE based captive / co-gen power projects setup and commissioned during the period of NRSE Policy-2006 having surplus power and not registered with PEDA so far or not signed the Implementation agreement will be allowed to get themselves registered with PEDA and to sign agreement to facilitate power purchase by PSPCL/LICENSEE. PSPCL will sign only long term PPA with such registered projects on the last escalated tariff of NRSE Policy-2006 payable for FY 2011-12.

5.4 As per Power Purchase Agreements signed with PSEB (now PSPCL) by IPP Biomass/Biogas power projects allocated by PEDA & set-up during the period of NRSE Policy 2001,the tariff has become stagnant at Rs. 3.49 per unit since2006. The generic tariff as per RE tariff regulation 2012 notified by CERC and adopted by PSERC for biomass power projects allows 5% annual rise in the fuel cost for the tariff period from the date of commissioning. Therefore to enable these projects to continue generation, the tariff for these projects will be re-determined by PSERC for the remaining period of PPA.

5.5 No parallel operation charges shall be levied on NRSE projects.



6.1 After issuing of all applicable statutory clearances the Producer shall enter into an Implementation Agreement with PEDA within a period of 15 days from the date of grant of applicable statutory clearances for the project and also notification of tariff if applicable. The project developer shall be required to submit a performance security in the shape of Bank Guarantee of Rs 20lacs per MW in case of non-solar projects and Rs. 40 Lacs per MW in case of solar projects before signing of implementation agreement or as stipulated in the bid document. The performance security shall be forfeited by PEDA for delays attributable to the developer as given in the allotment letter/implementation agreement/bid document.

6.2 The implementation agreement shall contain the major provisions for project allocation, land, location, power evacuation, project completion schedule ,time period, project life, tariff, tariff period, PPA period, various fiscal and technical assistance granted to the projects under NRSE policy, penalty provisions in case of delay, arbitration etc.

6.3 PSPCL/LICENSEE shall sign a Power Purchase Agreement within 30 days from the date of order issued by Commission in case tariff approval is to be given by PSERC. In case of competitively arrived tariff/preferential tariff and APPC, the PPA shall be signed within 30 days from the date of signing Implementation agreement by PEDA.

6.4 Scheduling: The NRSE projects operating in synchronization with PSPCL /PSTCL system and selling /wheeling power shall be required to adhere to scheduling as per applicable regulations of the Appropriate Commission.

6.5 Banking: The banking facility for the power generated shall be allowed for a period of one year by the PSPCL/LICENSEE/PSTCL. However, the energy banked during non-paddy season and non peak hours will not be allowed to be drawn during paddy season and peak hours respectively.

6.6 Injection of NRSE power: PSPCL/LICENSEE/PSTCL will accept the injection of energy in full even during sustained high frequency hours to ensure full utilization of non-conventional energy resources and merit order shall not be applicable.

6.7 Energy Payment: PSPCL/LICENSEE will clear dues within 60 days. However if the Developer requests for payment in 30 days or against Letter of Credit / payment in 7 days, rebate of 1% or 2% respectively, as the case may be, will be admissible to PSPCL/LICENSEE. Delay in payments will attract interest as per PSERC/CERC regulations.

6.8 Letter Of Credit: PSPCL/LICENSEE/PSTCL will provide facility of irrevocable and revolving, Letter of Credit issued by any nationalized bank. The amount of the Letter of Credit shall be equal to the bill amount of one month on the basis of average of last three months. All expenditures on Letter of Credit shall be borne by the power producers.

6.9 All project developers shall be required to submit monthly statement for verification of usage of fuel as detailed out in RE regulations and orders for determination of generic tariff issued by CERC. In addition, monthly information with regard to other parameter like energy generated, revenue earned, power factor and plant load factor achieved, reasons for non achievement of full generation etc as directed by PEDA shall also be submitted so as to maintain and update data bank on NRSE generation in the state and also for the purpose of monitoring generation under RPO regulations.



Government of Punjab, Department of Science, Technology, Environment and Non-Conventional Energy shall take up cases for amendment/ relaxation/ addition/ interpretation of provisions under this policy.


For Annexures and other details click here.

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Manu Tayal

Manu is an Associate Editor at Saur Energy International where she writes and edits clean & green energy news, featured articles and interview industry veterans with a special focus on solar, wind and financial segments.