Climate Mitigation Financing Framework in Rajasthan 2020 Copyright: This Document Is Not a Priced Publication

Climate Mitigation Financing Framework in Rajasthan 2020 Copyright: This document is not a priced publication. Reproduction of this publication for educational and other non-commercial purposes is authorised, without prior written permission, provided the source is fully acknowledged.

Year of Publication: 2020

List of outputs

Consolidated Report

Climate Mitigation Financing Framework in Select States

Policy Briefs from four States

Climate Mitigation Financing Framework in Andhra Pradesh

Climate Mitigation Financing Framework in Assam

Climate Mitigation Financing Framework in Odisha

Climate Mitigation Financing Framework in Rajasthan Contents

Context 2

Section I Greenhouse Intensive Sectors in Rajasthan 4

Section II Renewable Energy Financing Framework in India 6

Section III Renewable Energy Programme in Rajasthan 8

Section IV Energy Effi ciency Schemes and Programmes in Rajasthan 14

Section V Schemes aimed at reducing Aggregate Transmission and Commercial Losses and improving the Financial Health of State DISCOMs 17

Section VI Electrifi cation of the Transport Sector: Rapid Mass Transit System (Metro) 18

Section VII Rajasthan State fi nancing of CCMAs can be broadly categorised into three components 20

Section VIII Policy Recommendations 22

List of Figures and Tables

Figure 1 Greenhouse Intensive Sectors in Rajasthan 4

Table 1 Solar Parks in Rajasthan 10

Table 2 Funding for the Jaipur Metro Rail Project (State Government Finance and External Loan) 18 Table 3 Loans Disbursed by IREDA (Amount in Rs. crore) 21

Table 4 External Aid for Climate Mitigation Projects in Rajasthan 21

Table 5 Central Financial Assistance (CFA) to the State Government (in Rs. crore) 22

Annexure 1 State Finances for Climate Mitigation Actions (in Rs. crore) 24

Annexure 2 Rajasthan State Policies, Programmes and Institutional Setup for Climate Mitigation Actions 26

Climate Mitigation Financing Framework in Rajasthan | 1 Context

n a world where climate change is one of contributing to increasing carbon emissions. the biggest challenges facing humanity, As renewables get added to the energy mix in IIndia has emerged as a major player in- India, emphasis is also being laid on the pro- ternationally in terms of its efforts to take motion of Energy Effi ciency (EE) measures in climate-positive actions. As the country at- the various energy intensive sectors, antici- tempts to mitigate climate change and re- pating likely reductions in energy consump- duce its dependence on fossil fuels, the ener- tion and dependence on fossil fuels. gy sector is acquiring increasing prominence with actions being taken to decarbonise both Initially the RE and EE interventions were for- its demand and supply side. While the fi rst mulated and implemented at the national objective is being realised through efforts level, with only demonstration projects being aimed at increasing Renewable Energy (RE) implemented at the state level. Over the years, generation in the country, the latter objective however, there has been a gradual recogni- is being sought through measures aimed at tion of the potentially important role to be improving the effi ciency with which energy is played by the states, with national agencies used across various sectors. emphasising a vertical integration of the RE policy and a strengthening of state capacities. India has committed to a fi ve-fold increase in The Electricity Act 2003 specifi ed the division its RE targets and promised to establish 175 of tasks between the national level and state GW of RE capacity in the country by 2022. governments and provided for a supportive This will comprise of 100 GW of solar, 60 GW framework for state action. The generation of of wind, 10 GW of biomass and 5 GW of small electricity from renewable sources was to be hydro power capacity. This endeavour has promoted by the State Electricity Regulatory been supported through an increase in the Commissions (SERCs). At present, states poli- budgetary allocations for RE in the 2015-16 cies play a central role in the implementation Union budget.1 At present, energy generation of India’s RE and EE policies. The states are not in India is dominated by traditional coal-fi red merely implementing national RE policies, thermal plants. Focusing on RE has become but have their own exclusive policies promot- an imperative to meet the energy demand ing the generation of electricity from solar, spurred by fast economic growth, rapid in- wind and biomass. Ten out of 28 Indian states, dustrialisation, increasing urbanisation and which include Andhra Pradesh, Karnataka, the need to provide energy access to one of Gujarat, Maharashtra and Rajasthan, have the most energy deprived populations in the been implementing their own wind energy world, while at the same time refraining from programmes since 2009.2 Another signifi cant

1 Centre for Budget and Governance Accountability, 2020.Consolidated Report on Climate Mitigation Financing Framework in Select States, New Delhi. 2 Rao, K.U. and Kishore, V.V.N., 2009. Wind power technology diffusion analysis in selected states of India. Renewable Energy, 34(4), pp.983-988

2 | Climate Mitigation Financing Framework in Rajasthan action by states has been the setting of their and financing instruments used to deliver RE Renewable Purchase Obligation (RPO) tar- finance will be considered in this section. This gets and feed-in-tariffs to boost RE produc- will give us a context for discussing the RE tion. While state EE measures have not seen financing framework at the state level since the kind of expansion that is necessary, there a large part of the finances for RE initiatives are nascent attempts being made by them to come from the sources and instruments dis- formulate policies and programmes that aim cussed here. The state governments in vari- at improving EE in various states. ous Indian states, including Rajasthan, allocate funds for climate action (mitigation and The present study is focused on climate mit- adaptation) via the state budget. This forms a igation actions undertaken in the western critical part of the RE financing framework at Indian state of Rajasthan. However, before the state level and supplements the financ- we begin to analyse the policy, and the insti- es from the sources discussed in the previous tutional and fiscal measures that Rajasthan section. A complex policy, institutional and is undertaking to mitigate climate change, fiscal structure ensures RE financing at the or reflect on the suitability and adequacy of national level. It will, therefore, be instructive those measures, we need to assess the sec- to develop a comprehensive understanding tors that the state must concentrate its efforts of these aspects to understand the RE financ- on. This can be based on the state’s Green- ing framework at the state level. The subse- house Gas (GHG) inventory, which can enable quent sections will discuss the policies and identification of the major GHG producing interventions aimed at climate mitigation sectors. The discussion on the GHG intensive being implemented in Rajasthan across sec- sectors in Rajasthan will be undertaken in the tors (primarily RE and EE interventions). This first section based on the information drawn will be followed by a discussion on the climate from the Rajasthan Action Plan on Climate mitigation financing framework in the state. Change (RAPCC). The next section of the re- Based on the evidence presented in the report will delve briefly into the RE financing port, policy recommendations will be made framework at the national level. The various in the last section. sources of RE finance, institutions involved,

Climate Mitigation Financing Framework in Rajasthan | 3 Section I Greenhouse Intensive Sectors in Rajasthan

The energy sector in Rajasthan is the primary produce copious GHG emissions. contributor to the GHG emissions in the state (TERI, 2010).3 Of the total installed capacity of Industry is yet another sector, which contrib- 7716.63 MW around 52.97 per cent is thermal, utes signifi cantly to fossil fuel combustion and 19.14 per cent is hydel, 8.61 per cent is gas, 6.08 GHG emissions through its manufacturing pro- per cent is atomic and approximately 13.19 per cesses. The important industries of the state cent is renewable (wind and biomass). Energy include cement, mineral based industries, steel in the state is primarily generated through coal, rerolling, textile dyeing and printing, brick and i.e., fi red thermal power plants, and while RE ca- lime kilns and chemical. The industrial growth pacity addition is occurring, the pace at which in the state is dominated by small and medium this is happening is not ideal. The usage of low scale industries. The MSME sector in the state EE appliances is another major concern in the is especially polluting as it uses diesel, furnace state that needs to be addressed to reduce en- oil or woody biomass in an ineffi cient man- ergy consumption, and thereby the GHG emis- ner. While the larger industries are addressed sions. The electricity demand is growing and is under the Energy Conservation Act (EC), 2001 likely to continue to do so in the coming years, as designated consumers, the SME segment owing to rapid urbanisation in many areas as is addressed through cluster-based initiatives also rising temperatures due to climate change. The Rajasthan Power Corporation (RPC) has Figure 1: Greenhouse identifi ed new power plants with coal as a ma- Intensive Sectors in Rajasthan jor source of power generation in the state. Share (%)

Another major source of GHG emissions in the state is the Transport Sector. There is a rise in transportation services due to advancing urbanisation, increased economic growth and Renewable Power tourism. Due to the absence of an effi cient Thermal Power 13.2 public transport system, people rely largely on 52.9 private vehicles, which consume non-renewable fossil fuels such as diesel and petrol. En- Gas based ergy used in the commercial and residential Power sector is largely for cooking, heating, lighting 8.6 etc. The major sources of energy used in this Hydro power sector include grid-based electricity (produced 19.1 Atomic Power by coal-based thermal plants), LPG, Kerosene, 6.1

Coal, Diesel, Charcoal and Firewood, all of which Source: The Energy Research Institute (2010)

3 The Energy Research Institute (2010) Draft Rajasthan State Action Plan on Climate Change, TERI, New Delhi. Available at : http://www. nicra-icar.in/nicrarevised/images/State%20Action%20Plan/Rajasthan-SAPCC.pdf (Accessed on 23 January, 2020)

