The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

FiT and 20-GW National Solar Mission Lose Value in India

India faces yet another game-changer: Feed-in-tariffs and the ambitious government-sponsored 20-GW National Solar Mission (NSM) have lost value in India.

The existing conventional power cost ranges from Rs 7.00 to Rs 12.00 (US$0.13-0.23) per unit for industrial and commercial users, and the new solar power benchmark price is Rs 7-7.50 per unit. Many solar project developers are losing money by selling power to the government at this new price through power purchase agreements (PPA) that are mutually obligatory for 25 years. 

Instead, it makes more sense for an investor or a project developer to shun 25-year-long government PPAs and use the "Open Access" system to sell power to industrial and commercial users directly. Such users are paying more than Rs 7.00 per unit for existing erratic power supply and will likely be keen to pay more for reliable supply. Developers can also exercise an option to raise the cost of power supplied at regular intervals over the 25-year lifespan of the project.

That surely raises questions on the significance and value of various state governments’ policies as well as the ambitious National Solar Mission of the central (federal) government of India. If the state governments’ policies and the NSM have to remain significant, the price offered by the government to solar power project developers will have to become variable over the entire duration of the PPA. If not, it may be a losing proposition for a solar power project developer/investor to commit power at such low rates for 25 years.

The "Open Access" system enables power producers to sell power to users across the country via the national grid by bearing the cost of transmission, distribution losses, and wheeling and banking. These costs may affect the profitability of the power project initially, but committed higher billings over the next few years could provide much higher returns compared to current PPA fixed rates.

The success of the "Open Access" system will also depend on the “minimum committed load,” which calls for an industrial user to pay a minimum monthly fee to the local distribution company, irrespective of how much conventional power it consumed.

Various regulations in the country have already cleared the way for other precedents where large industrial units set up gas- or coal-based captive power plants. A similar arrangement for solar power will ensure that the end consumers and solar power project developers will be able to build mutually-profitable relationships.

While state government policies were expected to boost the solar power sector in the country, the captive or end-user segment offers a much larger market of at least 25,000 MW over the next five to seven years. 

Even if the benchmark PV project cost falls from the current Rs 9 crore to Rs 7 crore, it promises to be a market with a value of Rs 175,000 crore (about US$35 billion). 

The rules of the game in India have surprisingly changed despite it's current low installed capacity nearly 1,000 MW, which is far below government-targeted capacities to exceed 30,000 MW over the next decade. 

But if all solar developers were to go for the "Open Access" system, what will happen to state government policies and the National Solar Mission?

Untitled Document

Get All the Renewable Energy World News Delivered to Your Inbox - FREE!

Subscribe to Renewable Energy World Magazine and our award-winning e-Newsletter to stay up to date on current news and industry trends.

 Subscribe Now



Evaluating the Case for Module-Level Shutdown

Hannes Knopf With 2014 NEC adoption in full swing, many are anticipating what the next version of the code will hold for the PV in...

A Case Study in Energy-Transition Momentum

Tim King South Australia is clearly at the forefront of the global energy transition as it establishes a fast-moving model oth...

Listen Up: Can I Get Solar if my Roof is Shaded?

The Energy Show on Renewable Energy World Rooftop solar panels only work when they are in direct sunlight. So if you have a partially shaded roof, the output o...

US Senate Democrats Unveil Energy Bill That Restores PTC and Extends ITC

Brian Eckhouse, Bloomberg Senate Democrats unveiled a bill that would provide more tax credits for renewable energy while killing some tax ince...


$100 Discount on 5-day Advanced PV Project Experience Workhop

Upcoming 5-day Workshops: Nov. 7 - 11 Feb. 6 - 10

IREC Announces Changes in Regulatory Team

The Interstate Renewable Energy Council (IREC), a not-for-profit organization which for...

IREC Awarded New Funding to Advance Digital Credentials

The Interstate Renewable Energy Council (IREC) proudly announces funding for an innovat...

Fronius Shifting the Limits in Solar-Plus: It’s not just about products, it’s about solutions.

Fronius USA, who just recently launched the all-new Fronius SnapINverter line this past...


Industry Focus: Cleantech: 1366 Technologies joins Solarcity in New York

1366 is set to build a factory just up the road (OK, it is a long road – NYS Thruway) from Solarcity.  The...

Solar Decathlon 2015 Opens to the Public in California

Today, Oct. 8, the biennial Solar Decathlon opened up to the public at Orange County Great Park in Irvine, ...

ENER-G CHP technology selected for major London housing scheme

ENER-G has been selected to supply combined heat and power (CHP) technology for phase two of the Leopold Estate housi...

Georgia Legislature Approves PPA’s, Florida Hoping to Follow

Ah, the sunny south, the land of peaches, oranges and solar potential. I’m talking about Georgia and Florida he...


Bhupesh Trivedi is the CEO of Mumbai-based solar power consulting firm REECODE Energy Solutions. He has spoken at a few climate change and solar power conferences in India and consulted solar investors, EPC contractors and vendors in India. He is ...


Volume 18, Issue 4


To register for our free
e-Newsletters, subscribe today:


Tweet the Editors! @jennrunyon



Successfully Integrating Solar: A Proactive Approach

•      What does the increasing solar penetrati...

Solar Power Asset Management and Performance

SEIA and SEPA collaborated with industry leaders to present the first ev...

Solar Power Northeast

  From the team that produced Solar Power Southeast and the sol...


Fast facts: 4 things you need to know about the state of solar fina...

Fast facts: 4 things you need to know about the state of solar financing...

10 Questions You Should Be Asking

Tony Robbins is fond of saying that the quality of your life is directly...

Join us at the New Solar Power Northeast

From the team that produced Solar Power Southeast and the sold out P...


Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now