India’s Solar Spree

Some analysts tip 2010 to be a bumper year for renewables investment in the Asia-Pacific region, largely on the back of 2009 government initiatives that are likely to stimulate widespread adoption and investments in R&D and manufacturing capacity. India’s ambition to install up to 20 GW of solar photovoltaic and solar thermal capacity by 2022 stands out. Is that ambition credible?

Given its abundant, year-round, solar resources, India is perhaps ideally placed to benefit from such a programme, but the country is also faced with significant obstacles in respect of its infrastructure. Rural electrification is a major issue and the investment climate is challenging. More fundamentally, a nation of a billion souls is almost starting from virtually scratch.

According to latest government figures, at the end of October 2009 India had installed 3.1 MW of grid-connected solar power in the previous year, bringing total installed grid-connected solar capacity to 6 MW. Off-grid solar, not including solar lighting, water heating etc, is at a similar level of development, with 86 kW installed in the past year and a grand total of below 2.4 MW. These figures compare with a total installed capacity in India of some 150 GW.

Nonetheless, the government has set its sights high and following 2008’s eight part National Action Plan on Climate Change (see page 18), the Jawaharlal Nehru National Solar Mission expects US $23 billion of investment. The programme aims to see solar energy achieve grid parity with the cheapest coal-fired capacity by 2030 and establish India as a global leader in solar.

Phase one of the three-part programme has already been approved by the government, setting in motion a scheme that will span the remaining period of the 11th Plan and first year of the 12th Plan, up to March 2013, and which intends to foster 1000 MW of grid-connected (33 kV and above) solar plants, as well as 100 MW of roof top and small solar plants connected to the low tension (11 kV grid) and 200 MW of off-grid solar applications. Rs.43.37 billion ($950 million) of funding is approved for phase one.

Implementation of the 1 GW grid-connected target will be through NVVN, a subsidiary of NTPC, the country’s largest utility company. NVVN will directly purchase the solar power from the project developers. The 100 MW of solar roof top and smaller grid-connected solar power plants will be connected via the local distribution utility with power directly purchased by the companies concerned.

For the 200 MW of off-grid solar thermal and photovoltaic capacity additions, the government intends to implement the programme through a combination of low interest loans and central finance.

Production rates for 2010 have now been fixed by the Central Regulatory Electricity Commission at Rs.18.44/kWh (40 cents/kWh) for grid-connected solar PV installations and Rs.13.45/kWh (29 cents/kWh) for grid-connected concentrating solar power (CSP). Tariffs will apply for 25 years. In addition, a solar specific Renewable Portfolio Obligation (RPO) starting at 0.25% in the first phase of the Mission and increasing to 3% by 2022, is to be fixed after the policy change has taken place.

The government says it will provide equivalent power from the unallocated quota of NTPC’s capacity to allow other utility groups to purchase a solar power equivalent, which they will be able to count against their RPO requirements. The solar component of the RPO will be gradually increased while the tariff fixed for solar power purchase will decline over time.

Second phase targets include an additional 3000 MW grid-connected by 2017, mainly via utility RPOs, backed with a preferential tariff. This total potential installed capacity could more than double to 10 GW or more by 2017, the Ministry for New and Renewable Energy (MNRE) says, based on enhanced international finance and technology transfer. Meanwhile, solar thermal heating is planned to achieve 20 million m2 by 2022.

Ambitious? India is already faced with crippling electricity shortages, peak prices of around Rs 8.50/kWh (US cents 18.5/kWh) and increasing use of diesel generators, costing up to Rs 15/kWh (32.6 cents/kWh), a price similar to that of solar. It has abundant solar resources, and some 400 million people without access to electricity. It is among the world’s top carbon emitters.

Some point to the massive expansion in mobile phone and internet use in India, both of which are now close to ubiquitous yet were nonexistent less than a decade ago.

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