4 | Climate Mitigation Financing Framework in Rajasthan of the Bureau of Energy Efficiency (BEE). - Ac and introducing electric vehicles (EVs), which cording to BEE, four energy intensive clusters will help in reducing vehicular pollution (and have been identified in Rajasthan, namely, roll- GHG emissions) emanating from them. While ing mills, bearing clusters, marble clusters and the eventual reduction in carbon emissions textile clusters for energy consumption, and through these modal shifts in the transport an energy savings assessment to promote EE sector will be determined by the source of elec- measures. It has been recognised by the Rajas- tricity used by these systems, it will certainly than Climate Action Plan (RCAP) that there is help in reducing the number of private vehicles high energy efficiency potential in commercial on the road. In order to promote RE genera- buildings and the SME sector. For effective cli- tion, the government has formulated a generic mate mitigation, it is important for the state to ‘Policy for Promoting Generation of Electricity develop GHG management measures across all through Non-Conventional Energy Sources, these sectors. 2004’ and exclusive policies for promoting RE generation from solar, wind and biomass. The Climate change mitigation presents an enor- GoR also incentivises RE generation through mous opportunity to the state to exploit its inducements, such as exemption from electric- RE potential as it has a vast power generation ity duty, special incentives for industries, single potential from RE sources such as wind, pow- window clearance, allotment of land on conces- er and biomass. The Government of Rajasthan sional rates etc. (GoR) has begun its efforts to decarbonise the energy sector through a more efficient addition of the RE capacity in various sectors. The government has also initiated efforts towards developing an efficient rapid mass transit system,

Climate Mitigation Financing Framework in Rajasthan | 5 Section II Renewable Energy Financing Framework in India

The RE sector in India is largely private sector fi nancial landscape in India is dominated by a driven and commercially focused, which is why range of players including commercial banks mobilising cheap and adequate fi nance for (Private/ Public and Foreign banks), equity in- the sector is an important challenge (Sarangi, vestors (Private Equity and Venture Capital), In- 2018).5 The Government of India (GoI) has been stitutional Investors (state-owned, bilateral and supporting the growth of this sector through a multilateral institutions), and Development series of policy and regulatory measures. The Banks (Development Financial Institutions) recent policy thrust has come in the form of such as the IREDA and the Small Industrial De- the government’s transformative vision of pro- velopment Bank of India (SIDBI). Various incen- ducing 175 GW of RE by 2022. India’s Intended tives have been provided by the Government Nationally Determined Contributions (INDCs), from time to time to mobilise private fi nance which reiterate many of these promises, are for the sector. The most prominent instruments also indicative of the priority accorded to RE in used by the GoI include Accelerated Deprecia- the country. tion (AD), Generation Based Incentives (GBI) and Viability Gap Funding (VGF) (2018).5 In ad- Due to the limited availability of a public bud- dition, there are other policy instruments such get for the sector, it is important to mobilise as the Renewable Purchase Obligations (RPOs), private fi nance at a pace required to meet In- Renewable Energy Certifi cates (RECs) and feed- dia’s RE goals in the stipulated time period. The in-tariff schemes to fi nance RE. These are regu- limited public funding available for the sector is latory instruments for promoting the RE sector largely used to promote and incentivise private in the country. The federal policies typically cov- fi nance fl ow to the sector. It has been argued er only some of the viability gap and the rest that there is enough private fi nance available is eventually supported by state governments and that the need of the hour is to create an entering Power Purchase Agreements with enabling framework. The commercial banks renewable energy developers, agreeing to pay and fi nancial institutions rarely come forward feed-in tariffs for 20-25 years6. The Government to provide the requisite fi nancing because of has also created dedicated agencies and insti- the risks and uncertainties associated with the tutions for fi nancing RE in India. sector. While the fi nancing support for the RE sector The funding for the RE sector comes majorly is available in forms discussed above, it is still in the form of debt-equity fi nancing.4 The RE largely limited in size, reach and impact. It has

4 Sarangi, G.K., 2018. Green Energy Finance in India: Challenges and Solutions (No. 863). ADBI Working Paper Series 5 Government of Rajasthan, 2018. Economic Review 2018 - 19. Available at https://www.rajras.in/index.php/rajasthan-economic-review- 2018-19-download-pdf-english-hindi/ (Accessed on 23 January 2020) 6 There are other debt related fi nancing instruments too that are used by the Central government such as interest rate subsidy, reduced capital loan and extended tenor debt.

6 | Climate Mitigation Financing Framework in Rajasthan been argued that to incentivise private finance, through the budget, but a lot more needs to be the state governments need to provide fiscal done. It has also been highlighted that there is incentives to the RE sector as well. This is pos- a need to achieve synergy between national pri- sible since electricity is a concurrent subject of orities and state level strategies for more com- legislation and both the centre and states can prehensive action on RE and, concomitantly on legislate on the subject. The states are incentiv- climate mitigation in India. ising the RE sector by providing fiscal support

Climate Mitigation Financing Framework in Rajasthan | 7 Section III Renewable Energy Programme in Rajasthan

Rajasthan has an overarching “Policy for Pro- Limited, which facilitate implementation of en- moting Generation of Power through Non-Con- ergy effi ciency projects. EESL also undertakes ventional Energy Sources”. This Policy was capacity building of SDAs, the funds for which promulgated in 1999 (modifi ed later in 2004) come from the GoI, equipping them to under- and under its rubric exclusive policies for pro- take EE measures more effectively. Rajasthan moting the generation of electricity from so- has also set RPO targets, as mandated by the lar, wind and biomass have been promulgated Union government. The Rajasthan Electricity over the years. These policies have been mod- Regulatory Commission (RERC) has issued a ifi ed and even superseded over time to make fi fth amendment to its regulations for renew- room for changes in technology and innova- able energy obligation (RPO), under which it tion, to expand the mandate of the policies and has revised this to 4.75 per cent for the fi nancial to introduce new forms of state fi nancing for year 2018-19 from its earlier fi gure of 6.75 per them. The modifi cations of policies have led to cent. According to the RERC, the revised RPO a greater alignment of the Rajasthan RE pro- for FY 2018-19 will be applied retroactively from gramme with the national missions and poli- April 1, 2018. cies on the subject, the most prominent being the Jawaharlal Nehru National Solar Mission (a) Rajasthan Solar Energy (JNNSM). The Rajasthan Renewable Energy Corporation Limited (RRECL)7 is the state nodal Policy, 2014 and 2019 agency for implementing the RE policies and projects of the Ministry of New and Renew- The Rajasthan Solar Energy Policy (RSEP) was able Energy (MNRE) and the State Designated put in place in 2014, and while a new policy was Agency (SDA) for promoting EE. Apart from im- proposed in 2019 to further facilitate the gen- plementation of RE interventions, RRECL is also eration, and distribution of RE in the state, its responsible for the implementation and man- broad contours remain the same. Both ver- agement of EE programmes under the Bureau sions of the policy (2014 and 2019) have largely of Energy Effi ciency (BEE), Ministry of Power similar objectives, which are closely aligned to (MoP), including those that facilitate the devel- the national policy on solar energy articulated opment of an energy effi ciency market. These through the JNNSM. The objectives of the pol- include the Energy Effi ciency Services Limited icy include: (1) Developing Rajasthan as a solar (EESL), which is a joint venture of the Nation- hub to produce 25000 MW of solar energy to al Thermal Power Corporation Limited (NTPC meet the energy requirements of the country Limited), the Power Finance Corporation (PFC), as well as the state of Rajasthan in the next 5-6 the Rural Electrifi cation Corporation Limited years; (2) Providing a long term and sustainable (REC) and the Power Grid Corporation of India solution for meeting the energy needs of the

7 RRECL was formed by merging erstwhile REDA (Rajasthan Energy Development Agency) and the Rajasthan State Power Corporation Ltd (RSPCL) in August 2002 and is registered under Companies Act 1956

8 | Climate Mitigation Financing Framework in Rajasthan people of Rajasthan, while simultaneously re- tance (CFA) from the Union Government and a ducing the dependence on fossil fuels; (3) Gen- matching grant by the state government. The erating employment opportunities for the peo- MNRE has also sanctioned CFA of up to 30 per ple of Rajasthan; and (4) Facilitating research cent of the total project cost for the establish- and development to help innovation in the fi eld ment of 18MW solar rooftop power plants in of solar energy to achieve grid parity. 8,9 residential and institutional areas. Rooftop solar power projects of a total capacity of 126 MW RRECL is the state nodal agency under the pol- were commissioned till 30th March 2019, and icy, and its responsibilities include: registering out of this, projects amounting to 37MW capac- the RE projects; approving them; facilitating ity are being implemented under the various the allotment of government land; facilitating subsidy schemes of MNRE via the RREC. water allocation for the production in solar energy plants; facilitating the approval of power The Solar Energy Policy of 2014 and 2019 both evacuation plans; and facilitating the execution facilitate the alignment of the Rajasthan Solar of Power Purchase Agreements (PPAs) with the Programme with the JNNSM. Under the Ra- state DISCOMS and other stakeholders. jasthan Solar Energy Policy, RREC is appoint- ed as the nodal agency for the establishment The objectives laid down by the RSP are to be of solar parks under the Central scheme, “De- achieved through a range of projects, which velopment of Solar Parks and Ultra Mega Solar would facilitate the establishment of both Power Projects”. A subsidiary company of the grid-connected and off-grid solar energy power RREC is established as a special purpose ve- plants. Under the grid-interactive solar power hicle (SPV) for the management and develop- projects, the state government seeks to facil- ment of infrastructure in the solar parks. The itate and support the establishment of solar policy also seeks to promote and incentivise power plants (1) sanctioned under the guide- the development of solar parks by private solar lines of the MNRE; (2) for the sale of power to power developers, who along with the RREC Rajasthan state distribution companies or DIS- manage them. The private power developers COMS; (3) for the sale of power through RECs; can develop common infrastructure in the so- and (4) for captive use of power/ for third par- lar parks such as roads, power evacuation sys- ty sale of power and for sale of power outside tems etc. The state government through the Rajasthan. The state government will also pro- Solar Energy Policy also seeks to promote the mote the establishment of rooftop solar PV development of solar parks by contributing power plants connected to the LT grid under up to 50 per cent equity (including the cost of the net metering scheme. This policy entails land) in a Joint Venture Company (JVCs) estab- crediting the customers for the power they lished for the development of solar parks. For generate through the rooftop solar plants. instance, the state government has established JVCs with the Essel Group and the Adani Group RRECL is also implementing the programme for the development of solar parks, and in both for the installation of the SPV grid-connected cases the GoR and the private partners have a power plants to promote solar rooftop power 50:50 stake (see Table 1). generation, which has been promoted by the MNRE. This programme will be implemented with the help of the Central Financial Assis-

