The Jawaharlal Nehru National Solar Mission
has brought the Indian solar power industry into
the sunshine. Thanks to the mission, India has at
least taken a good start with respect to its
multifarious solar power ambitions. This special
story by
Venugpal Pillai reviews the recent
developments in the Indian solar power industry
and attempts to look at the challenges ahead.
Just before the National Solar Mission was launched,
India's grid-connected solar power capacity was
negligible—estimated at just around 2 mw. Now, in less
than two years into the policy regime, India's solar power
capacity has appreciated sharply. As of July 31, 2011,
India's grid-connected solar power capacity, coming from
plants of capacity 1 mw or above, was estimated at 45.5
mw. More importantly, under the two rounds of bidding
held under the first phase of the National Solar Mission,
projects aggregating over 1,000 mw have been approved.
Here is a brief chronological summary.
Round 1 of Phase 1: The process of selecting
developers began in August 2010 with nodal agency
NTPC Vidyut Vyapar Nigam (NVVN) embarking on
selecting 150 mw of solar PV and 470 mw of solar thermal
power projects. The response was tremendous with bids
received exceeding 5,000 mw. Capitalizing on the
demand-supply mismatch, shortlisted applicants were
asked to quote a discount on the CERC-approved rates, as a secondary selection criterion. This was done in consultation
with all stakeholders and pre-bid meetings held by NVVN.
The process, apart from ensuring transparency also resulted in
lower tariffs, bringing the solar mission closer to its gridparity
objective.
Bundling Scheme |
In order to facilitate grid-connected solar power generation in the
first phase, a mechanism of "bundling" relatively expensive solar
power with power from the unallocated quota of the Ministry of
Power) generated at NTPC coal-based stations, which is relatively
cheaper, was proposed in the JNNSM.
This "bundled power" is being sold to distribution utilities at
prices determined by Central Electricity Regulatory Commission
(CERC). JNNSM also provides for NTPC Vidyut Vyapar Nigam Ltd
or NVVN to be the designated nodal agency for procuring the solar
power by entering into a power purchase agreement with solar
power generation project developers who will be setting up solar
projects during the next three years, i.e., before March 2013 and
are connected to the grid at a voltage level of 33kV and above. For
each mw of installed capacity of solar power for which a PPA is
signed by NVVN, Union power ministry shall allocate to NVVN an
equivalent amount of mw capacity from the unallocated quota of
NTPC coal-based stations and NVVN will supply this "bundled"
power to distribution utilities. This scheme is referred to as the
'bundling scheme'.
Considering the fact that some of the grid-connected solar
power projects were already at an advanced stage of development,
the guidelines for migration of projects from their respective
existing arrangements to the ones envisaged under JNNSM were
issued in February 2010 and thereafter guidelines for selection of
new-grid connected solar power projects (photovoltaic and solar
thermal) were issued in July 2010 by the Union ministry of new
and renewable energy. |
In December 2010, a total of 704 mw of grid-connected solar
power projects were selected. This included 16 projects of 84
mw capacity under the "migration scheme" at CERC-tariff.
Another 37 projects of 620 mw (seven projects of 470 mw solar
thermal and 30 projects of 150 mw of photovoltaic projects)
were selected by NVVN on the basis of discounts offered on
CERC-approved tariff. The average discount offered by
developers was
6.06 per unit on the CERC tariff of
17.91 per
unit for solar PV projects and
3.95 per unit on the CERCapproved
15.31 per unit on solar thermal power projects.
(The migration scheme refers to solar power projects under
development before the advent of the National Solar Mission
and which moved under the mission guidelines.) NVVN
entered into PPAs with 36 developers in January 2011 and they
were supposed to achieve financial closure by July that year.
Out of these 36 projects, 35 projects aggregating 610mw could
achieve financial closure, and were finally approved under the
first round of Phase 1.
