India’s National Solar Mission Promotes Rapid Solar Power Growth

Mercom Communications India, Pvt. Ltd., a subsidiary of Mercom Capital Group, a global clean energy communications and consulting firm, attended the 5th Renewable Energy India 2011 Expo held in New Delhi, India by Exhibitions India Group last week. With over 190 eminent speakers and 527 exhibitors from 33 countries, the Expo turned out to be the biggest event for renewable energy ever held in India. The participation level has been increasing consistently over the years along with growing interest and opportunities in the sector. Even the lashing rains in Delhi could not dampen the spirits of over 12,000 visitors who thronged the Expo.

Under NSM, PV and CSP share a 50/50 stake in total solar power production. There are presently very few CSP installations in India, but several 500-MW CSP plants are in the process of getting financing with support from NSM.

Transmission infrastructure for grid connected solar power is a key agenda item for the Ministry of New and Renewable Energy. Secretary of the ministry, Mr. Gupta, said at REIE that the national Clean Energy Fund holds about $667 million annually for transmission infrastructure. “We seek this money for innovative solar projects, research and development projects and demonstration projects,” said Gupta.

International financing and technology transfer is seen as key to scale up solar power generation in the second phase (especially for off-grid installations). For these projects, incentives are provided primarily as capital subsidies – 30 percent for non-priority regions, 90 percent for priority regions and accelerated depreciation, and five percent for soft loans in some cases. Incentives depend on whether the scheme is offered by state or center and vary from $0.27 to $0.40 per kWh for grid-connected power, depending on the size of the plant.

Some states such as Gujarat, Rajasthan and Karnataka, have encouraged investment by announcing renewable energy policies and schemes. This seems to have impacted their visibility in the renewable energy space.

While the fervor and number was impressive, questions still loomed large as to the developments in the Jawaharlal Nehru National Solar Mission (JNNSM) process, including companies’ ability to achieve financial closure, cancellation of projects who could not meet the criterion and announcement of the next batch and size of projects. The elimination of reverse bidding seemed to be on top of the wish list of solar project developers.

Manufacturers continue to look for new and emerging markets for export opportunities while keeping a watchful eye on the domestic market. Most of the conference exhibitors on the manufacturing side had participated in previous years. Engineering Procurement Construction (EPC) companies were voicing concern about quality in project execution with so many new entrants without adequate experience, flooding the market.

Concentrated solar power (CSP) and Concentrating Solar Energy -related companies had decent presence this year, but considering that concentrated solar energy and Photovoltaic (PV) are allocated 50:50 in terms of projects under JNNSM, concentrated solar thermal energy had a much smaller presence than PV at the conference. Also in attendance were interested entrepreneurs and developers looking to develop small projects of 50KW-2MW.

The conference did a good job by bringing together private and government representation. India’s renewable energy industry is being watched closely by the rest of the world and it is up to the government to execute well and instill confidence in order to attract the investments needed to grow these important sectors.