8 Rajasthan Renewable Energy Corporation Limited, Government of Rajasthan (2019) Rajasthan Solar Energy Policy, Jaipur. Available at : https://energy.rajasthan.gov.in/content/dam/raj/energy/rrecl/pdf/Common/Rajasthan%20Solar%20Energy%20Policy%202019%20.pdf (Accessed on 23 January, 2020) 9 Rajasthan Renewable Energy Corporation Limited, Government of Rajasthan (2014) Rajasthan Solar Energy Policy, Jaipur. Available at http://rips.rajasthan.gov.in/menupdf/Rajasthan-Solar-Energy-Policy-2014-10.pdf (Accessed on 23 January, 2020)

Climate Mitigation Financing Framework in Rajasthan | 9 Table 1: Solar Parks in Rajasthan

Solar Park Developer

Rajasthan Solarpark Development Company Limited (RSDCL), a Bhadla Solar Park II (680 MW) subsidiary of RRECL. 680 MW has been commissioned.

Bhadla Solar Park III (1000 MW) M/s Saurya Urja Company of Rajasthan Limited (SURAJ). 500 MW has been commissioned.

M/s Adani Renewable Energy Park Rajasthan Limited (AREPRL). Bhadla Solar Park IV (1000 MW) 250 MW has been commissioned.

Phalodi – Pokaran (750 MW) M/s Essar Saurya Urja Company of Rajasthan Limited.

Fatehgarh – Phase 1B (1500 MW) M/s Adani Renewable Energy Park Rajasthan Limited.

Rajasthan Solar Park Development Company Limited along Nokh Solar Park (980 MW) with NTPC (a subsidiary of the RRECL).

Source: Solar Energy Corporation of India

Also, several incentives/ facilities are being consistent over the years with very little change made available to the solar power projects. through the years considered under this study. These include those available to the industries The budgetary support for this can be delineat- under the Rajasthan Investment Promotional ed from budget documents where it has been Scheme, which comprises the allocation of wa- mentioned as the amount allocated for “appro- ter required for the operation of power plants priation” towards various private companies in- by the Water Resource Department from the vesting in solar parks. There was no allocation nearest canal as also an expeditious grant of towards this line item in the 2016-17 and 2017-18 consent by the Rajasthan State Pollution Con- budgets. Thereafter, a consistent allocation of trol Board (RSPCB). Solar power plants of ca- Rs .0004 crores has been made under the bud- pacity 3074 MW have been commissioned in gets for subsequent years (See Annexure 1). the state up to March 2019. For the development of solar parks and mega solar power proj- Apart from incentives given by the GoI and ects in the state, three joint venture companies GoR for the establishment of solar parks and (JVCs) have already been incorporated. These ultra-mega solar projects, funding for the pro- are M/s Saurya Urja Company of Rajasthan Lim- gramme is also forthcoming from multilateral ited (SURAJ), M/s Adani Renewable Energy Park climate funds and international development Rajasthan Limited and M/s Essar Saurya Urja banks. For example from Climate Investment Company of Rajasthan Limited. Under the Cen- Funds (CIFs), through the Clean Technology tral scheme, “Development of “Solar Parks and Fund, a multi-donor Trust Fund within the CIFs, Ultra-Mega Solar Power Projects”, 6 solar parks and the Asian Development Bank. in Rajasthan have been approved for development. The state also seeks to promote the establishment of off-grid and decentralised power plants Evidence of budgetary support is available in to address energy and thermal requirements the budget documents though it is less cer- for commercial and domestic use. This includes tain, whether this is purely in the form of equity. the sale of solar plants to individuals through its The fi nancial support from the GoR has been own distribution system, the establishment of

10 | Climate Mitigation Financing Framework in Rajasthan local solar grid and stand-alone solar plants for include: acting as a facilitator for the execu- the supply of electricity to remote villages, and tion of PPAs between the power producers and the installation of SPV water pumping systems. DISCOMs; loans from IREDA/ fi nancial institu- The 2019 Solar Energy Policy has proposed tions/ commercial banks etc.; allotment of land some additional programmes aimed at pro- for the projects; allotment of water required moting the setting up of solar power projects in the power plants; and approval of power with a minimum capacity of 0.5 MW and a max- evacuation plans etc. This policy has been in imum capacity of 3 MW in the vicinity of exist- operation since 2010 and will remain so, till it ing 33 kV grid sub-stations for sale of power to is modifi ed or superseded. Under the policy, DISCOMs. The state will also promote the solar- power producers can generate electricity for isation of existing grid-connected agricultural captive use or sale to third party/licence holders pumps as per the provisions/guidelines issued including DISCOMs. The RPO of the state DIS- by DISCOMs based on regulations of appropri- COMs for the purchase of electricity produced ate Commission/guidelines of the central/state by biomass will be as per the guidelines issued government. The state government, through by the Rajasthan Electricity Regulatory Com- the new policy, also seeks to promote solar pow- mission (RERC). Also, the sale of power by the er projects with storage systems to reduce the power producer will be according to the PPAs variability of output of solar power into the grid entered by the two parties as per the rules and and to ensure the availability of fi rm power for a guidelines issued by the RERC.11 The incentives period. The state will promote the setting up of offered by the state government are in the form solar-based Electric Vehicle charging stations of revenue foregone, including exemption from as per the Guidelines of the MoP/MNRE/State electricity duty at the rate of 50 per cent for 7 Government/RERC. These are some of the ad- years from the commencement of operation ditional features of the 2019 Solar Energy Policy. for power developers with power plants pro- The measures towards the promotion of EVs, so ducing electricity for captive use. The power far, have been undertaken under FAME II. While plants under the scheme are also allotted land there are plans for the state government to take at concessional rates and given the incentives up these initiatives independently under the available to industries under the Rajasthan In- new draft Industrial Policy of Rajasthan, these vestment Promotion Scheme administered are yet to materialise. by the Department of Industries. The private developers are also given an exemption from (b) Rajasthan‘s Policy for stamp duty, sometimes up to 100 per cent. As Promoting Generation of of March 2019, a total of 13 Biomass plants with a capacity of 120.45 MW had been established Electricity from Biomass, while 3 more were underway. 2010 (c) Rajasthan Wind Rajasthan has a comprehensive policy for the generation of electricity from biomass called Policy, 2012 the “Policy for Promoting Generation of Elec- tricity from Biomass, 2010”.10 RRECL is the state The “Policy for Promoting Generation of Elec- nodal agency responsible for the execution of tricity from Wind” was promulgated in 2000 the policy. Its responsibilities are manifold and and then later in 2003 and 2012.12 Under this,

10 Department of Energy, Government of Rajasthan (2010) Policy for Promoting Generation of Electricity from Biomass 2010, Jaipur. Available at https://energy.rajasthan.gov.in/content/dam/raj/energy/corporate-one-lines-viewer/pdf/SolarPolicy/Policy_Promoting_ Generation_Electricity_Biomass_2010(Web).pdf (Accessed in January 2020) 11 Department of Energy, Government of Rajasthan (2010) Policy for Promoting Generation of Electricity from Biomass 2010, Jaipur. Available at https://energy.rajasthan.gov.in/content/dam/raj/energy/corporate-one-lines-viewer/pdf/SolarPolicy/Policy_Promoting_ Generation_Electricity_Biomass_2010(Web).pdf (Accessed in January 2020) 12 Department of Energy, Government of Rajasthan (2012) Policy for Promoting Generation of Electricity from Wind 2012, Jaipur. Available at https://energy.rajasthan.gov.in/content/dam/raj/energy/corporate-one-lines-viewer/pdf/SolarPolicy/wind_pol.pdf (Accessed on 23rd January 2020)