Round 2 of Phase 1: The second round of bidding under
Phase I also drew a very encouraging response from
developers. Bidding that closed on October 3, 2011, saw
over 150 companies evincing interest in developing largescale
(mw-sized) projects. As against the indicative 350
mw of capacity put on offer, nodal agency NTPC Vidyut
Vyapar Nigam Ltd received applications for 218 projects
(including multiple projects submitted by a single
developer) aggregating over 2,500 mw.
Like the previous round, NVVN expects to shortlist bidders
on the basis of discounts over CERC-approved rates. Some
experts believe that the average discount that NVVN could
stand to earn would be even higher than that in the preceding
round. Some of the companies that have submitted their bids
(requests for selection) include Anil Ambani (Reliance) Group, Lanco, Moser Baer, Tata Power, Hindustan Petroleum
Corporation, GAIL (India), etc. NVVN expects to shortlist
bidders by end of November 2011.
A very striking progressive step taken by the Centre in the
second round was encouraging the setting up of large solar
power plants, thereby bringing in cost efficiency. In this round,
the minimum size of the project was set at 5 mw and in
multiplies thereof. In the previous round, this was 1 mw.
Secondly, it allowed developers seven months from the date of
signing of the power purchase agreement for attaining
financial closure, as against six months earlier.
In the second round of selection, the government
stipulated that total capacity of projects to be allocated to a
company, including its parent, affiliate or ultimate parent or
any group company shall be limited to 50 mw. They can
submit applications for a maximum of three projects at
different locations, subject to a maximum aggregate
capacity of 50 mw.
The Technology Factor: Currently, solar power is very
capital intensive resulting in the cost of generation of solar
power is much higher than conventional forms like thermal
energy. Although there is zero cost of inputs—sunlight is freeand
it is inflation-proof—the capital cost of a solar power is
quite on the higher side. The National Solar Mission envisages
the technology aspect as a long term objective. It stipulates
India to become progressively self-sufficient in solar power
equipment, aiming at a manufacturing capacity of at least 4
GW per year by 2020.
In all this, one must admit that making India a technological
base for the solar power industry will be a tall order, however
noble the intentions might be. Currently, all primary
equipment, be it solar photovoltaic cells or solar thermal
collectors are imported. An industry expert noted that today
India is barely equipped to be an "assembler", it would take a
very long time for the country to create a fully-integrated
equipment base, which would span from silicon wafers to
solar photovoltaic modules, in the context of SPV plants at
least. If India seeks to create an integrated equipment
manufacturing base for solar photovoltaic plants, it would
have to begin with a national semiconductor policy, a solar
power producer observed, requesting anonymity.
MW-SIZE GRID-CONNECTED SOLAR PLANTS IN INDIA |
(As of July 31, 2011) |
Developer |
Location, District |
State |
Capacity |
|
|
|
(MW) |
Sri Power Generation (India) |
Varadayapalem, Chittor |
Andhra Pradesh |
2.0 |
Reliance Industries |
Thyagaraj Stadium |
Delhi |
1.0 |
North Delhi Power |
Keshavpuram |
Delhi |
1.0 |
Lanco Infratech |
Charanka, Sabarkanta |
Gujarat |
5.0 |
Sun Edison |
Gandhinagar |
Gujarat |
1.0 |
Azure Power |
Khadoda, Sabarkanta |
Gujarat |
5.0 |
C&S Electric Ltd |
Nandha, Bhiwani |
Haryana |
1.0 |
Karnataka Power Corporation |
Yelasandra, Kolar |
Karnataka |
3.0 |
Karnataka Power Corporation |
Chikodi, Belgaum |
Karnataka |
3.0 |
Mahagenco |
Chandrapur |
Maharashtra |
1.0 |
Tata Power Co |
Mulshi, Pune |
Maharashtra |
3.0 |
Dr. Babasaheb Ambedkar SSK |
Arvindnagar, Osmanabad |
Maharashtra |
1.0 |
Raajratna Energy Holdings |
Sadeipali, Bolangir |
Orissa |
1.0 |
Azure Power |
Ajanal, Amritsar |
Punjab |
2.0 |
Reliance Industries |
Khimsar, Nagaur |
Rajasthan |
5.0 |
ACME TelePower* |
Bherukhada, Bikaner |
Rajasthan |
2.5 |
Sapphire Industrial Infrastructure |
Iynarkulam, Sivaganga |
Tamil Nadu |
5.0 |
B&G Solar |
Mayiladuthurai |
Tamil Nadu |
1.0 |
RL Clean Power |
Marakathoor, Sivaganga |
Tamil Nadu |
1.0 |
West Bengal Green Development |
Seebpore, Asansol |
West Bengal |
1.0 |
Total for 20 projects |
|
|
45.5 |
*Based on concentrated solar technology, rest are all photovoltaic systems (Source: MNRE) |
In terms of solar collectors (used in solar thermal plants),
India has the technology for low temperature applications.
