India's national solar mission: getting it right

  • 02/07/2010

India launched its National Solar Mission last year. The aim is ambitious – to build capacity of 22,000 mw by 2022. Clearly this is critical: if we can upscale our solar energy generation, we also build the ‘learning’ needed for the world – prices will drop, technology will grow, new answers will be found. But the question is how is this programme working? What is being done by the Ministry of New and Renewable Energy to get it right?

My colleague Arnab Pratim Dutta investigated developments and found interesting and challenging issues that are being thrown up as solar takes off in the country. His report raises fascinating issues, which will have to be resolved so that we have an effective programme for solar.

We know that the government has evolved an innovative mechanism to fund solar projects. The National Thermal Power Corporation (NTPC) trading subsidiary, National Vidyut Vyapar Nigam (NVVN) will bundle solar power will cheaper unallocated quota of thermal power. So with one unit of solar (roughly at Rs 18), bundled with four units of cheaper conventional energy (roughly Rs 2/unit), the power utility will have to pay Rs 5 per unit.

Already some 100 mw projects of solar PV have been ‘migrated’ to this scheme – these were projects either already running or in the process of being built. The issue of PV verses Thermal has been gripping policy makers in the country: what is the right proportion? Should the technology mix be mandated? After some discussions and lots of lobbying (by the PV group), it has been agreed that the ratio will be 50:50. But as yet, solar thermal projects have been slow off the block.

TheCentral Electricity Regulatory Commission tariff report has interesting details of how the project proponents are pricing different components. What is clear is that solar thermal pricing seems still uncertain – the range is enormous. While Acme and SunBorne Energy as well as Entegra has proposed between Rs 16-17.70 crore per mw (without storage), Spanish giant Abengoa says the cost will be Rs 28 crore/mw. Clearly, much work will have to be done on the ground still to understand the costs and gather experience. But read the report and also read Arnab’s account of the public hearing to discuss tariffs.


The big issues confronting policy makers are:

a. How do they select projects for approval for the next tranche of some 150 mw of solar PV grid based projects by 2010-11? They have application for over 700 mw, and just about everybody, from real estate dealers to diamond merchant is joining this ‘sun’ rush. But without government clearance, the banks do not fund easily. So, various options are being explored – from reverse bidding to financial guarantees. The decision on this is expected soon.

b. Does the country mandate domestic content in the solar programme? TheAjay Shankar committee report set up by the government to explore this further raises important issues and questions. It recommends a phased-in protection to stimulate domestic manufacturing – but starting now. This stimulus is clearly important as it would make India a manufacturing hub and bring down prices. It is clear that the solar manufacturing industry in the country wants this preferential market. Deepak Puri, head of Moser Baer, stresses the reasons why. But it is also clear that this ‘protection’ coming at a time, when the market is still young could lead to poor practices of pricing and quality. The solar business needs to have a competitive edge to ensure innovation. Inderpreet Wadhwa, president of the Independent Solar Power Producers Association and CEO of Azure power (with an operating plant near Amritsar) points to this.
 

I find this discussion fascinating. Not because we have the answers or even that we will get the answers right. But because we are asking these questions and looking for ways to build the right kind of sun-empire in the country. I am sure, this technology transition will take huge experimentation to get it right. The big challenge is how we can make sure we keep ‘learning’ – checking how the answers are working and how we can review and revise and improvise the pathway for the future. This is why we must keep talking about what is being done to implement the programme. And we will.

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