Climate Mitigation Financing Framework in Rajasthan | 11 the state government supports and incentivis- (e) Solar Water Pump es the setting up of wind power plants of unlim- Programme ited capacity on preferential tariff for direct sale of power to the DISCOMs of Rajasthan for years 2013-14 to 2015-16. This tariff was determined by The SPV Pumping System installation pro- the RERC. The state government, through this gramme is being implemented in Rajasthan policy, also promotes utility grid projects for the for the solarisation of the irrigation system.13 sale of power to a third party within the state This scheme is being implemented by the Ra- or for captive use through incentives which are jasthan Horticulture Development Society similar to the ones offered under the Solar Ener- (RHDS) with technical support from the RRECL. gy Policy. The policy also seeks to promote the Till March 2019, 40,251 SPV water pumps had setting up of wind power plants by private de- been installed. This scheme was implement- velopers for the sale of power through the REC ed after studying several GoI schemes being mechanism. The power generated from these implemented by the Horticulture Department plants will be purchased by the DISCOMs of Ra- and then combining it with JNNSM, and the jasthan as per the guidelines laid down by the Rashtriya Krishi Vikas Yojana (RKVY), along with RERC. The minimum RPO for Rajasthan DIS- state resources. Thus, while functionally, the COMs shall be governed by the RERC. The state base was JNNSM as also other schemes (and government incentivises the setting up of the resources for them), these were combined with power plants through exemptions from elec- it in the programme. Financially, the scheme tricity duty given to the energy produced by the received 30 per cent subsidy under the MNRE private developers for captive use, concessional and 56 per cent subsidy from RKVY. If the RKVY allotment of land for establishing power plants, support dwindled, the state government was and incentives available to industries under the required to fi ll the gap to provide a total subsi- Rajasthan Industrial Investment Programme. dy of 86 per cent. Presuming that the cost of a solar water pump system is about Rs. 5,00,000, (d) Solar Energy Rural the farmer would need to pay only Rs. 70,000 (14 per cent of the solar water pump system Electriﬁ cation Schemes cost), equivalent to the cost of the pump. This, therefore, leads us to the fi gure of a subsidy of The electrifi cation of rural areas through various 86 per cent. initiatives of the state government of Rajasthan and the Union government has led to signifi - The GoR has also begun the implementation cant strides in the fi eld (GoR, 2018). The Deen of the GoI’s Kisan Urja Suraksha evam Utthaan Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) Mahabhiyan (KUSUM) scheme to enable the and the Pradhan Mantri Sahaj Bijli Har Ghar farmers to install solar water pump sets on Yojana are two prominent schemes in this re- their farms. While they can use the electricity gard. An important intervention has been un- generated by the solar water pumps, they will dertaken by the RRECL seeking to electrify the also be allowed to sell the surplus energy gen- un-electrifi ed villages and hamlets in the state erated, which can then be transmitted to the through the establishment off-grid SPV Home power grid. A new feature that has been add- Lighting Systems (HLS). This scheme is being ed to this scheme, allows the farmers to lease implemented with the help of subsidy support their lands to private developers for the estab- by the GoI and GoR. Under this scheme, 50,142 lishment of solar power plants with a capacity HLS had been established in the un-electrifi ed of 0.5 to 2 MW. These plants will be established villages and hamlets of Rajasthan till March within close distance of power stations so that 2019. the power can then be fed into the grid with

13 Goyal, Dinesh. 2013. Rajasthan Solar Water Pump Programme. Akshay Urja Renewable Energy, Vol 7, Issues 2 and 3.

12 | Climate Mitigation Financing Framework in Rajasthan Box 1: Projects Covered 3. Transformer packages for Ramgarh & Bhadla under ICB-3 under Tranche-I 4. Shunt reactor packages for Ramgarh, Bhadla, Bikaner & Akal under ICB-4 There are a total of seven projects covered Construction of 400 KV for Ramgarh - under Tranche-I as shown below: 5. Akal line under ICB-5 1. Construction of 400 KV Substation in Construction of 400 KV at Bhadla-LILO Ramgarh and augmentation works at 6. point of Jodhpur-Merta line under ICB-6 Akal under ICB-1 7. Purchase of Conductors for Ramgarh- 2. Construction of 400 KV Substation in Akal line & Bhadla-LILO point of Jodhpur- Bhadla & augmentation works at Bikaner Merta line and Jodhpur-Akal line under under ICB-2 ICB-7.

Source: Economic Review Rajasthan 2018 – 19. 14 minimal loss. The farmers can lease their lands ADB's Ordinary Capital Resources (OCR) and for the purpose and receive an annual income US$200 million from its Clean Technology Fund in return. This scheme is aimed at helping small (CTF) including US$2 million for technical as- solar power developers, who are otherwise ex- sistance. The main objective of the investment cluded from opportunities to generate electric- programme is to develop public sector trans- ity for the state DISCOMs. The scheme helps in mission infrastructure capacity to support pri- a decentralised generation of solar electricity, vate sector-led renewable energy generation which can be fed into the grid without invest- in Western Rajasthan. The US$150 million loan ing massively in the creation of an infrastruc- for Tranche-1 was approved and signed on ture for the purpose. 12th September 2014, which consists of US$88 million from CTF and US$62 million from OCR (f) Rajasthan Renewable (see Box 1). The project became operational in November 2014 and was to be completed Energy Transmission by December 2016. But ADB approved an ex- Investment Program - ADB tension of the project period from December 2016 to December 2018. Out of the US$150 The Asian Development Bank (ADB) has ap- million (Rs.1142.5 crore) loan, US$18 million (Rs. proved a loan proposal under the Multitranche 138.1 crore) has been surrendered and cancelled Financing Facility (MFF) amounting to US$500 by ADB. million on 26th September 2013. Of this loan, US$300 million is to be provided from the

14 Government of Rajasthan (2018) Economic Review 2018 - 19. Available at https://www.rajras.in/index.php/rajasthan-economic-review- 2018-19-download-pdf-english-hindi/ (Accessed on 23 January 2020)

Climate Mitigation Financing Framework in Rajasthan | 13 Section IV Energy Efﬁ ciency Schemes and Programmes in Rajasthan

While promoting energy generation from Code (ECBC) and has also incorporated ECBC non-conventional energy sources and adding codes in their municipal by laws.15 When a state renewables to the energy mix, the GoI and the demands ECBC compliance, it is required that GoR are also making efforts to promote a more all new buildings above a certain load demand, effi cient usage of energy through innovative have a specifi ed contract, wherein the built up mechanisms. These efforts are being undertak- area must comply with the minimum energy en under the overall ambit of the Energy Con- requirements of the ECBC. Rajasthan has also servation (EC) Act 2001, which was enacted to mandated energy audits for certain categories reduce the emissions intensity of the economy of buildings, based on the size or connected by 33-35 per cent by 2030 over the 2005 levels. load of the building. The Bureau of Energy Effi ciency (BEE) was established to implement the EC Act, which has With the increasing ownership of appliances, it laid down regulatory guidelines for energy is very important to ensure that EE appliances conservation. This includes, the standards and are available and affordable in the market. The labelling programme for energy effi cient appli- GoI’s UJALA scheme, which aims at ensuring ances, energy conservation codes for residen- that EE lighting and fans are both accessible tial and commercial buildings, and an energy and nominally priced is an important interven- effi ciency programme called Perform, Achieve tion in this regard. The GoR is implementing and Trade (PAT) for energy intensive industries. this scheme along with EESL. It has also man- Within the larger framework of cooperative dated the usage of BEE star rated applianc- federalism, the states in India have an import- es for all public buildings in the state. RRECL ant role to play in implementing EE measures. works as the SDA in Rajasthan and undertakes The SDAs are the counterparts of BEE in states energy audits and ensures compliance of EE and play an important role in implementing regulations for buildings. There is a budget allo- the programmes of BEE. The states with strong cated in the Rajasthan State Budget, usually in SDAs and robust EE initiatives have a greater the form of subsidies to ensure that RERC can scope to attract investments on EE projects. undertake these activities effectively. However, it is less certain if the budget is adequate for the Rajasthan has been ranked as one of the ‘front RERC to undertake the range of activities that it runner’ states by the State Energy Effi ciency needs to, to manage and administer both as an Preparedness Index, 2018 of the NITI Aayog and SNA and SDA. has implemented the UJALA scheme for energy effi cient lighting. The State Energy Depart- For energy conservation in industries, the GoR ment has notifi ed mandated obligatory com- has focused on setting energy saving targets pliance with the Energy Conservation Building for PAT with designated consumers, mandating

15 Alliance for Energy Effi cient Economy (2018) State Energy Effi ciency Preparedness Index 2018. Available at https://www.aeee.in/wp- content/uploads/2018/09/State-EE-Preparedness-Index-FINAL_July2018.pdf (Accessed on 23 January, 2020)

