India’s Solar Mission on Track, But Needs More Props
While India’s solar mission to generate at least 1,100 megawatt of power by 2013 is on track now, private players feel the government needs to accelerate the pace of growth in the coming years to meet the eventual goal of generating 7% of the nation’s power needs.
Amit Dave/ReutersWorkers clean solar concentrator panels at a solar food processing unit in Gujarat.
India’s Ministry of New and Renewable Energy launched the Jawaharlal Nehru National Solar Mission in January 2010 with a stated goal of developing 20,000 megawatt of solar energy in three phases by 2022 and to reach cost parity so that generating solar power costs the same as conventional power by that time.
Farooq Abdullah, India’s Minister of State for New and Renewable Energy, said he’s satisfied with the progress so far on its various projects. In the first phase of the mission, the government hopes to build capacity to generate 1,100 MW by 2013.
However, “this is not the main objective because 1,000 MW is nothing as far as India is concerned,” said Santosh Kamath, executive director of advisory firm KPMG. “Ultimately, the objective is to make solar energy a very significant contributor to India’s power and energy needs.”
The government held a transparent bidding process to allocate projects to developers and sign agreements for about 70% of the capacity it aims to achieve in the first phase. These projects are at the development stage, working on securing financing to starting construction, before they become operational. The Ministry noted that the bidding process itself has helped reduce the cost of solar power by almost 30%, as competition in the bidding process lowered prices.
“What is really good about what has happened so far is that it has kick-started an eco-system in the country,” Mr. Kamath said.
The federal government’s involvement and active interest in projects has spurred the start of new companies, expansion of existing operations, and addition of labor and new technology.
Each state also has an obligation buy a minimum level of solar power and they can substitute this with renewable energy certificates if they are short of the required amount. Gujarat, Rajasthan and a few other states also have their own separate initiatives to develop solar power.
“Our policies in the first phase have facilitated a declining trend in costs and induction of various technology options in the first phase of the Mission,” Minister Mr. Abdullah said.
“I am confident that project developers will be able to commission their solar plants well in time and that we will be able to move ahead for a scale expansion in the next phase of the Mission,” he said.
Last week, a KPMG report predicted that India’s solar energy sector needs up to $110 billion in capital over the next 10 years to meet its energy goals. However, the last three years the sector has seen only eight investments worth $100 million.
Many of the projects are small without a proven track record making it difficult for investors to put their money. It makes it even more risky when India’s banks themselves are hesitant to take on these projects. The KPMG report recommends that the fund, set up with fees levied on imported fossil fuel, be used to promote new solar projects.
Some solar energy start-ups like SuRe Energy Systems Pvt. Ltd. have resorted to raising money from friends.
Also, the KPMG study found that the state electricity boards, which are expected to buy power from renewable energy sources, doesn’t have the financial capacity to do so, and suggests that the government sponsor this as well.
KPMG recommends another focal change in the way power is consumed. Instead of power from a grid, the firm recommends that users can generate and use their own power and advocates decentralizing of solar power, especially when it comes to uses such as rural lighting systems, agricultural pumps, and telecom towers. The government is expected to spend 2 billion rupees on subsidies to such off-grid projects annually.
Posted on June 1, 2011, in NEWS and tagged Farooq Abdullah, India, Jawaharlal Nehru National Solar Mission, KPMG, Ministry of New and Renewable Energy, Renewable energy, Solar power, Watt. Bookmark the permalink. 1 Comment.