Tapping the Solar Potential in India

The increased interest in renewable energy sources, including solar energy, has put India in the league of countries such as Germany, Spain and Japan, who are leaders in harnessing solar power. The UPA government of India is now committed to adding 1100 MW of grid connected solar power by the end of the first phase of the Jawaharlal Nehru National Solar Mission.

India has set a target of 20,000 MW of solar energy by 2022. Towards this end, Indian government and domestic industries need to put in special efforts. One of the pillars for the solar success will be indigenous manufacturing of solar power equipment. Though the government is taking extra efforts to remove existing barriers, such as the high cost of solar power and payment security, the solar industry is yet to find many takers.

An Active Government

The main action to come from the ministry level thus far includes the release of guidelines for selection of new solar power projects under the 1000 MW solar power scheme in the first phase of the aforementioned Solar Mission. These guidelines were released by Dr. Farooq Abdullah, Union Minister for New and Renewable Energy, and Sushil Kumar Shinde, Union Minister for Power. This shows that senior people are involved in this mission.

The Government has also announced guidelines to encourage domestic manufacturing, while the ministry has also invited global solar companies to invest in India.

Under the National Solar Mission, NTPC Vidyut Vyapar Nigam (NVVN) will be the nodal agency to buy solar power from independent solar power producers.

The CERC has fixed the rate of Rs. 17.91 per unit for PV and Rs. 15.31 per unit for solar thermal power projects for 2010-11. The rates are applicable for Solar PV projects commissioned by March 2012 and Solar Thermal projects commissioned by March 2013. The government will offer the equivalent MW of power from the unallocated quota of NTPC for bundling with solar power.

The NTPC arm will select projects to set up about 1000MW capacity of solar power plants, based on solar thermal and photovoltaic technologies.

Building energy efficiency is one of the targets for the Indian government. Solar energy will get prominence if the industry is careful about energy efficiency. Recently, the government approved a framework of the National Mission for Enhanced Energy Efficiency (NMEEE ). This regulatory board is expected to strengthen the market for energy efficiency by creating strong regulatory and policy regimes. It is also expected to drive sustainable business models in the energy efficiency sector. During the next four years, NMEEE will help achieve a total avoided capacity addition of 19,598 MW, as well as fuel savings of around 23 million tons per year, and green house gas emissions reductions of 98.55 million tons per year.

Dr. Ajay Mathur, Director General of the Bureau of Energy Efficiency, said that, “The mission will unlock the market for energy efficiency on a public-private partnership (PPP) basis, which is estimated to be around Rs. 74,000 crore (US$16,300 million).”

The NMEEE has chalked out a four-pronged action plan. Its mission has been summarized as the ‘Perform Achieve and Trade’ Scheme (PAT), a market-based mechanism to increase cost effectiveness of improvements in energy efficiency in large industries. The second initiative is Market Transformation for Energy Efficiency (MTEE ), which includes accelerating the shift to energy-efficient appliances in designated sectors through innovative measures in order to make products more affordable.

NMEEE ’s third initiative is the Energy Efficiency Financing Platform (EE FP), which allows for the creation of mechanisms that would help finance demand-side management programs in all sectors by capturing future energy savings. The final initiative is the Framework for Energy Efficient Economic Development (FEEE D) to develop two fiscal instruments to promote energy efficiency - the Partial Risk Guarantee Fund (PRGF) and Venture Capital Fund for Energy Efficiency (VCFEE).

Solar Applications

India is looking at the deployment of several applications after implementing sufficient solar projects. One option is to ensure the availability of solar light in rural streets. These kinds of projects create huge self employment opportunities. For instance, the Ministry of New & Renewable Energy has recently sanctioned a project in Rajasthan to provide solar power to every single panchayat in the State by installing 1.12 kW capacity solar systems at each of the 9,168 Bharat Nirman Rajeev Gandhi Sewa Kendras.

Another important application could be with telecom towers, which are currently using diesel to provide uninterrupted power services. The use of solar energy to power these systems can considerably mitigate the use of diesel, especially during the daytime.

Feeding power to LT, or 11 KV grid, is yet another important application, which can help villages and industry by providing additional power for rural applications, such as irrigation pump sets that may even satisfy the current unmet power requirement in the daytime.

Implementation Hurdles

Solar is the new buzz word in India. Yet manufacturers still need to create channels to reach out to potential users. Indian solar system needs trained technicians for installation and servicing of solar energy systems.