14 | Climate Mitigation Financing Framework in Rajasthan regular energy audits to monitor compliance industrial areas and roof top solar plants have with the targets set. The RERC is responsible for been established in the 25-unit offi ces of the ensuring and reviewing that mandated energy Corporation. To promote the usage of ener- audits are completed. The MSME sector in India gy effi cient appliances, the state government accounts for about 45 per cent of the manu- along with the EESL is promoting the usage facturing output and is a signifi cant part of the of energy effi cient LED bulbs, tube-lights and industrial sector in most states. Close to 200 en- fans. This is being taken up under the Centre’s ergy-intensive MSME clusters account for about ‘Unnat Jyoti by Affordable LEDs for All’ (UJALA) 25 per cent of India’s energy consumption.16 scheme. Under this scheme, 88,257 energy effi - The state has also undertaken several steps, cient fans, 162 lakh LEDS and 3 lakh tube-lights along with the BEE, to advance EE in the MSME have been distributed. The GoR is also planning sector, which includes holding workshops, un- to implement a scheme for the replacement of dertaking demonstration projects and provid- ineffi cient irrigation pump sets with 5 star-rating subsidy for energy audits. For many of the ed Energy Effi cient Pump Sets (EEPS) with an activities, the MoP via the BEE transfers funds average capacity of 12 HP. This intervention to the SDA. The CFA is also allocated for capac- may be implemented by the BEE or the EESL ity building of the SDAs to enable them to un- in collaboration with the respective DISCOMs. dertake the activities. Rajasthan has also imple- Alternatively, private energy service companies mented fuel saving projects in fi ve small scale (ESCOs) may be enlisted for the job. For De- industries with the assistance of BEE. mand Side Management (DSM), the state has a dedicated DSM programme in most sectors. The state of Rajasthan is implementing its own The state not only provides fi nancial incentives exclusive programmes for EE street lighting for DSM programmes in the state, but also has and EE water pumping and has a dedicated a dedicated DSM cell in the SERC. The state budget for them.17 These programmes are over has also established a State Energy Conserva- and above the EESL’s programmes for EE street tion Fund (SECF). The Union government has lighting (Street Lighting National Programme released funds for the operationalisation of the or SLNP) and EE water pumping (Municipal SECF and the state government has released a Energy Effi cient Programme or MEEP) being matching grant for this. The SDA regularly con- implemented in the state. The state govern- ducts awareness programmes on energy con- ment has initiated the “Street Light Project”. servation measures in schools and for the gen- The aim of the project is not only to spread il- eral public, with the help of BEE funding. lumination, but also to reduce the energy consumption by making the street lighting system The BEE (2018) has also undertaken an ambi- energy effi cient. The project entails the setting tious programme of EE improvement and tech- up of LED street lights and has been complet- nology upgradation of fi ve SME clusters in India ed in 188 urban local bodies (ULBs). The fund- called the “National Programme on Energy Ef- ing for the project comes from the EESL, a GoI fi ciency and Technology Upgradation in SMEs”. undertaking, under the SLNP, without any cost It is implemented by the BEE with the support incurred by the state government or the ULBs. of the Ministry of Small and Medium Enterpris- In a similar endeavour, the Rajasthan State es (MSME). The scheme has been implement- Industrial Development and Investment Cor- ed in Rajasthan as well. This entails conducting poration (RIICO) has undertaken some signifi - baseline energy audits (BEAs) in the operation- cant policy decisions towards the promotion of al units of the identifi ed clusters and conduct- non-conventional sources of energy and reducing workshops to raise awareness among the ing energy consumption.18 About 18,000 LED unit owners on the EE technologies available to street lights have been installed or changed in them. Post workshop audits are also conduct-

16 Bureau of Energy Effi ciency (2018) Annual Report 2018. 17 ibid 18 ibid

Climate Mitigation Financing Framework in Rajasthan | 15 ed to assess the infl uence of the programme. strengthening their institutional capacities and The BEE through EESL and the National Power capabilities. Training Institute (NPTI) has undertaken programmes for building the capacity of DISCOMs In addition, the RRECL implements energy on DSM and EE measures and technologies. conservation programmes to promote the use For this, an MoU is signed between the BEE of energy effi cient appliances through different and state DISCOMs. Under this programme, promotional activities establishing pilot proj- DSM cells are established in the state DISCOMs, ects from time to time, to demonstrate energy load surveys are undertaken, the DSM action savings in the state. To recognise sincere efforts plan is drawn out and capacity building work- towards Energy Conservation, the RRECL has shops are conducted for DSM offi cials. Three instituted the Rajasthan Energy Conservation Rajasthan DISCOMs have signed MoUs with the Awards (RECA). So far, a total of nine awards BEE for this programme, namely, the Jodhpur have been given. Vidyut Vitran Nigam Limited, Jaipur Vidyut Vit- ran Nigam Ltd and Ajmer Vidyut Vitran Nigam Limited. The programme is conducted with funding from the BEE. The Union Government also provides fi nancial assistance to SDAs for

16 | Climate Mitigation Financing Framework in Rajasthan Section V Schemes aimed at reducing Aggregate Transmission and Commercial Losses and improving the Financial Health of State DISCOMs

The Integrated Power Development Scheme er be seen as one, as one of the biggest factors (IPDS) is aimed at reducing the aggregate impeding the uptake of RE in states is the poor technical and commercial losses (AT&C) in ur- financial health of the state DISCOMs. Under ban areas. The reduction of losses goes a long UDAY, the GoI and GoR cover the outstanding way in helping conserve energy, and can be debts of the state DISCOMs. As per the MoU, deemed as a climate mitigation measure. A the GoR is obliged to cover 75 per cent of the sum of Rs. 1343 crore has been sanctioned for outstanding debts as on 30th September 2015 the scheme by the state government. In 2013, over a period of two years. Also, under the the average AT&C losses for Rajasthan’s utilities scheme, Rajasthan has a target of installing ap- were 26.74 per cent. Under the state’s Power for proximately 56,000 smart meters for consum- All Plan formed with the Union government, ers with consumption between 200 - 500-kilo- the state’s utilities were targeting AT&C losses watt-hour (kWh) by December 2019. Till August of 15 per cent on an average in 2019. The utilities 2019, the GoR had not installed any smart me- have been able to reduce their losses but have ter for these consumers. In September 2018, the not yet achieved their target. The current AT&C World Bank announced a US$250 million loan loss rate is 21.29 per cent. The GoR is also imple- to the GoR to help improve the performance menting the Mukhyamantri Bijli Sudhar Yojana, and financial health of the state’s DISCOMs. The which aims at improving the quality of electric- terms of the loan included: instituting a perfor- ity being supplied alongside efforts to reduce mance management system; implementing the wastage and loss of electricity through is- performance improvement incentives; transfer- sues of transmission and theft (GoR, 2018). ring a major amount of debt from the DISCOMs to the state government; reducing procure- The Ujwal DISCOM Assurance Yojana (UDAY) ment costs; and initiating the use of new infor- was launched by the GoI to improve the fi- mation technology systems, among others. The nancial and operational efficiency of the state loan has been effective since 2018 and will be DISCOMs. While this may not be considered a disbursed by 2019. direct climate mitigation action, it must howev-

Climate Mitigation Financing Framework in Rajasthan | 17 Section VI Electriﬁ cation of the Transport Sector: Rapid Mass Transit System (Metro)

In the transport sector, the Jaipur Metro Rail project. Phase 1 of the project was to be funded Project has been completed, which will go a through equity and subordinate debt funding long way in reducing carbon emissions from from the GoI and GoR (JMRC Annual Report, vehicular pollution. The metro rail project is a 2017). 19, 20 mass rapid transit system. The construction of Phase 1 of the project has been completed, Phase 1B of the project has been funded by a while that of Phase 1B is likely to be complet- loan of Rs. 960 crore from the ADB, with the ed soon. The Jaipur Metro Rail Corporation Ltd. state government bearing the cost of Rs 167 (JMRC) was established as an undertaking of crore. The total estimated cost of Phase 2 of the the state government (special purpose vehi- project is estimated to be Rs 10,394 crore and cle or SPV) for the management of the metro the GoR is seeking to implement this phase us-

Table 2: Funding for the Jaipur Metro Rail Project (State Government Finance and External Loan)

Equity Amount (Rs. Crore) Percentage

Government of Rajasthan 1,494 54%

RIICO 100

Rajasthan Housing Board (RHB) 100

Debt from the Government of Rajasthan 366 12%

Grant from Jaipur Development Authority (JDA) 120 4%

Loan of ADB through GoI/ GoR 969 31%

Total 3,149 Source: Annual Reports, JMRC

19 The Ministry of Urban Development, GoI, through a letter, sanctioned a support of Rs. 630 crore to the project. This support was to be matched by the GoR through equity support (Rs. 472 crore), subordinate debt (Rs. 157.50 crore), additional subordinate debt by GoR for land costs other than those owned by the GoR (Rs 108 crore) and debt from GoR and other agencies such as the Jaipur Development Authority (JDA), Rajasthan State Industrial Development and Investment Corporation (RIICO) and Rajasthan Housing Board (Rs. 812 crore). The JMRC was to be converted to joint ownership between the GoI and GoR. The state government, however, did not agree to the terms and conditions laid down by the central government for the creation of JV and, therefore the share of the central government (Rs. 630 crore) was provided by the state government. 20 Jaipur Metro Rail Corporation (2015) Annual Report 2017 - 18. Available at http://transport.rajasthan.gov.in/content/dam/transport/metro/ RTI/Section%204(1)%20(b)/17/Annual%20Report%202017-18_%209th.pdf (Accessed on 23 January 2020)

