India's grand 2022 solar mission picks up momentum as States join the fray with their ultra mega projects.
India's grand 2022 solar mission picks up momentum as States join the fray with their ultra mega projects.
This May, India's solar ambitions hit a new high as power tariffs dropped to record lows. It was the Bhadla Solar Park in Rajasthan which basked in the sun's glory this time, not once but twice. Days after dropping to Rs 2.62 per unit, solar tariff plunged yet again to hit the latest low of Rs 2.44 per unit.
In the first auction conducted by Solar Energy Corporation of India (SECI) - the Central government-promoted company that is setting up solar parks across the country in partnership with respective State government agencies - Phelan Energy Group of South Africa and Avaada Power won bids for Rs 2.62 per unit to develop 50 mw and 100 mw respectively. In the same auction, SBG Cleantech - a consortium of Softbank Group, Airtel and Foxconn - offered Rs 2.63 per unit for setting up a 100-mw plant.
Days later, in another auction held by SECI at the Bhadla Solar Park, the tariff slipped further to Rs 2.44 per unit. ACME Solar Holdings and SBG Cleantech placed winning bids of Rs 2.44 and Rs 2.45 per unit to set up 200 mw and 300 mw plants respectively. Months before these jaw-dropping lows, the tariff had fallen to Rs 2.97 per unit at the auction for Rewa solar plant, the world's largest standalone solar plant in Madhya Pradesh, in February.
Some of the world's largest solar power producers have been making a beeline for Bhadla, a small village, about 200 km from Rajasthan's famed Jodhpur city, in the past two years.
Set on the fringes of the Thar Desert, the Bhadla Solar Park will become the country's largest operational solar park when it will generate 2,255 mw in December 2018. The project, being developed by the State government's Rajasthan Renewable Energy Corporation in four phases, is already generating 480 mw from a number of units set up by big players, such as Fortum Finnsurya Energy, Rising Sun Energy, Solairedirect, SBG Cleantech and ACME Solar Holdings, among others.
Over the past few years, a string of auctions across the country has witnessed a steady decline in the price of solar power. Solar tariffs have slid from a high of around Rs 16 per unit in 2008 to the current below Rs 3 per unit. With tariff heading south, solar power has attained grid parity (solar power price being equivalent to grid price of coal or gas).
Rising global solar power production and newer technologies have slashed the cost of solar modules, the vital component in generating energy, by about 80 per cent since 2008, bringing down tariffs the world over. In India, solar tariffs have been slipping rather rapidly and to rather unbelievable lows mainly because of a rush to win SECI's auctions across the country. The projects on offer at these auctions appear to be lucrative to developers as they come with assured returns and no hassle of land acquisition.
"Solar tariffs have definitely declined quite substantially because projects come bundled with land, evacuation infrastructure, State government guarantee and deemed generation. These factors allow the final project economics to be very cheap," notes ReNew Power Ventures Chairman Sumant Sinha.
The overwhelming response to SECI's successive auctions augurs well for the country's mega solar programme - the Jawaharlal Nehru National Solar Mission's (JNNSM). The plunging tariffs take the country - which is estimated to have solar energy potential of around Rs 7,50,000 mw - closer to the JNNSM's whopping 1,00,000-mw (100 gw) target to be met by 2022.
The JNNSM, launched in 2010 by the then UPA government, has literally unleashed a saffron revolution in the country with a phenomenal spurt in solar power capacity from a mere 2 mw in 2010 to the current 12,289 mw. "India's solar power generation capacity will cross 20,000 mw in the next 15 months," predicts Union Power Minister Piyush Goyal.
In fact, the solar mission got a massive policy push in May 2014 with the NDA government led by Prime Minister Narendra Modi taking charge. As chief minister of Gujarat earlier, Mr Modi had put the western State in the forefront of India's unfolding solar revolution. Within a year of taking over, the Modi government raised the solar capacity target set under the JNNSM by fivefold from 20,000 mw to 1,00,000 mw.
The ambitious programme is now looking to push up the country's renewable energy capacity by over three times from the present 57,261
"India's solar power generation capacity will cross 20,000 mw in the next 15 months." PIYUSH GOYAL Union Power Minister
mw to 1,75,000 mw by 2022. The huge green energy target will be driven by solar power - a massive nine-fold jump from the current 12,289 mw to 1,00,000 mw by 2022 - and wind energy - to double from the present 32,280 to 60,000 mw by 2022 - while the remaining 15,000 mw will come from biomass and small hydro projects (below 25 mw capacity).