The same would need to be extended to medium and highheat
applications, where the reliance on imports is
currently absolute.
As years go by, India would need to take very brisk steps in at
least creating an enabling environment for an equipment
manufacturing base evolve. India's sprawling micro, small and
medium enterprise (MSME) sector can play a very critical role.
MSME entities need to be encouraged to manufacture
components and systems for solar power plants. R&D activities and gradual capacity expansion should also be
incentivized and supported through soft financial loans. As
envisaged in the JNNSM, Indian Renewable Energy
Development Agency (IREDA) will play a supportive role to
this effect, through refinance operations. An international
solar power producer observed that if India hopes to have an
efficient equipment manufacturing base for solar power, it
should be ensured that equipment can be locally produced at
low cost. In this reckoning, creating a large base that would
bring in the benefits of economies of scale is crucial.
Off-Grid Rural Opportunity: Perhaps the biggest
opportunity—as also the biggest challenge—of the JNNSM is
being able to provide affordable off-grid solar power for rural
applications. It is here that technology can come to the rescue.
Currently, reaching grid power to far-flung rural areas is very
costly, regardless of the source of power. Even distributing
conventional (say coal-based) power is not cost effective given
that there is no rural grid for transporting power. Hence, lowcost
off-grid solar power can be a technological solution to the
rural populace that can now transit from darkness (absence of
electricity) to off-grid affordable solar power, without
engaging in the intervening stage of conventional grid power.
However, as some experts point out, off-grid solar power for
rural application can also succeed if it is affordable and
continuous. Low-temperature solar converters, for which
technology exists in India, can be gainfully used to provide
power for at least most parts of the day. Currently, off-grid
solar applications in rural area predominantly include
domestic and street lighting and solar cookers.
WORLD SOLAR POWER INSTALLED CAPACITY* |
(MW) |
|
2000 |
2005 |
2009 |
European Union |
189 |
2,341 |
15,943 |
Japan |
318 |
1,422 |
2,633 |
China |
19 |
68 |
305 |
USA |
139 |
479 |
1,650 |
Rest of the world |
763 |
1,051 |
2,347 |
World Total |
1,428 |
5,361 |
22,878 |
*Relates to solar photovoltaic plants only |
Source: www.epia.org |
THE RAY FORWARD
On purely technical grounds, the sun can meet the entire
energy needs of a tropical country like India. In a year, over
5,000 trillion kwh of solar energy is incident over India's land
surface, which is several times the electricity consumed in the
country. However, as a solitary source of electric energy, it is
not feasible to think solar—not just in India but in any country
endowed with and advocating solar energy. In the best
scenario, solar power can only progressively substitute and
balance the use of other forms of energy. The National Solar
Mission is only the first step in the direction of tapping the sun
for gainful socio-economic use. However, it should be
admitted that the all-important first step has indeed been
taken, and the initial results are very encouraging.
Solar energy has distinct advantages but also limitations.