18 | Climate Mitigation Financing Framework in Rajasthan ing a PPP model. Since its inception till March crore. The total estimated cost of Phase 2 of the 2019, an amount of Rs. 793.31 crore had been in- project is estimated to be Rs 10,394 crore and curred under the project. During the Financial the GoR is seeking to implement this phase us- Year 2018-19, an outlay of Rs. 200 crore was fixed ing a PPP model. Since its inception till March against which Rs. 194.48 crore had been utilised 2019, an amount of Rs. 793.31 crore had been in- by March 2019. curred under the project. During the Financial Year 2018-19, an outlay of Rs. 200 crore was fixed For promoting Electric Vehicles (EVs), the state against which Rs. 194.48 crore had been utilised government has implemented the GoI scheme by March 2019. (FAME Phase 1) aimed at promoting the uptake of EVs through the State Road Transport Cor- For promoting Electric Vehicles (EVs), the state poration. However, it does not offer any finan- government has implemented the GoI scheme cial incentives for procuring EVs or hybrid vehi- (FAME Phase 1) aimed at promoting the uptake cles through its own resources (AEEE, 2018). It of EVs through the State Road Transport Cor- is also planning to implement Phase 2 for the poration. However, it does not offer any finan- FAME scheme, which will entail incentivising cial incentives for procuring EVs or hybrid vehi- the manufacture of EVs and the establishment cles through its own resources (AEEE, 2018). It of EV charging stations. Whether the state is also planning to implement Phase 2 for the government is going to allocate resources for FAME scheme, which will entail incentivising them is questionable at the moment. It has the manufacture of EVs and the establishment mentioned the promotion of solar-based EV of EV charging stations. Whether the state charging stations as one of the priority areas in government is going to allocate resources for the 2019 Solar Energy Policy, but whether and them is questionable at the moment. It has how much of the state resources will be used to mentioned the promotion of solar-based EV incentivise the process is unclear at present. The charging stations as one of the priority areas in draft of the new Industrial Development Policy the 2019 Solar Energy Policy, but whether and of Rajasthan, 2019 has articulated the need for how much of the state resources will be used to a new State Electric Mobility Policy aimed at in- incentivise the process is unclear at present. The centivising the manufacture and uptake of EVs draft of the new Industrial Development Policy in the state. This, however, has not yet been for- of Rajasthan, 2019 has articulated the need for mulated. a new State Electric Mobility Policy aimed at incentivising the manufacture and uptake of EVs Under the Smart City Mission, the GoI seeks to in the state. This, however, has not yet been for- provide citizens of selected cities with a better mulated. quality of life through the provision of world class infrastructure, a clean environment and Under the Smart City Mission, the GoI seeks to the deployment of smart energy efficient solu- provide citizens of selected cities with a better tions. The GoI will give a grant of Rs. 100 crore quality of life through the provision of world per city over a period of 5 years, with a matching class infrastructure, a clean environment and grant to be provided by the state government/ the deployment of smart energy efficient solu- ULBs. Four cities in Rajasthan have been short- tions. The GoI will give a grant of Rs. 100 crore listed under the Mission, namely, Jaipur, Udai- per city over a period of 5 years, with a matching pur, Kota and Ajmer (GoR, 2018). grant to be provided by the state government/ ULBs. Four cities in Rajasthan have been short- Phase 1B of the project has been funded by a listed under the Mission, namely, Jaipur, Udai- loan of Rs. 960 crore from the ADB, with the pur, Kota and Ajmer (GoR, 2018). state government bearing the cost of Rs 167

Climate Mitigation Financing Framework in Rajasthan | 19 Section VII Rajasthan State ﬁ nancing of CCMAs can be broadly categorised into three components

Component A: State fi nances routed through both the central and the state government. The the state budget to fund the state RE and EE large-scale grid connected RE projects under schemes. Annexure 1 provides a summary of the JNNSM are fi nanced by the state govern- state fi nances through budgets. ment, external aid, CFA and/ or by loans from NBFCs. Component B: State fi nances received through Central Financial Assistance (CFAs) disbursed 2. The combined deployment of central and from the Central Nodal Ministry or the Central state fi nances is also used to fi nance schemes PSUs (e.g. EESL, SECI) as subsidies. These in- to support small-scale, decentralised and off- clude performance grants transferred as per grid projects for electrifi cation of un-electrifi ed the recommendations of the Central Finance villages and areas in the state. An important Commission (CFC) to the state government. intervention in this regard has been undertak- These fi nances are routed through the SNA of en by the RRECL to electrify the un-electrifi ed the MNRE and the SDA of the BEE, which hap- villages and hamlets in Rajasthan through the pens to be RRECL in both cases. The CFA for establishment of off-grid SPV Home Lighting some of the EE measures such as improving Systems (HLS). This scheme is being imple- the capacity of the DISCOMs is directly trans- mented with the help of subsidy support by the ferred to the DISCOMs after MoUs have been GoI and the GoR. The scheme, which is funded signed with them. without Central support is the Mukhyamantri Bijli Sudhar Yojana, which is aimed at improv- Component C: External aid / loans from bilateral ing the quality of electricity being supplied and and multilateral banks are routed through the reducing the AT&C losses. The GoR budgetary state’s budgets; and loans are provided by the support for the various schemes has been fair- Non-Banking Financing Companies (NBFCs) ly consistent with very little variation. Also, the such as IREDA. utilisation of the allocated funds has been 100 per cent. The ﬁ ndings from the assessment on available state ﬁ nances are as follows: 3. The GoR has been supporting the low carbon transport sector in the state by aiding the 1. Most RE Projects in the state are jointly fi - establishment of a mass transit system, through nanced by the GoI and the GoR. Rajasthan’s measures such as the setting up of a metro rail RE programme is closely aligned to and draws network in its Smart Cities. The Jaipur Metro largely from the Central RE schemes and pro- Rail Project is supported by the GoR through grammes. In doing so, the GoR ensures that equity and subordinate debt and a loan from the private developers can benefi t from the the ADB. range of incentives and also avail fi nances from

20 | Climate Mitigation Financing Framework in Rajasthan 4. The GoR is partially supporting the GoI Table 3: Loans Disbursed by schemes aimed at improving the fi nancial IREDA (Amount in Rs. crore) health of the state DISCOMs. The GoR will help to cover a part of the debts of the state 930.99 Loans DISCOMs. Along with the Union government, Disbursed by IREDA the state government also supports schemes (in Rs. crore) aimed at reducing transmission and distribu- 701.59 tion losses (UDAY scheme). 440.55 457.52 5. State departments responsible for climate change mitigation actions, such as measures for promoting EE and low carbon transpor- 30.62 tation are channelling the fi nances through 2014-15 2015-16 2016-17 2017-18 2018-19 dedicated state owned enterprises (SOEs). The SOEs operate on the basis of the central and Source: Annual Report, IREDA state policy frameworks for climate mitigation actions. They have the capacity to blend capital and energy effi cient water pumping over and provided by the state and the Union govern- above the EESL programmes that do so. The ment with external sources of capital and the state government allocates a separate bud- fl exibility to develop fi nancial instruments to get for these schemes. Similarly, loans for large meet the needs for policy implementation. scale RE projects through IREDA are in line with the state and the national targets for RE. 6. Capital investment by Central PSUs such as the EESL for EE programmes is behind the Below is a snapshot of the RE and EE fi nanc- immense progress being made towards ener- es available in the state of Rajasthan from the gy conservation and EE measures in the state. range of sources discussed above (See Tables The state government has its own exclusive 3 to 5). This summary must not be considered programmes for energy effi cient street lighting exhaustive due to the lack of availability of data.

Table 4: External Aid for Climate Mitigation Projects in Rajasthan

Total Expenditure External Total Project Expenditure since inception to Agency Cost during 2018-19 March, 2019 Jaipur Metro Rail Line - 1B (June 2014 ADB 1,126.00 194.48 793.31 to March 2020) Rajasthan Renewable Energy Transmission Investment Program ADB 1,466.16 51.06 1,243.47 (November 2014 to December 2018)

Intra-State Transmission System in Rajasthan under Green Energy KfW 793.90 136.62 387.20 Corridor Project

Second Programmatic Electricity Distribution Reform Development Policy World Bank 1,850.00 Loan (October 2018 to September 2019)

Source: Economic Review Rajasthan 2018-19

Climate Mitigation Financing Framework in Rajasthan | 21 Table 5: Central Financial Assistance (CFA) to the State Government (in Rs. crore) 98.27 80.82

43.19

0.16 As on 1st As on 1st As on 31st As on 31st April, 2016 April, 2017 March, 2018 March, 2018

Capital works under Streetlight Capital works in Agricultural LED in Rajasthan DSM in Rajasthan

EESL Investment

Source: EESL’s Annual Reports for 2016 -17 to 2018-19

Section VIII Policy Recommendations

1. The Rajasthan State Action Plan on Climate from the GoI to the RE sector through such Change proposes the setting up of an infra- measures can go a long way in bolstering the structure development fund, which would pro- state government’s RE initiatives. 21 vide the necessary fi nance for the RE sector. The modality of fi nancing a fund of this nature 3. Given the huge potential of EE measures is not very certain at the moment and needs in the SME sector, it is rather disconcerting to to be articulated clearly. The state government observe that the GoR is largely implementing must make allocations for it through its budget. EE measures of the BEE. It has neither formulated any state scheme on EE, nor allocated any 2. Rajasthan has been able to record the low- funding for the promotion of EE technologies in est tariff of Rs 2.44 per unit of electricity in the the SME sector. To realise the energy saving po- auction carried out by the Solar Energy Corpo- tential of the SME sector, the state government ration of India Limited (SECI) for a capacity of must take appropriate and adequate policy, 500 MW in the Bhadla Phase - III Solar Park. The institutional and fi scal measures. A dedicated low tariff was made possible by the decision of budget must be allocated towards implement- the GoI to cover solar power by SECI under the ing demonstration projects, organising aware- ambit of a Tripartite Agreement for payment ness generation workshops etc. in energy in- security against defaults by state distribution tensive units in the SME sector. companies. This goes to suggest that support