Of the 100-gw solar power target, 40 gw would come from solar parks and ultra mega solar projects of 500 mw and above that are being set up across the country by State and Cen- tral government agencies as well as private companies. Another 40 gw or 40,000 mw will be added by rooftop solar projects to be installed by government agencies and institutions, private business establishments, industrial houses as well as households. A part of the target is also being met by canal-top projects. The remaining 20 gw will be met through an entrepreneur scheme that will encourage small and medium enterprises (SMEs), farmers and other individuals to set up some 20,000 projects of 1 mw each across the country.
The Central government has earmarked Rs 8,100 crore for some 84 solar parks with 40,000 mw capacity set to come up all over the country. Some 34 solar parks of aggregate capacity 20,000 mw are at various stages of development, while another 50 are in the pipeline.
According to the Solar Park Scheme, respective State agencies, such as State utilities or State-run renewable energy entities, will have to tie up with SECI, the nodal agency for developing solar parks. The State governments will nominate their
"The State government has set a target to achieve 5,000 mw of solar power by the end of 2018-19."
M KAMALAKAR BABU V-C & MD, New & Renewable Energy Development Corp of Andhra Pradesh
implementing agency and also identify land for their respective solar parks.
These parks will house many big and small solar power plants developed by multiple players selected through auctions. Power producers in solar parks will have to sell their solar power to State or Central power utilities - these utilities are required to purchase a certain percentage of their power consumption as renewable energy under the Renewable Purchase Obligation (RPO) - by entering into power purchase agreements (PPAs) with them. The power utilities will bundle solar power with power from other sources and sell it to end consumers.
Gujarat under Mr Modi was the frontrunner in setting up a solar park way back in 2012. The 500- mw Charanka Solar Park in Charanka in Patan district, billed as Asia's first multi-developer solar park and anchored by Gujarat Power Corporation, played a vital role in placing the State as a prominent solar energy player in the country.
Subsequently, many other States have joined the fray to tap solar power. In fact, the current solar surge in the country is driven by States, each trying to outdo the other in a true show of competitive federalism. As many as 21 States have signed up with SECI and are in the process of setting up 34 solar parks to generate 20,000 mw of solar power cumulatively.
The 1,000-mw Kurnool Ultra Mega Solar Park - the country's largest functional solar park with 900 mw already synchronised to the grid - has placed Andhra Pradesh at the top of the list of States with the largest solar energy installed capacity. The other States ruling the solar energy chart with their big solar parks and mega plants are Rajasthan (2,255 mw Bhadla Solar Park, which will be the country's largest solar park when it starts operation in December 2018), Tamil Nadu (Adani Group's 648-mw Kamudhi plant, cur-
"For renewable energy, it is important that storage technology catches up. Then only will we actually be able to decide if green energy is cheaper and conventional energy is costlier." GURDEEP SINGH Chairman, NTPC
rently the world's largest operational solar plant), Telangana ( ReNew Power's 143-mw Dharmaraopet solar farm), Gujarat (700-mw in Vav solar park), Karnataka (2,000-mw Pavagada solar park) and Madhya Pradesh (750mw Rewa ultra mega solar power plant, to be the world's largest solar plant when commissioned in October 2018).
The buzz around solar power has equally excited the corporate world.
Many domestic companies - such as ReNew Power Ventures, Welspun Renewables Energy, NTPC, Reliance Power, Tata Power, Adani Enterprises, ACME Holdings and Suzlon Energy - and global corporations - like Fortum, Solairedirect, SBG Cleantech, Trina
Solar, First Solar, ABB, Engie, Enel Green Power and China Light & Power - have been in the forefront of the country's solar energy expansion.
India, in the meanwhile, is hurtling swiftly towards the big 2022 solar power target. In fact, that mega target will certainly play a vital role in the country's another ambitious target of slashing its emission level by around 35 per cent of its GDP by 2030. As a part of this plan, India is looking to double the share of renewable energy in the total installed power capacity to 40 per cent from the current around 20 per cent.
India's 1,00,000-mw solar target, however, looks too very ambitious when seen from a global perspective. The world's solar energy installed capacity is a little over 3,00,000 mw, produced over a span of around 17 years. But India is trying to add a third of the global solar capacity in the next five years and against many odds.
In fact, India's first break-up target of 40,000 mw through solar parks and ultra mega solar projects appears quite realistic. The target is being driven primarily by the country's RPO - which makes it compulsory for power utilities to purchase a certain percentage of green energy - and renewable generation obligation (RGO) - which mandates thermal power producers to generate a certain amount of power from renewable energy sources. Moreover, healthy competition among States to enhance their respective solar power capacity is set to take the country closer to that big goal.
