In a bid to develop solar power potrential in the country, the ministry of So far 33 grid interactive solar photovoltaic power plants have been installed in the country with financial support from the centre. These plants, with aggregate capacity of 2.12 megawatt, are expected to generate about 2.55 million units of electricity annually.

In addition, around 14.5 lakh decentralised off-grid solar photovoltaic systems aggregating to about 125 megawatt capacity, capable of generating about 150 million units in a year, have been installed. A collector area of about 2.15 million square meter has been installed for solar water heating applications. The amount of energy generation depends on the use pattern of the system and climate of the place. Typically, a solar water heating system with two square meter of collector area can generate energy equivalent to up to 1500 units of electricity when the system is used for about 300 days in a year.

To reduce the cost of solar energy systems, the government has taken several measures, which include:

• Research and development to improve their performance and reduce the consumption of materials
  
• Subsidy on selected solar energy systems
  
• Interest subsidy to provide soft loan to users and the manufacturers
  
• Concessional or nil import duty on some of the raw materials, components and products excise duty exemption; and 
  
• 80 per cent accelerated depreciation in the first year, etc.

Many incentive have been given to private agencies for research and generation of solar energy. All academic, research institutions and industries, including the private institutions are engaged in research in solar energy. They are eligible to receive grant for undertaking R&D. In addition, expenditure on R&D by the private industries is eligible for deduction from profits under Income Tax Act.

Under grid interactive solar power generation, private companies are eligible for production-based incentive for power fed to the grid from megawatt capacity solar power plants set up on build own and operate basis in the country.

Proposals from project developers with a maximum aggregate capacity of 5 MW, either through a single project or multiple projects of a minimum capacity of 1 MW each, are being considered under the programme. The ministry of new and renewable energy says it will give preference to projects from states where the state electricity regulatory commissions (SERCs) have either announced or are in the process of announcing tariffs for solar power.

For projects approved and commissioned by 31 December 2009  the ministry will provide generation- based incentive up to Rs12 per kWh for solar photovoltaic power and Rs10 per kWh for solar thermal power after taking in to account the tariff provided by the SERC or the utility.

These incentives are in keeping with the ministry of new and renewable energy's emphasis on setting up demonstration programmes to support megawatt-size grid interactive solar power generation projects, up to a maximum capacity of 50 MW.

Any registered company, as project developer, would be eligible to set up solar power projects on build, own and operate basis. Proposal from each project developer with a maximum aggregate capacity of 5 MW, either through a single project or multiple projects of a minimum capacity of 1 MW each, would be considered.

A maximum of 10 MW capacity solar power generation projects would be considered in a state. Preference would be given to the projects from the states where the state electricity regulatory commissions (SERCs) have announced or are in the process of announcing tariff for solar power.

The ministry will also provide incentive to the concerned utility and the state nodal agency, which will be involved in implementation and monitoring of the projects in that state.