Cost is a concern for any new technology during its infancy stage, and it is widely believed that the cost of solar energy is quite high. Subsidies and soft loans will make this energy source affordable in the short run, yet Indian solar industry must look at advanced research to become cost-effective and ensure advanced manufacturing and economies of scale.

Global Market

Is India the hot market for solar energy? Can it overtake Germany? According to Lux Research, investors are looking at India as the next hot market for renewable energy sources. The report looked at the growth potential of 15 emerging solar markets and found that India has massive potential because of government subsidies, a need for distributed generation, and increasing energy demands. “India comes away by far as the most attractive market for long term growth out of those potential markets we looked at,” researchers at Lux said.

In the United States, First Solar, a leading provider of sustainable solar energy solutions, may benefit from India’s adoption of solar power because its solar panels are made of cadmium telluride and are not subject to the domestic content requirement.

Markets that could grow rapidly this year include Cyprus, Israel and Malaysia because of government subsidies, according to the report. Those markets are unlikely to be “the next Germany,” because of their small size, the report finds.

South Africa and the United Kingdom were also potentially strong markets because of government support for solar power, according to Lux Research. Russia, Brazil and Mexico were identified in the report as potentially large solar markets even though they do not have solar incentives.

Who is investing in Indian solar projects?

Several supports are in place to see the light from the sun. For instance, the Asian Development Bank is keen to back $425 million worth of investments in India’s solar power plants. This backing is earmarked primarily to help the project initiatives secure financing.

ADB is planning to guarantee 50 percent of loans that international and Indian banks make to solar projects that have less than 30 megawatts of capacity in the country.

ADB is keen to cover $150 million of any payment defaults from the projects resulting from problems, including technological failures, financial difficulties or insufficient solar irradiation, that could affect their output.

Under its Solar Mission plan, India is looking at adding the production of 20 gigawatts of solar power by 2022. The plan favors domestic manufacturers of crystalline silicon solar modules, including Moser Baer and Tata BP Solar, a joint venture of Tata Power and BP.

National Thermal Power Corporation is looking at the feasibility of establishing solar power projects in the Maldives. NTPC is also targeting the addition of 105 MW of electricity to the national grid by setting up four or five solar power projects in India in the next two or three years.

NTPC has also formulated a plan for capacity addition of about 1,000 MW through renewable resources by 2017. Simultaneously, it will also have a capacity addition of 301 MW through Solar PV (photo-voltaic) and thermal by March 2014.

The Union Government has approved nine solar power projects of 8.8 MW capacity to be set up in Haryana by independent power producers. These projects will get commissioned by September 2011.

As part of the energy conservation drive launched by the state government, two projects of 100 KW Rooftop Solar Photovoltaic had been commissioned at Omax Auto, Manesar and Daruhera at a cost of Rs 260 lakh per unit. The Ministry of New Renewable Energy has provided a total financial assistance of Rs 150 lakh for these projects. One such project of 50 KW had also been commissioned recently at Retreat, Teri, Gawal Pahari and Gurgaon.

Of course research is an important component for the solar industry to grow. The Indian Institute of Science (II Sc), Bangalore, is in the process of mapping solar hot spots with abundant round-the-year sunlight that could be harnessed with the setting up of solar power plants.

Following the aggressive plans by the Union government, Gujarat has launched work on the 500 MW solar power park, Asia’s largest such project. Besides solar power plants, the park, to be spread over 2,000 hectares, will also be home to units manufacturing solar power plant panels and other equipment. The project cost is estimated at Rs.1,287 crore ($280 million).

The Gujarat government has handed over land allotment letters to 15 companies, including Azure Power, GMR Energy and GSPC Pipavav Power Company, that are setting up solar power plants in the park. The park would be home to around 500 MW solar power generation capacity. Once completed, the park is expected to attract investment in excess of Rs.7,500 crore ($1650 million). The first phase of the project is expected to go on-stream by December 2011.

India has a huge potential to harness solar energy. The industry hopes that there will be more incentives to come from the government, which wants more participation from the private sector.

Brief

India will face severe energy crisis if it does not devise effective strategies to fully utilize the renewable energy resources. Under the Jawaharlal Nehru National Solar Mission, India aims to produce 1,000 MW of solar power by 2013 and 20 gigawatts (GW) by the end of 2022. India currently generates 18,155MW, with 10.9 percent of its electricity sourced from renewable resources, of which solar energy contributes only 18MW, or 0.01 per cent. India needs more investment and active participation of the private sector to see more action in the solar industry.