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Lower Tariffs Drive Big Solar Dreams

The sun is literally shining bright for India’s green energy sector. And the government is taking a leap of faith by conjuring up unheard of mega-scale solar power plants astariffs head south since the launch of Jawaharlal Nehru National Solar Mission (JNNSM) in January, 2010.Solar power tariffs have come down to Rs 8.50 per unit from Rs 18 a few years ago, removing one ofthe major impediments to the sector’s growth. Rates are expected to drop further as projects gain economy of scale. Even at current tariffs, the non-conventional and renewable energy ministry (MNRE) considers solar power viable when bundled with electricity from conventional sources.

This, together with the policy of mandatory sourcing of green power and other financial incentives is primarily driving big solar dreams that would change the way project planners look at solar power plants. The department of heavy industries is piloting a solar project with a capacity of 4,000 mw, first reported by ToI on September 21. This is a global first and similar in size to the ultra-mega power projects (UMPPs) conceptualized to ramp up generation capacity quickly.

Another major change that is expected to push growth is the MNRE ministry’s plan to bid out 750 mw solar capacity in JNNSM’s second phase (2013-17). This would be similar to the case of conventional power plants where a company offering the lowest tariff gets to set up and operate a project. But unlike conventional projects, the ministry would provide viability gap funding to these solar plants, making them attractive proposition for investors.

All these factors together are prompting companies such Reliance Power to think in terms of setting up three-digit capacity of 100 mw solar plants, which have so far remained in two digits. There is certainly scope for such plants.

A recent study by power equipment-maker Schneider said 80% of the surveyed corporate houses expected to get 15% of their electricity from renewable sources in the next three years. According to MNRE secretary Ratan P Watal, nearly 40% of India’s population lacked access to conventional energy resources. Even providing one unit of power to such households throughout the year would itself need a capacity of 15,000 mw of solar power.The signs are all there. A capacity of 1,685 mw was added in three years since JNNSM was launched against a target of 1,000 mw set for the first phase. The government is now set to roll out the second phase with the aim of ramping up capacity to 10,000 mw by 2017.

Solar contributes less than 0.5% of India’s energy mix but government hopes to ramp it up to 5%-7% by 2022, when the JNNSM’s third and final phase concludes and tariffs become competitive against grid. A 2010 study by the US-based The Pew Charitable Trust estimated clean power investments in India to touch $169 billion over the next decade, much of it into solar and wind power plants.

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