State Power plans – fact or fiction

The Indian federal government wants to raise the solar RPO to 8%, from 3% when even the 3% is not working. It also wants thermal power plants to keep 10% capacity for solar power, when power utilities are running losses and not setting up any new plant. Bureaucrats and politicians are seemingly living in a different world compared to morsels. The gap between dream and reality is widening in the solar sector. MOU’s to set up more than 200,000 MW of renewable power was singed in India’s renewable energy conference. However, setting up even 1/5^th of that capacity will be a big achievement, given the structural issues.

India is all gung ho about building huge amounts of solar capacity, as solar energy has become competitive with fossil fuel prices in India. Solar power costs around Rs 6.5-7 per unit, compared to the Rs 4-7 per unit paid by customers for electricity prices in India. Large parts of India can already install solar energy based on pure economics alone. However, the plans of some states to quickly build huge capacities through mega solar power plants of 1000 MW sizes and more is running into teething problems. NTPC recently said that distribution utilities are not willing to buy power from it, as they have huge problems with debt. Solar power is still expensive compared to domestic coal generated power and India’s industrial growth has not really taken off making demand tepid. Some of India’s coal and gas power plants have restarted while growth has not taken off.

Read more about Solar power in India.

India’s southern state which have the biggest power deficits are the most aggressive and have set up aggressive 5-10 GW targets. But they are finding it hard to set up even 1000 MW. Andhra Pradesh which had signed a MOU with NTPC to set up 1000 MW solar park in Anantpur, has got only 250 acres of land which means that only 50 MW can be installed now. Buying land in other districts has also become difficult as land owners have jacked up prices even of barren land, since they know that there is demand for solar power plants.

Telangana too faces huge land constraints and its ambitious 100,000 MW target by 2022 seems a non-starter currently. It has managed to only finalize 600 MW odd capacity as there was no land to satisfy all bidders in solar auctions.

Lack of ground work is a huge issue for all governments. The capability is really low amongst government workers, while their political masters have grandiose plans. This means that there is a huge gap between targets and achievements. Even the solar pump plan is running aground due to this gap. According to TOI, Softbank has also not moved ahead with its plan to set up 10 GW in AP. Naidu had earlier gone to Japan and signed a MOU. 10,000 MW would require 20,000 hectares which is a tall order in AP. Governments should look at the practical issues when announcing target, rather than signing billions worth of MOUs to generate media headline.