The Indian government is looking to set up four gigantic solar panel power plants with hundreds of thousands of solar panels in each farm. The government is looking to replicate the Rajasthan 4000 MW power plant in other places in the country, which have very high solar power insolation. Note India is a growing country with a huge power deficit. It does not have sufficient oil and gas or other fuel resources. But solar insolation is abundant in the country, with many parts of India receiving around 2000 kWh of solar energy per year. This means 1000 watt of solar panels will give you around 2000 units of electricity per year. This is in sharp contrast to Germany which gets around 1000-1200 kWh. The country is planning on setting up the plants under the same PSU model. A consortium of public owned companies will be formed which will build these plants. BHEL will likely be the solar panel supplier, while other companies will help with financing and construction of these plants.
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It is however strange that the government is committing to spend huge amounts of capex; around $4-5 billion a plant for the solar power plants, while it is using the private route to build large thermal power plants in the country. Note most of the giant thermal power plants in India have come up a cropper. Price escalation of coal has meant that these plants have turned unviable with fixed PPA tariff coming lower than the costs of generating the power. Tata Power’s Mundhra UMPP is running into huge losses while Reliance Power which bagged most of the contracts for the other giant thermal plants has refused to build the plants citing the losses. Solar power is much more certain in terms of costing as solar panel costs are the major cost component and most of the costs are upfront. Compare this to fossil fuel plants which have to depend on fuel costs for the majority of their costs. Any increase in fuel pricing can lead to huge headaches for the developer. Given the volatility in fuel pricing these days, building a fossil fuel power plant is not a very attractive option as it was in 2008.
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The Centre has proposed four ultra mega solar power projects (UMPPs). These would be in Rajasthan (4,000 Mw), Gujarat (4,000 Mw), Kargil (2,000 Mw) and Ladakh (5,000 Mw). These would cost Rs 90,000 crore.As far as Gujarat UMPP is concerned, it will be developed with five to six companies. However, Kapoor said the Centre has yet to finalise details in this regard. Further, a lot of private developers have desired to develop 1,000 MW to 3,000 MW on their own.However, it won’t be possible as the project will be tendered, he added. According to Kapoor, transmission is a major issue for the development of Kargil and Ladakh UMPPs.
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