The foremost advantage lies in the eternity of the energy
source and its zero cost. The biggest limitation is the high
capital cost and therefore the high cost of generation. While
technological advancements and widespread deployment are
certainly bringing down capital costs of solar power equipment, there is a limit to this efficiency. It is estimated
that if worldwide deployment in terms of installed solar power
capacity doubles from its existing levels, there will be a 22 per
cent reduction in capital costs. However, even if solar power
capacity were to increase 16 times from its current level, the
reduction in capital costs would be only 60 per cent.
Furthermore, what is more important from the Indian point of
view is that in order to avail the benefits of global expertise,
there should be a quick transfer of technology to enable
domestic product at low capital costs.
India has envisaged that solar power will attain grid parity
with coal-fired power by the year 2030. At this juncture, it is
difficult to say if this would happen in India, or anywhere else
in the world. It depends on solar power deployment,
emergence of new technologies and a host of other factors. It
may also be noted that parity between solar power and coalbased
power could be possible by the sheer fact that coal
prices are moving up. Coal has traditionally been the
cheapest form of power generation for India, reflecting in the
fact that over half of the country's installed power capacity is
from coal-fired plants. However, cost of power generation
from coal is on a definitive uptrend. The growth in India's
domestic coal production is not keeping pace with demand,
and the reliance on imported coal is proving unsustainable.
Hence, experts feel that grid parity between solar and coal- based power will be attained through a combination of
forces. Firstly, technology will bring down cost of solar power
generation, and secondly, sheer demand-supply mismatch
will increase cost of coal-fired power.
Whatever be the impact that technology and deployment
will have on solar power generation, it should be accepted, at
least in the foreseeable future, that solar power generation cost
is high in absolute terms. The mw-sized power plants that are
being built under the National Solar Mission are based on
power purchase agreements signed at CERC-approved rates
that are in tune with the cost of solar power generation. Hence,
the development of solar power projects will depend on feed-in
tariffs and other subsidies-much like the case in developed
nations. Government support will therefore be critical to the
solar power industry's growth in the coming years.
Untitled Document
Jawaharlal Nehru National Solar Mission: An Overview |
Launched in November 2009, the
Jawaharlal Nehru National Solar
Mission, commonly referred to as the
National Solar Mission, is India's biggest
step towards harnessing its huge solar
power potential. The mission has set a
target of attaining 20 GW of solar power
capacity by 2020 and also achieving grid
parity by that year. The mission also
envisages India to have 20 million solar
lighting systems and over 20 million sqm
of solar thermal collector area, by 2020.
JNNSM, in its goals, also envisions India to
be a global leader in the manufacture of
solar power equipment with a target of
around 4 GW of manufacturing capacity by
2020, apart from building dedicated
manufacturing capacities for poly-silicon
material to annually make around 2GW of
solar cells.
JNNSM has been divided into three
phases. The first phase ending 2013
envisages 1.1 GW of cumulative gridconnected
solar capacity. At the end of the
second phase, the cumulative capacity
targeted is between 4 GW and 10 GW. By
end of 2020, the overall capacity is
projected at 20 GW.
Out of the 1.1 GW of grid-connected solar
capacity envisaged by 2013, around 100 mw
(or 0.1 GW) is expected to come from rooftop
and other small solar power connected to the
electricity grid, below 33kV. This component
of the mission was designed essentially as a
state-driven scheme to encourage the states
to declare their solar policy for grid
connected projects focusing on distribution
network and to strengthen the tail-end of the
grid. This would also help to create a
database of performance of solar plants
under different climatic and grid conditions.
Keeping this in mind, a cap of 20 mw per state
was introduced in the guidelines with
individual projects capped at 2 mw.
The ongoing feed-in tariffs and other
fiscal concessions announced by the
government relate to the first phase.
Modalities for the second phase will be
formalized in due course.
The guidelines for implementation
of the JNNSM were announced on
July 25, 2010, after extensive
consultation with various stakeholders,
including the states, manufacturers,
financial institutions, and project
developers/investors. The guidelines
provide for deployment of both Solar
PV projects and solar thermal
technology projects in a ratio of 50:50 in
capacity terms.
