India, which plans to raise solar capacity eightfold by 2017, will probably auction more megawatts than planned this fiscal year in a bid to cut chronic power shortages in the world's second most-populous nation.

The government will tender 750 megawatts of capacity in the first week of May, kicking off the second phase of its National Solar Mission, said Tarun Kapoor, joint secretary at the New and Renewable Energy Ministry. India expects to auction more than the 1,650 megawatts targeted for the year through March 2014.

The South Asian nation, where power cuts shave an estimated 1.2 percentage points off annual economic growth, has published draft legislation that would enable the solar industry to get direct grants covering as much as 40 percent of upfront construction costs, a model previously used to build roads, ports, railways and fossil-fuel power plants in India.

The ministry plans to auction solar capacity in as many as five lots starting in May, Kapoor said today by telephone. It’s putting together guidelines for the second phase, he said.

Some solar ventures in India have faced delays after project supplies stalled and dust clouds diffused the radiation required to drive generation. Of the 350 megawatts awarded in the first phase in December 2011, 340 megawatts met a deadline to arrange financing from lenders, yet only 260 megawatts have been completed, Kapoor said. Those that failed to meet last month’s deadline for commissioning will face penalties, he said.

Copyright 2013 Bloomberg

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