Solar Power in India has taken off under the ambitious JNNSM government subsidy scheme with almost 400 MW of Solar Capacity installed in 2011 . With various states like Gujarat, Karnataka coming up with aggressive solar subsidy schemes on their own as well, solar power capacity in India should surge by around 1 GW in 2012. This has made India one of the fastest growing solar markets in the globe right now.

India’s JNNSM scheme was managed by MNRE which is the Central Ministry for Renewable Power and NVVN which is the state owned utility’s NPTC trading arm . However note NTPC is a listed company and is getting into the production of solar power as well. So to have a regulator which is also a participant makes little sense. With the first phase of JNNSM to be complete next year, the scheme is being overhauled. The Indian government is going to turn over the supervision of its 20 GW by 2022 Solar Power scheme to a new entirty called Solar Energy Corporation of India.

JNNSM part 2 will start in 2013 and it will need more funding as it proposes to build 4-7 GW of capacity. The funding agency IREDA does not have the resources to finance such a big outgo which could easily see more than $5 billion in funding requirements. Note a number of international financial institutions like Exim Bank , ADB and KFW are already involved in funding solar energy in India.

JNNSM

he 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

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)