India converts its JNNSM subsidy mission into a Solar Park scheme – first one to come up in Kurnool

The Indian government is radically transforming its central JNNSM subsidy program for faster and cheaper implementation of large scale solar farms in the country. Instead of allowing solar developers to set up solar farms anywhere in the country, it will open auctions only for specified locations where utilities and water will already be provided along with dedicated power transmission structure. This is expected to further lower the already low costs of solar power in India, which have fallen dramatically in the last few years.

With JNNSM Phase 1 installing around 1 GW of solar power in India, the government embarked on Phase 2 which was to construct around 9 GW by 2017. The program was delayed last year, as there were issues regarding funding of the program. Finally the Phase 2 Batch 1 started with around 750 of solar PV plants bid out, half being under the DCR requirements. Now the government is doing a radical overhaul of the Batch 2. These will be instead by 3 tranches, which will seek to install 15000 MW by 2019.

This will be done in an increasing manner with the first tranche calling for 3000 MW of installations in the next couple of years. The funding will be done with the help of the low cost power generated by the central utility NTPC. The expensive solar power will be bundled with the cheap thermal power generated by the central thermal power stations owned by NTPC.

Tranche 2 and Tranche 3 will become more ambitious with 5000 MW and 7000 MW to be installed. Though the decisions have not been made regarding how Tranche 2 and 3 will be funded and installed, I expect the “Solar Park” scheme to be used by the government. The first 1000 MW are to be reverse auctioned, with the plants to be set up in the giant Kurnool solar park in Andhra Pradesh. Note AP has become super bullish on solar power and the CM Chandrababu Naidu is an ally of the BJP, which is ruling at the center. The government has plans to set up giant solar parks in different parts of the country and the government may decide to auction the plants at these locations to private developers.

I think this is a great idea as transmission and distribution will be controlled by the government, since uncontrolled setting up of large solar power capacities would lead to grid instability. As it is, India’s electricity transmission infrastructure is quite weak and has already resulted in the “biggest power brownout” in the world. Best way to invest would be to put money into component sellers such as mounting structure, cabling and inverter sellers as well as some of the solar cell manufacturers as the solar parks will have a DCR component.

Bloomberg

India announced draft rules to auction 1,000 megawatts of solar capacity in Andhra Pradesh as Prime Minister Narendra Modi accelerates clean-energy deployment.

Companies will be invited shortly to bid for contracts to build plants at a solar park in the southern state, according to the rules issued today by the Ministry of New and Renewable Energy. A quarter of the capacity will be required to use locally made panels and cells.

The rules also outline a broader plan to boost India’s clean-energy targets and shift responsibility for implementing capacity away from states to the central government. By 2019, the central government expects to install 15,000 megawatts, more the five times the current national capacity and about triple what it committed to in 2012.

Companies will be able to bid for as much as 250 megawatts of capacity with each project capped at 50 megawatts, according to the rules. State-run power trader NTPC Vidyut Vyapar Nigam Ltd., known as NVVN, will run the auction and sign 25-year power purchase agreements with the winners.