BHEL bags Rs 62 crore solar contract Karnataka Power Corporation

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Bharat Heavy Electricals Ltd has won Rs 62 crore order for setting up a solar power project at Belakavadi in Karnataka. The company said Karnataka Power Corporation Ltd has placed the turnkey contract for a five-megawatt solar photovoltaic project.

Bharat Heavy Electricals Ltd is executing another 11-mw solar photovoltaic power projects. Company scrip was trading at Rs 1,937, down 0.75%, at 1250 hrs on Bombay Stock Exchange.

The company manufactures photovoltaic modules at its Bangalore manufacturing facility. Solar cells and modules manufactured by the company are also exported to countries like Germany , Australia and Italy .

Bharat Heavy Electricals had in February this year signed an agreement with Spain’s Abengoa to set up solar power projects in India . The companies seek to tap emerging opportunities arising out of the Jawaharlal Nehru national solar mission, which aims at the establishment of 20,000-mw solar power generation capacity by 2022.

India Creates Scheme to Boost Solar Projects

India‘s federal cabinet Thursday approved the allocation of 4.86 billion rupees ($108 million) toward a scheme to guarantee payments for electricity bought from solar power producers, as part of the government’s efforts to encourage development of renewable energy.

The funds will be used as guarantee in case state-run power utilities and distribution companies default on payments for solar power, which currently costs much more than coal-based electricity.

The payment security scheme aims to help solar power producers arrange finances for their projects, the government said in a statement issued after a cabinet meeting.

The scheme will help the federal government meet targets under its National Solar Mission, which aims to build 1,000 megawatt of solar power capacity by 2013 in the first phase. India aims to add 20,000 MW of solar power by 2022 under the solar mission.

The scheme will be implemented by the Ministry of New and Renewable Energy and NTPC Vidyut Vyapar Nigam Ltd. will be able to draw funds from the account as per the scheme’s provisions, the statement said.

NTPC Vidyut, a unit of India’s largest power generator NTPC Ltd., buys solar power from the producers and sells it to utilities bundled with coal-based power.

But most state-run distribution companies are cash-strapped with weak finances. This has elevated the risk of solar power producers not being paid for the electricity produced. That has affected solar companies building these new plants as lenders aren’t willing to give loans to projects where returns are risky.

Solar companies that have been awarded projects under the mission’s first phase in particular are facing hurdles in arranging finances. For the projects awarded so far, companies have to raise funds by the end of June.

India currently has 20,000 MW of renewable energy capacity, constituting more than 11% of the country’s total power generation capacity of around 174 gigawatts.