However, the second part of the 100-gw target of 40 gw of rooftop projects is still work in progress. The growth of rooftop solar projects is rather minuscule at a little over 1 gw. The government schemes provide up to 30 per cent subsidy (70 per cent in case of special-category States) for rooftop solar plants and attractive feed-in tariffs. But the huge cost of rooftop solar panels overrides the tangible benefit in the eyes of customers. "Almost all States have some netmetering policy. But few have a functioning net- metering programme. Other issues affecting rooftop installations include lower accelerated depreciation and removal of the 10-year Income Tax holiday," points out Raj Prabhu, the CEO of Mercom Capital Group, a leading global green energy consultancy.
The third section of the ambitious 1,00,000- mw target of generating 20,000 mw of power through the entrepreneur scheme is a non-starter as of now in the absence of any definite guidelines. Many experts, in fact, are strongly in favour of this scheme as such projects empower a large section of society by involving farmers, SMEs and local communities. Moreover, for a vast country, like India, with a considerable number of people deprived of power, such small, community-controlled projects can be designed to suit the needs of the community. Such small projects dot the landscapes of Germany, and Japan.
But these small projects can succeed in India only when the country has efficient decentralised energy systems or micro-grids that can cater to energy needs of local communities. Incidentally, Andhra Pradesh is focusing on micro-grids and has also taken up two pilot projects to build storage facility for solar power near small, community-centred solar plants. If these pilot projects succeed, it can change the very dynamics of green energy in India. It will perhaps put an end to the current irrational obsession with big projects and nudge policymakers and the industry to go in for smaller plants.
The big solar projects coming up across the country will end up getting stuck with a creaky transmission system. The ambitious green energy corridor project envisaged in 2011 as an alternative transmission network is yet to see the light of day. The other major hurdle in the way is the need for huge investments for the big solar goal at a time when the banking system is crumbling under the weight of bad debt.
Fragile finances of State electricity boards (SEBs), the ultimate buyers of almost all power generated in the country, are also a cause for concern. In a bid to attract big investors into solar parks, the Central and State governments have promised guaranteed purchase of power in case SEBs happen to default on payments. However, these guarantees will come back to haunt the governments in future if the power utilities fail to improve their financial health.
For all the eco-friendly advantages of solar projects, they are huge landguzzlers. According to industry estimates, 1 mw of solar project roughly requires about 5,000 acres of land. Vast tracts of land will have to be acquired to generate 1,00,000 mw of solar power at a time when land acquisition has more or less turned into a taboo.
Fortunately, a few States are using innovative ways to harness solar power without harming the interests of land owners. Gujarat, for instance, has come up with canal-top projects by mounting solar panels over its large network of canals linked to the Sardar Sarovar Dam over the Narmada. This has not only solved the vexed land acquisition problem but also helped in preventing evaporation of water in the canals. The mega Pavagada solar park in Karnataka too has designed a unique model to see the project through. It has not acquired an inch of land. Instead, it has taken all land on lease for 25 years from land owners for an annual rent of Rs 21,000 per
"We have learnt an important lesson from the Rewa project, and that is, if we have better, well-prepared projects, both foreign and Indian investors will participate in them." MANU SRIVASTAVA, Principal Secretary, NRED, Madhya Pradesh "Almost all States have some netmetering policy. But few have a functioning net-metering programme. Other issues affecting rooftop installations include lower accelerated depreciation and removal of the 10-year Income Tax holiday." RAJ PRABHU CEO, Mercom Capital Group
acre and made them partners in the project.
As big numbers keep popping out of ongoing mega solar projects, some experts and technocrats have been red-flagging the futility of over-reliance on solar energy. Solar power, or for that matter, any other green energy source, has its own limitation, given the limitations of nature, absence of affordable storage facility, and so on. Green energy at best can complement conventional energy but not replace it.
So, it would be too naive to expect green energy entirely replacing conventional energy in the foreseeable future. It would also be foolish to demonise coal and think of banishing it away from the energy portfolio. "For renewable energy, it is important that storage technology catches up. Then only will we actually be able to decide if green energy is cheaper and conventional energy is costlier," notes Gurdeep Singh,the chairman and managing director of NTPC, India's largest thermal power producer which is also a major player in the renewable energy sector.
A wiser option hence would be to look for cleaner coal and also seek to strike a right balance between conventional and non-conventional energy sources. A right mix of clean coal and green energy sources could perhaps work wonders.
PM Narendra Modi: Chief architect of India's massive solar energy expansion
Jaw-dropping fall in tariffs in successive auctions takes India closer to the big 2022 solar energy target.
Bhadla will become the country's largest operational solar park once it goes on stream in December 2018.
Innovative canal-top projects and smaller plants can better suit a vast country like India.
Adani Group's Kamudhi plant is currently the world's largest operational solar plant.