With impressively low bids, as low as Rs. 7.49 /kilowatthour (kWh), or about 15 US cents/kWh, in India’s recent reverse-auction under its Solar Mission Reverse, I’m in India with my colleagues Vignesh Gowrishankar and Sameer Kwatra this week at to make sense of this emerging market. At Intersolar and during our stakeholder discussions, NRDC and our partner, Council on Energy, Environment and Water (CEEW) just released a new factsheet, Laying the Foundation for a Bright Future: India’s National Solar Mission that discusses the Mission and initial progress in installed solar power projects. The factsheet highlights the strong government policy and private sector support needed to achieve grid parity and achieve this Mission’s 20 gigawatts of grid-connected solar energy by 2022.
In India, the state of Rajasthan, receives twice the intensity of solar radiation for more than twice the number of days than Germany, the current installed-solar power world leader. India’s solar power has the potential to save 95 million tons of CO2 annually by 2022. India aims at both solar photovoltaic (PV) and solar thermal technologies through a variety of applications for lighting, space-heating, cooling, water heating, and cooking. India’s power demand is constantly increasing due to the consistent growth of rapidly urbanizing cities. This crucial need and opportunity for solar energy utilization will result in tremendous reduction of India’s dependence on imported fuel.
The Ministry of New and Renewable Energy (MNRE), the Indian Renewable Energy Development Agency (IREDA), and the National Thermal Power Corporation (NTPC) work to implement the mission, identify renewable-energy-financing incentives and facilitate Power Purchase Agreements. MNRE responded efficiently to initial company dissatisfaction with the first batch of projects in Phase I, through increased financial closure timeline and increasing the maximum capacity of projects. Additional government incentives instituted include feed-in tariffs, generation-based incentives, manufacturing incentives, off-grid applications, and creation of demand through the increase of state utilities investment in solar power purchase.
India’s largest industries, such as Reliance and Lanco, and emerging solar leaders, such as Welspun and Azure Power, are actively involved in driving down prices and competing for bids. Some manufactures, such as Moser Baer and TataBP Solar, are advancing the learning curve by investing in manufacturing capacity. Even though 143.5 megawatts of solar power has already been installed – a big leap from 19 megawatts – there is still a long way to go to see whether the projects are commissioned on time.
This factsheet illustrates Indian government instituted financial security through the Payment Guarantee Scheme for solar developers to ensure financially stable Phase I projects. Additional Gujarat, Rajasthan, and Karnataka developed local oversight through state-level solar policies. Even Delhi incentivizes homeowners to solar power use with 25-year grid-access at $0.37 (Rs. 17) per kilowatt hour.
Over the past few months, NRDC and CEEW convened in discussions with key Indian government and industry leaders in solar energy, to further develop our independent assessment and analysis of India’s National Solar Mission. Funding incentives to solar power operators, financial institutions, state and local governments, utilities, NGOs, and entrepreneurs encouraged over 150 solar companies to apply for the second batch of projects under Phase 1 of India’s National Solar Mission. Some of the key themes that have emerged from our discussions including the Mission’s bidding process and reverse auction, goal of creating domestic manufacturing, project bankability and financing, and project implementation, including land acquisition and electricity evaluation.
The ability to be cost competitive will determine the scaling up of solar power in India. Increasing support from both government and industry will contribute to the success of responsiveness to India’s growing demand for clean solar energy. We’ll be continuing our assessment of the Solar Mission to propel India’s efforts to attain clean energy solutions and our global challenge of reducing greenhouse gas emissions.
(Co-authored by Neha Mathew, NRDC Academic Intern)