India Solar Subsidy JNNSM Guide – What you needed to know

The Indian Government’s launch of the ambitious Jawaharlal Nehru National Solar Mission(JNNSM) was done with much fanfare with a target of reaching 20 GW of Solar Capacity by 2022 under 3 phases from the 81 MW currently.While the government had the best intentions and had laid down a well defined 10 year plan with subsidy support for both Solar Thermal and Solar PV Technology,it has already run into problems.Due to high interest the government went in for bidding of projects which led to irrationally low bidding from unknown firms.This has put the entire exercise in question with the the biggest private utility saying JNNSM is a failure.Without extensions of deadlines it looks highly unlikely whether the 37 winners will actually put up the plants.

JNNSM is divided into 3 phases with the ultimate goal of reaching grid parity with coal by 2030.I don’t know where they came with the 2030 figure as I think solar should reach grid parity much earlier and should be below coal cost much  before

1)Phase I (up to 2012/2013) – remaining period of 11th five yr plan & first yr of 12th yr plan Target of 1100 MW
2) Phase II (2013-2017) – remaining 4 yrs of 12th five yr plan Target of 3000-10000 MW
3) Phase III (2017-2022) – 13th five yr plan 20000 GW overall

The Objectives of the Solar Mission

1) Solar Lighting-Deploy 20 million solar lighting systems for rural areas

2) Solar Heaters – Achieve 15 million sq. meters  by 2017 & 20 million by -2022 of solar thermal collector area

3) Solar Manufacturing – Global Leader in Solar Manufacturing ( Seems a Pipe Dream right now) with Targets 4-5 GW equivalent of installed capacity by 2020 including setting up of dedicated manufacturing capacities for poly silicon material to annually make about 2 GW capacity of solar cells

4) Off Grid Solar Applications – Solar Mission has set a target of 1000 MW by 2017

Funding of the JNNSM will be done by

1) Renewable Energy Credits (REC) – State Electricity Regulatory Commissions (SERC) to fix a minimum
percentage of energy purchase from renewable sources of energy

2) NTPC’s Trading Arm NTPC Vidyut Vyapar Nigam Ltd ) is chosen as the nodal agency for entering into a Power Purchase Agreement (PPA) with solar power  developers.NTPC will mix expensive solar power with cheaper coal power .

3) Incentives

• Zero import duty on capital equipment, raw materials and excise duty
  exemption
• Low interest rate loans, priority sector lending
• Coal tax
• Budgetary Support for MNRE though 2011 Budget has not given anything
• UNFCCC Funds – Again not certain as no international agreement ( another pipe dream)

First Phase (How it has fared so far)

Smaller 2 MW PV Projects

India has set a target of 1100 MW for the first phase with around 100 MW allocated for 2 MW projects which have the best chance of being built.Note the 2 MW project winners are already flipping the projects as many non-serious players won the projects.These companies were speculators and has no intention of building the plants anyway

Transfer Projects

It has also allowed 80 MW projects to be transferred to JNNSM rate which has led to strong state objections.The State nodal agencies have also started objecting to the tariff policy as 80 MW of Solar Projects were awarded the base FIT of Rs 17.91 as they were transferred to the Indian Federal Subsidy from their initial PPAs with individual states.Note these solar project developers who have managed to get transferred will get tariffs which are almost 60% higher than the lowest bidder for the 5 MW Solar Project at Rs 10.95.This will also mean a much large taxpayer outgo to the 16 Project Winners for the 80 MW than for the 150 MW projects

Larger PV 5 Projects and Bigger Solar Thermal Plants

The rest of the 620 MW projects are in serious trouble with no major construction happening.The developers might find it profitable to lose their deposit money rather than building the plant.The government will have to potentially bailout these companies if it wants to see its Solar Mission be successful.While the first phase is already in trouble the government is already thinking of auctioning another 296 MW of solar projects in April.Don’t know how that will help as the majority of the First Phase projects are already in trouble

SUMMARY

The First Phase of the JNNSM has not inspired much confidence and compared to successful programs in Germany seems a total failure.State Governments like Gujarat and Rajasthan are pushing solar energy much better than the Federal Government.The fast declining costs of solar energy IMHO will pretty much make this policy obsolete anyway in a couple of years.

Author Links on JNNSM

1. Renewable Energy in India Biggest Hurdle is the Poorly Managed Electricity EcoSystem
2. Indian Solar Energy Feed in Tariff Federal Discrimination leads to State Pushback
3. India Solar Thermal Bidding sees Massive Discounts;479 MW Projects to be constructed with 90% in Rajasthan
4. Can ADB rescue India’s JNNSM with Loan Guarantees and Equity Investment
5. Solar Energy in India – Domestic Content Requirements may be made more Stringent for Longer Time
6. Green Industry in India – Solar Energy runs into Debt Hurdle even as Government plans Smart Meter Rollout
7. “Renewable Energy Certificate” Policy Starts in India – What you need to Know and Who will Benefit
8. USA Opposes India’s Solar Energy Domestic Content Requirements
9. “Buy American” Solar Panel Military Law reveals Policy Confusion and Protectionist Hypocrisy
10. List of Current and Future Solar Photovoltaic Energy and Solar Thermal Plants/Projects in India
11. German Development Bank Kfw joins ADB,World Bank in funding Clean Energy in India
12. Green Energy in India gets unexpected boost as Central Electricity Regulatory Commission (CERC) mandates 6% Renewable Energy generation
13. Solar Energy in India – Biggest Energy Opportunity of the 21st Century
14. Solar Power Companies in India Growing by the Day but a Long Way to Go