21 Press Information Bureau, Government of India (2017) “Historic low Tariff of Rs. 2.44 per unit discovered in Bhadla Phase-III Solar Park in auction by SECI”, 12 May. Available at https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1489763 (Accessed on 19 March 2020)

22 | Climate Mitigation Financing Framework in Rajasthan 4. While there is a policy thrust on introducing ing the sector lies with the private developers, EVs in the state to reduce vehicular pollution and indeed, all the other sources of funding can being caused by a rise in the number of con- help in incentivising this sector. It will be help- ventional vehicles, the state government has ful if the state government attempts to bring made little or no effort towards the objective, greater coherence between the state and cen- beyond the implementation of the GoI scheme tral policies on RE and EE. Most importantly, it ‘FAME’. While the GoR is making efforts to- is important that the government should act as wards procuring electric buses, incentivising a facilitator and should devise innovative policy manufacture and the sale of EVs by offering mechanisms not only in terms of introducing incentives to the customers and establishing innovative financing instruments, but also in EV charging stations under the Phase I and II creating a conducive environment which min- of FAME, it has largely proceeded with the help imises associated risk factors. Such policy-level of the Union government’s funds, with no al- innovation calls for collaboration and a portfo- locations through the Rajasthan state budget. lio of investment arrangements. Collaborative Andhra Pradesh is a good example in point. The efforts between a variety of stakeholders such AP state government has articulated its own as governments - both at the centre as well as Electric Mobility Policy, 2017-18 through which in provinces, financial institutions, investors, in- it offers a range of incentives to improve the dustrial agencies, and research organisations, manufacture and uptake of EVs. The state gov- can go a long way towards minimising co-relat- ernment has sought to address the situation ed risks. There is also a need to make the ap- through its new Industrial Development Policy. proval and clearance system more transparent The draft of the policy which has been circulat- and reduce the transaction costs associated ed and is available in the public domain indi- with the system. The single window clearance cates that the state government is planning to system instituted for the sector is a move in the set up an EV research and manufacturing zone. right direction. The state will also offer financial incentives to encourage component manufacturing for EVs 6. It must be noted that unlike Andhra Pradesh and bring in a dedicated policy to provide im- and Kerala, which have two separate agencies petus to the sector. Further, the policy draft for the implementation of RE and EE measures, also calls for provisions for allotment of land RRECL in Rajasthan takes care of both sets of in- on short-term leases. The government believes terventions. Commentators point out that this that the move will reduce the land cost for the leads to a digression from the main mandate entrepreneurs as the leases would be for three of the agency, leaving it in a position whereby it years. Moreover, the GoR needs to ensure their is not able to fulfil either mandate adequately. effective implementation with dedicated bud- The state government must appoint dedicated getary allocations towards achieving them. The entities for promoting RE and EE in the states GoR has also articulated the need for an Electric and confer them with adequate authority and Mobility Policy but has not formulated it so far. budgetary resources. The state government is also recommended to formulate and imple- 5. While the funding from the centre and the ment the State Energy Conservation Policy. As state in the RE sector serves to incentivise pro- of now, most EE policies in the state are being duction, it is not directed at meeting the entire implemented with BEE funding, with the state cost of RE generation, transmission and distri- government allocating very little towards meet- bution. The primary responsibility of developing its EE objectives.

Climate Mitigation Financing Framework in Rajasthan | 23 1.1930 1.0591 1.1000 0.2180 0.0006 0.5500 0.0002 0.8500 0.2804 0.0001 0.0001 0.0001 0.0001 0.0000 54.6916 0.0000 2019-20 BE 13816.4708 12000 1.2025 1.9230 1.0930 0.2569 0.2687 0.6306 0.3454 0.0002 2.2600 0.0006 0.0000 0.0001 0.0001 0.0001 0.0001 0.0000 2018-19 RE 12000 1.9229 0.8612 1.0800 2.4724 9.3405 0.0006 0.0001 0.0001 0.0001 0.0001 2.0600 0.0002 0.0000 0.4400 0.0000 86.8167 2018-19 BE 1.1271 12000 1.5736 1.2239 0.7455 5.9450 0.9800 0.0000 0.0000 0.0000 0.4000 0.0000 0.0000 0.0000 0.0000 0.0000 96.4167 2017-18 A 12000 1.7481 8.4913 0.0001 0.0001 0.0001 0.0001 1.8700 0.7552 2.2476 0.0006 0.0000 0.0002 96.4167 0.9800 0.0000 0.4000 2017-18 RE 1.7481 0.7191 12000 1.8679 0.0001 0.0001 0.0001 0.0001 8.4913 0.9817 2.2476 0.0000 0.0002 0.0000 0.4004 0.0006 45.7667 2017-18 BE 9000 1.1960 1.9636 0.3508 4.4972 0.0006 0.2600 0.8890 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 2016-17 A 9000 0.000 1.1960 1.9852 0.0001 0.0001 0.0001 0.0001 0.3567 0.0006 4.4972 0.0000 0.2600 0.0002 0.8890 0.0000 56.6489 2016-17 RE 9000 3.3715 0.9817 0.0001 0.0001 0.0001 0.0001 0.0001 2.6883 0.0250 4.5360 0.0002 0.0006 0.0000 0.0000 0.4004 17.0663 2016-17 BE Annexure I: State Finances for Climate Mitigation Actions (in Rs. crore) Climate for Finances I: State Annexure Major Head 4810 - Capital Outlay on New and Renewable Energy and Renewable on New Outlay Major Head 4810 - Capital Development Rural for Major Head 2501 - Special Programmes Major Head 2801 - Power Major Head 2810 – New and Renewable Energy and Renewable Major Head 2810 – New Sub – Minor Head The Headquarters (Biofuel) and Administration Direction Areas in Rural Generation Solar Power Limited Urja Corporation Akshay Rajashthan to Assistance Areas in Rural Generation Solar Power Castes) Scheduled Plan for (Special Component Biofuel Authority Sub-Plan) (Tribal Headquarters Areas in Rural Generation Solar Power Bio Gas Areas cation in Rural Electrifi Solar Energy Limited of Rajasthan Company Energy Surya to Appropriation Limited of Rajasthan Company Energy Surya Essel to Appropriation Limited Rajasthan Park Energy Renewable Adani to Appropriation Limited Rajasthan Solar Park Dhirubhai Ambani to Appropriation (DDU-GKY) Yojana Kaushalya Grameen Upadhyaya Deen Dayal (RGGVY) Yojana Vidyutikaran Gandhi Grameen Rajiv scheme under UDAY DISCOMs to Assistance

24 | Climate Mitigation Financing Framework in Rajasthan 0.00 0.00 5.30 4.00 30.00 9.3931 0.0001 0.0001 60.0008 2019-20 BE 5.50 0.00 5.30 4.00 72.83 0.0012 0.0000 0.0000 14.8930 2018-19 RE 2.30 3.00 5.50 0.00 29.00 0.0001 10.7444 10.0000 634.1984 2018-19 BE 205 6.30 0.00 0.00 4.80 25.00 11.1105 0.0000 0.0000 2017-18 A 4.30 0.00 3.40 4.50 25.00 12.1169 0.0000 0.0000 509.7984 2017-18 RE 5.00 2.10 1.40 25.00 0.0001 8.5240 0.0000 639.9984 0.00 0.00 3.60 5.40 15.71 720.8 8.9117 0.0000 3.10 15.71 5.40 5.40 4.80 0.0000 0.0000 18.6780 1950.996 5.40 5.40 9.20 11.80 10.00 0.0001 31.7836 649.999 2016-17 BE 2016-17 RE 2016-17 A 2017-18 BE Annexure I: State Finances for Climate Mitigation Actions (in Rs. crore) Climate for Finances I: State Annexure Sub – Minor Head Corporation Rail Jaipur Metro SC) Limited-(For Transport City 04-Jaipur ST) Limited-(For Transport City 06-Jaipur Limited- Transport City 03-01-Jaipur Plan Facility) Environment Global (From Limited-(From Transport City 03-01-Jaipur Aid Central Facility) Environment Global (JCTS) Services Limited Transport City -Jaipur Total Smart City Domestic Solar Lights for Grant Solar Lamps for Grant Years Budgets, Various Rajasthan State Source: Major Head 2217 - Urban Development and Scheduled Tribes Scheduled Castes of Major Head 2225 - Welfare

