Sunshine state: Can Gujarat still live up to the promise?

The Gujarat Solar Policy introduced by the government of Gujarat in 2009 and the preferential feed-in tariff programme for solar power in Gujarat are often credited with kick-starting the solar movement in India. However, of late various regulatory and market developments in Gujarat have shaken investor confidence in the Gujarat solar story.

Some of the features of the regulatory framework governing the solar power sector in Gujarat which investors consider key attributes typically of an investment-grade solar policy have come under challenge and may negatively influence investment decisions.

Waiver of requirements

Until solar power achieves grid parity, an investment grade policy framework for solar energy should ideally provide mandatory renewable energy targets or purchase obligations to create a market. Further, a clear enforcement regime setting out penalties or consequences of non-compliance with such targets or obligations is also required.

Akshay Jaitly is a partner and Avirup Nag is a counsel at Trilegal. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.