The circular provides guidance on the implementation of the Solar Home Systems (SHS) as part of the Household Electrification Development Plan (HEDP). It aims to attain 90% household electrification by 2017.
It states that SHS can be installed by distribution utilities (DU), and are funded by fees collected from consumers and by government subsidies. This circular regulates the tariff collection process and the associated government subsidies.
Tariff Collection: A "fee-for-service" is collected monthly by the DUs for energy supplied through the SHS. The fee is determined by the Energy Regulatory Commission (ERC). The tariffs are set on the basis of the expected cost of supplying electricity using SHS in the given context (e.g. topography, distances).
Subsidies: A capital subsidy to cover initial procurement and installation costs is provided to DUs on output basis, i.e. payment of the subsidy depends on the number of SHSs installed. The amount of subsidy is determined by the Department of Energy on an annual basis and depends on the availability of funds and the price of the SHSs. The eligibility of the SHSs is determined by the Department of Energy.