Climate Mitigation Financing Framework in Rajasthan | 25 Sustainable Municipal and Urban Infrastructure Smart Cities Mission, clean central various as the policies such energy projects, Energy to Waste under Swachh components Mission, NationalBharat Enhanced Mission for with green ciency Effi Energy of buildings, Energy rating Building Code Conservation RE policies, including State those aimed at promoting of RE fromgeneration Biomass Ministry and of New (MNRE), Energy Renewable (MOP), Ministry of Power Ministry of Environment, Change & Climate Forest Ministry of Urban (MoEFCC), of Bureau Development, (BEE), ciency Effi Energy Services ciency Effi Energy (EESL) Limited Department of Local Urban Self Government, & Housing Development Department, DSM cells Agriculture Demand Side Agriculture Management (DSM) Ministry of Environment, Change & Climate Forest Ministry of(MoEFCC), & Farmers’ Agriculture &FW), (MoA Welfare of Bureau NABARD, (BEE). ciency Effi Energy (MOP), Ministry of Power Services ciency Effi Energy (EESL) Limited Development Rural Raj & Panchayati Department of Rajasthan, Department of Agriculture and Department of Department ofFisheries, Horticulture, Rajasthan, DSM cells National Mission for Sustainable Agriculture (with EE & RE component), Vikas Krishi Rashtriya water (RKVY), Yojana onharvesting schemes ponds and drip farm Jawaharlal irrigation, Nehru National Solar Mission (JNNSM) RETs in Agriculture in Agriculture RETs and Demand side management [Energy ciency (EE)] Efﬁ Low Carbon Carbon Low Transport National Electric Mobility National Electric Mission 2020 policy is no state There yet mobility on electric but is being proposed the new through Industrial Rajasthan 2019, Policy Development other contains which promoting for incentives manufacturing EV Ministry of Heavy & PublicIndustries Ministry of Enterprises, & Forest Environment, Change (MoEFCC), Climate Ministry Transport of Road and Highways Road State Rajasthan Corporation Transport Municipal (RSRTC), Urban Administration, and Development Housing Department, Jaipur Development Rajasthan (JDA), Authority (RHB) Housing Board Clean Industrial and Processes Product Use National Mission on ciency, Effi Energy Enhanced ciency Effi National Resource Perform, (Draft), Policy (PAT) and Trade Achieve the for Policy scheme, of Energy promotion in Small and ciency Effi Medium Enterprises Industrial Rajasthan 2019, Policy Development Investment Rajasthan Scheme Promotion Industries Ministry of Heavy Bureau & Public Enterprises, (BEE), ciency Effi of Energy (MOP), Ministry of Power Services ciency Effi Energy (EESL), Ministry ofLimited Small and Medium Micro, Enterprises Department of Industries, DepartmentRajasthan Rajasthan, of Energy, Small Department of Micro, and Medium Enterprises, Rajasthan Installation of Renewable Renewable Installation of Energy (RE) and EE Capacities National Action Plan on Climate National Action Plan on Climate Change, National Solar Mission, Mission and Energy Wind Mission Energy Tidal Coastal , Inventory, State Rajasthan Policy, Solar Energy Rajasthan and Wind Rajasthan 2019, 2019 Policy Solar Hybrid Wind Purchase Renewable (Draft), Obligations and Renewable (RECs) cates Certifi Energy Ministry and Renewable of New (MNRE), MinistryEnergy of Ministry (MOP), of Power & Climate Forest Environment, non- Change (MoEFCC), companies nancial fi banking as IREDA,such Solar Energy of India (SECI), Corporation ciency Effi of Energy Bureau Electricity (BEE), Central (CERC) Commission Regulatory Department of Energy, State Energy Renewable Rajasthan (RRECL), Ltd. Corporation Regulatory Electricity State (SERC) Commission Annexure II: Rajasthan Policies, Programmes and Institutional Setup for Climate Mitigation Actions Climate and Institutional Setup for Programmes Policies, II: Rajasthan Annexure Central Central Policies State Policies Central Institutions coordinating Policy Rajasthan State Government Department implementing Policy Policies for Policies for CCMAs

26 | Climate Mitigation Financing Framework in Rajasthan State Designated Agency Agency Designated State Renewable - Rajasthan Ltd Corporation Energy (RREC) Lighting ciency Domestic Effi Energy (DELP), Programme Building Conservation Smart (ECBC), Cities, Code Demand Municipal EESL’s Side Management schemes Lighting as Street such and National Programme ciency Effi Energy Municipal (SLNP and Programme MEEP) cient street effi energy State cient effi lighting and energy and pumping scheme water code ECBC Rajasthan mode under PPP Operating investment. with private of Both Government of India and Government to contribute Rajasthan The BEEthe EE schemes. funded largely are schemes BEE itself. by Sustainable Municipal and Urban Infrastructure RRECL,State PSUs- Rajasthan Nigam Limited Vitran Vidyut DISCOM), (RRVNL, State Nigam Vitran Ajmer Vidyut Jodhpur (AVVNL), Limited Nigam Limited Vitran Vidyut and Jaipur Vidyut (JdVVNL) (JVVNL) Nigam Limited Vitran Rajya Rajasthan DISCOMs. Nigam Limited Utpadan Vidyut (RVUNL, Generation Electricity Company) Programme, Solar PV cient Solar Effi Energy Pump Sets, KUSUM Scheme Solar Water Rajasthan Pump Programme the JNNSM on was The base were other schemes which the Financially, ride. made to tied; 30 per cent were resources subsidy under MNRE and 56 subsidy fromper cent RKVY; support dwindled, the if RKVY required was government state at the to arrive ll the gap fi to subsidy of 86 per cent total RETs in Agriculture and in Agriculture RETs Demand side management ciency (EE)] [Energy Efﬁ Low Carbon Carbon Low Transport State PSUs - Rajasthan State Transport Road State (RSRTC), Corporation Road Jaipur State Corporation, Transport Rajasthan Industrial State Development and Investment Ltd Corporation (RIICO), Jaipur Metro Ltd Corporation Rail (JMRC) and Adoption Faster ofManufacturing &) Electric (Hybrid (FAME-India) Vehicles Scheme Mass transit movement through programme Rail buses & Metro projects Mass transit movement through programme Rail buses & Metro projects Clean Industrial and Processes Product Use Dedicated State PSUs State Dedicated Renewable – Rajasthan Ltd Corporation Energy (RREC) Demand Side Management under programmes National Mission for Energy Enhanced (NMEEE), ciency Effi to Programmes EE inenhance and (large industries SMEs) state No exclusive or programme scheme EE in the improving for It is sector. industrial BEE done through largely only initiatives Energy of State Creation subsidies Fund, Conservation Installation of Renewable Renewable Installation of Energy (RE) and EE Capacities State PSUs- Rajasthan Vidyut Vidyut PSUs- Rajasthan State (RRVNL, Nigam Limited Vitran Ajmer, DISCOM), State Jodhpur and Jaipur DISCOMs, Energy Renewable Rajasthan (RRECL, Ltd. which Corporation agency designated is a state Other JVCs RE projects). for from created timeare time to Rajasthan c projects. specifi for Nigam Limited Utpadan Vidyut (RVUNL, Generation Electricity Company) designed underSchemes National Solar Mission - Canal-top Programme, Rooftop etc. UDAY Solar Programme nancial the fi improve to scheme DISCOMs, of state health and Deen scheme SAUBHAGYA Jyoti Gram Upadhyaya Dayal (DDUGJY) Yojana cation programme electrifi Rural technologies, using off-grid Bijli Sudhar Mukhyamantri electricity T&D reduce to Yojana losses loan subsidies, Central State Exemptions, Tax and subsidy, of RE, purchase for Tariff Setting cates Certifi Energy Renewable (RECs) Annexure II: Rajasthan Policies, Programmes and Institutional Setup for Climate Mitigation Actions Climate and Institutional Setup for Programmes Policies, II: Rajasthan Annexure State Owned Enterprises & State Designated Agencies Central Programmes State Programmes Financing instruments under Policy Policies for Policies for CCMAs

Climate Mitigation Financing Framework in Rajasthan | 27 28 | Climate Mitigation Financing Framework in Rajasthan Report on Climate Mitigation Financing Framework in Rajasthan

Author: Divya Singh Research Inputs: Jyotsna Goel (CBGA), Ajay Pal Singh (CBGA) Editorial Inputs: Pustav Joshi (SSEF), Raghav Anand (SSEF), Jyotsna Goel (CBGA), Nilachala Acharya (CBGA) Graphics and Design: How India Lives (www.howindialives.com) For more information, please write to the author at: [email protected]

Acknowledgements We are thankful to Shakti Sustainable Energy Foundation (SSEF) for supporting CBGA for this project. We are thankful to Mr. Pustav Joshi and Mr. Raghav Anand from SSEF for providing useful feedback and suggestions on earlier versions of this publication. We are also thankful to offi cials from Rajasthan’s Energy Department for providing useful insights on clean energy fi nancing by the state.

Disclaimer The views/analysis expressed in this report/document do not necessarily reflect the views of Shakti Sustainable Energy Foundation. The Foundation also does not guarantee the accuracy of any data included in this publication nor does it accept any responsibility for the consequences of its use.

*For private circulation only

Climate Mitigation Financing Framework in Rajasthan | 29 About the Project The project studies policy, institutional and fiscal measures which four select states, viz., Andhra Pradesh, Assam, Odisha and Rajasthan are undertaking to mitigate climate change, along with a reflection on the suitability of the budgetary provisions in meeting their State Action Plan on Climate Change (SAPCC).

About CBGA CBGA is an independent, non-profit policy research organisation based in New Delhi. It strives to inform public discourse through rigorous analysis of government budgets in India; it also tries to foster people’s participation on a range of policy issues by demystifying them.

For further information about CBGA’s work, please visit www.cbgaindia.org or write at: [email protected]

About SSEF Shakti Sustainable Energy Foundation works to facilitate India’s transition to a cleaner energy future by aiding the design and implementation of policies that promote clean power, energy efficiency, sustainable transport, climate policy and clean energy finance.

For further information about SSEF’s work, please visit www.shaktifoundation.in

30 | Climate Mitigation Financing Framework in Rajasthan