India Now - page 43

Last year, Himgiri Energy Ventures won a
contract to supply solar power to the Madhya
Pradesh state grid at
6.5 a unit. First Solar India
won a contract to supply solar power to Andhra
Pradesh at
5.25 a unit. With falling prices of
solar power it has come closer to achieving grid
parity, a situation when the cost of producing
renewable energy is comparable with the cost of
generating energy from fossil fuels.
Pro Solar Policies
Renewable energy is high on the government’s
agenda. Among solar, wind, biomass and small
hydro power, wind power has already achieved grid parity.
However, solar power is expected to emerge the shining star
of the next phase of renewable energy expansion because
solar power plants can be set up much faster than wind power
plants, which makes them a preferred option in a country
where the speedy expansion of the installed energy capacity is
also a top priority.
“A large scale solar energy plant of say 1,500 MW can be
established in six months whereas it would take three years
to create a wind power farm of similar capacity,” notes Shan-
mugasundram. “Also, solar energy is far more predictable
and hence more reliable than wind energy,” adds Rane.
Growing recognition that India must significantly build up
its solar energy generation capacity has favourably impacted
solar policy. “While the previous government at the centre
had set the ball rolling in the right direction, the current gov-
ernment has put out ambitious targets that promise to give
the sector a major fillip,” says Shanmugasundram.
The government has upwardly revised the Jawaharlal Nehru
National Solar Mission (JNNSM) target from 20 GW of solar
power to 100 GW, achievable by 2022. It aims at achieving the
erstwhile target of 20 GW by 2017. It has also brought forward
its aim of achieving grid parity by five years to 2017.
To spur development, the government has introduced clear
and streamlined policies that address developers’ concerns
such as delays in land acquisition and power evacuation
constraints (especially in southern region), power purchase
agreement (PPA) bank-ability issues, etc.
“Announcing the creation of over 25 solar parks each of
capacity more than 500 MW aims to resolve issues relating to
land and power evacuation,” explains Ramesh Kumar, Gen-
eral Manager (Solar), Solar Energy Corporation of India. “To
mitigate the PPA risk, there is a provision under the JNNSM
central schemes (Phase 1/Phase 2) for standard PPAs with
power trading agencies NTPC Vidyut Vyapar Nigam Limited
and Solar Energy Corporation of India with appropriate pay-
ment security mechanisms.”
Other investor-friendly solar policies include sops such as
tax benefits, discounted transmission & distribution network
charges and banking facilities. “Attractive tariffs and viability
gap funding support coupled with low business
risk have made this sector very attractive to
investors,” adds Kumar.
The industry has welcomed these moves. “In
particular, solar developers look for opportuni-
ties to bid for large scale projects as these bring
in economies of scale and make for more viable
projects,” says Vineet Mittal, Vice Chairman,
Welspun Renewables. “A further fall in overall
development costs will allow us to quote lower
tariffs and in turn help solar power inch closer
to grid parity. States receiving high solar irradia-
tion such as Rajasthan and Gujarat have been
requested to proactively identify land banks to significantly
cut short the acquisition time.”
Growing Global Interest
Pro-solar policies have brought the Indian solar space into
global focus. “Ambitious targets and doing away with the
anti dumping duty show the government’s intent to promote
solar power generation in a big way, and in turn, have helped
India emerge as an attractive destination for investments in
solar power,” says Mittal. Achieving the revised lofty aims
would entail investments upwards of US$ 100 billion across
states with strong solar prospects, such as Andhra Pradesh,
Gujarat, Punjab, Rajasthan, Uttar Pradesh and Karnataka.
Already, the Canadian company Solar Inc, Finnish state-con-
trolled Fortum, US firms First Solar and SunEdison, French
power utility companies EDF, Fonoroche and Solairedirect,
and the German company BELECTRIC are active in India.
First Solar has a development pipeline of over 200 MW
of projects in Andhra Pradesh and Telangana. Recently, it
announced plans to develop 5 GW of capacity by 2019, join-
ing India’s vision to ramp up solar energy capacity in the total
energy mix to 10 per cent.
“India remains one of our most important global markets.
First Solar is excited about the vision that the new Indian gov-
ernment has for solar energy, and as a global market leader
our commitment demonstrates our intent to work with the
government in achieving this goal,” says James Hughes,
Chief Executive Officer of First Solar, Inc. In January 2015,
SunEdison and Indian business house Adani Enterprises
entered into an agreement to establish a manufacturing
facility for ultra low-cost photovoltaic solar panels. Aiming
at achieving solar energy parity sans incentives or subsidies,
this new joint venture entails investments up to US$ 4 bil-
lion. Some of the output of the new facility is expected to be
consumed in another mega venture of the Adani group with
Rajasthan Renewable Energy Corp, to create India’s largest
solar park with a capacity of 10,000 MW in Rajasthan.
Overseas investment firms are also entering the Indian
renewable energy space. Some appreciable investments of
2014 are Goldman Sachs’ investment of US$ 70 million in
Nehru National
target by
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