NATIONAL SOLAR MISSION: PHASE-WISE TARGETS |
|
Phase 1 |
Phase 2 |
Phase 3 |
|
2010-13 |
2013-17 |
2017-22 |
Grid-connected capacity (GW) |
1 - 2 |
4 - 10 |
20 |
Off-grid applications (MW) |
200 |
1,000 |
2,000 |
Solar thermal collector area (mln sqm) |
7 |
15 |
20 |
Domestic mfg base (MW/year) |
--- |
|
4 - 5 |
Solar lighting system (numbers) |
|
|
20 million |
Solar RPO (% to total) |
0.25 |
|
3 |
|
Renewable purchase obligations (RPO) introduced by the
Centre have inspired investment in clean energy sourcesmainly
wind and now solar. Currently, the RPO stipulated is 5
per cent, which means that at least 5 per cent of the total
electricity purchases made by power distribution utilities have
be from renewable energy sources. Trading in renewable
energy certificates have also resulted in a better demand for
RPOs. Some experts are of the opinion that the government
could do well by introducing solar RPOs that will stipulate
mandatory purchase of solar-based power.
While there is much in favour of solar energy, it must also
be appreciated that solar power is land-sensitive, and in the
Indian context, this could be detrimental to the solar
industry's growth. While land will have to be procured for
mw-sized plants, the government could provide incentives
for roof-top plants in semi-urban and urban areas. This could
displace predominantly fossil-fuel based grid power, at least
to some extent.
In summary, the National Solar Mission is a concerted effort
to develop the entire solar power industry, and not setting up
solar power plants in isolation. Solar power cannot entirely
substitute coal-based power, but it can certainly reduce the
dependence on scarce fuel resources like coal, oil and gas. The
future of the Indian solar power industry—both in terms of
installed capacity and domestic competence in equipment
manufacturing—depends much on what can be achieved in
the next four-five years under the aegis of the solar mission.
The future penetration level of solar energy in India cannot be
foretold, but it is here to stay—just like the sunshine.
Showing the light |
The current cost structure of solar energy is very high therefore
no matter how high the domestic demand, it is not feasible.
Therefore we need the domestic subsidy like JNNSM to get
plants up and going. It cannot survive without government
support, nowhere in the world. I think that if the industry does not
drive the cost down, it is dead.
— James Abraham, MD & CEO, SunBorne Energy
Technology has to improve furthermore and economies of scale
have to be achieved so that prices can be brought down further.
New markets like India, South America and South Africa can help
create these economies of scale.
— Christopher Winter, Country Manager-India,
Gehrlicher Solar AG
Continuous advancements to system components, efficiency
gains, optical improvements and reduction of overall power
losses will continue to increase performance. In addition to
performance upgrades, controlling manufacturing costs will
allow solar to be cost-comparable to traditional forms of energy
generation. As the solar component supply chain matures,
manufacturing processes become more efficient and volumescaling
cost savings will occur.
— Brian Robertson, CEO, Amonix Inc
It is absolutely clear that India has to develop a base for solar
PV cells to fulfill the Solar Mission objectives. India has
missed the bus in semiconductor manufacturing and can ill
afford to do so for the solar PV manufacturing. The
lack of semiconductor manufacturing industry should
motivate India to ensure that the nascent manufacturing
market for solar PV develops and provides the energy security
that the country needs.
— Kai Vogt, Director-International Business,
centrotherm photovoltaics AG
Economies of scale across the value chain right
from silicon manufacturing to module production
and a conscious effort of lowering margins at every
step would further bring down prices. This definitely is a
much needed advantage which India should capitalize
particularly when it is at the nascent stages of promoting this
industry. If large industrial, financial and technology
partners come together and build large capacities from
upstream to downstream, it would result in large reduction in
prices and enable to bring solar power at grid parity much
earlier than predicted.
— Gaurav Sood, Managing Director,
Solairedirect Energy India Pvt Ltd
(Extracted from exclusive interactions with Electrical Monitor in
the recent past) |