What will be India's Solar Power Capacity in 2012 after 400 MW in 2011

Solar Power in India has been growing at a rapid clip due to a number of favorable factors

1) Big Energy Deficit

2) Lots of Sunlight

3) Falling prices of Solar Panels

4) Favorable government subsidies.

These and above factors are explained in my article that Solar Energy in India may the biggest oppurtunity of the 21st century.

India has a huge electricity demand supply gap – Large parts of India regularly face blackouts for lack of electricity supply leading to huge monetary losses .It has been estimated that India suffers from more than 15-20% supply shortage in times of peak power.Major cities like Gurgaon regularly face 8-10 hours of power cuts in summer months.

Lack of power grid availability – Solar Energy is ideally suited for providing power to those areas which don’t have power lines connecting it.Large parts of India don’t have electricity grid connectivity and it is cheaper to power them through solar energy rather than extending power lines

Increasing expensive and unreliable electricity supply – The rates of electricity prices are going up rapidly each year due to a combination of factors like higher costs of fossil fuels,increasing capital expenditure by utilities and privatization of power.Not only is the power expensive , the quality and reliability of the supplied electricity is very poor.A study has found that poor farmers who  receive “free electricity” in India  are willing to pay for quality electricity supply rather than do with the “unreliable free power”

Solar Energy approaching Grid Parity – The costs of Solar Energy has been decreasing rapidly over the last 2 years.Despite solar energy prices being higher  than other forms of electricity , it is expected that solar energy will equal that of grid prices in the next 5 years in most parts of the globe. Solar Energy is the only form of Energy whose cost trend has been declining over the long term while all other major forms of energy have seen their costs increasing .

Strong Support from the Government – Solar Energy needs a push from the Government in terms of regulation and incentives as it is a costliest form of power currently . The Indian government through the Jawaharlal Nehru National Solar Mission has provided strong support to the growth of this industry . The government has set a  target of 20 GW by 2022 with 1000 MW of solar power to be set up through private investment by 2013. CERC guidelines aims at providing  20% + returns to private investors through a higher guaranteed rate to electricity generate from solar power ( FIT)

However the industry is facing birth pangs due to factors which are uniquely India such as red tape,not fully thought of policies.

JNNSM First Phase Problems

JNNSM which was unveiled with much fanfare has promised much but teething problems threaten to crash the Solar Party in India.While some of these problems were discussed earlier like a) Debt Financing of Solar Projects b) Irrational Bidding c)Small Plant Sizes of 5 MW d) Unhealthy Competition ,other problems have cropped up.Note India was trying to avoid the fate of the Czech and Spanish example of renewable energy subsidy boom and subsequent bust  by auctioning the projects to lower bidders.However this has resulted in a new set of problems seen with this type of bidding which has been seen in China. The biggest problem is that the winners of the Solar PV Projects are mostly unknown small firms who have bid so low that make the returns negative for investors according to the renewable energy ministry officials (MNRE).Bidding has gone as low as 23c/Kwh which is crazily low considering the debt costs in India are as high as  13% annually.Compare that to China where debt is priced as low as 3-4% and the winners are huge utilities.With even India’s Tata Power saying that the projects are not  bankable as their is confusion how the electricity tariffs will go to developers,its difficult how these unknown firms could manage the financing .While the companies will lose their bid deposits if they don’t finish the projects,Indian Solar Energy will be the biggest loser as the failure of the Phase 1 of JNNSM of 1000 MW by 2013 will lead to even further delays.

So What was the Result for 2011

After all this ,India solar energy capacity in 2011 should reach around 400 MW which is 1/3rd of what was targetted.Around 140 MW of this will be from Gujarat which had earlier set a target of 900 MW which fell to 300 MW and is now 140 MW.There are 29 developers with PPA from the government there who want the 31st December deadline extened by 6 months.This represents 450 MW in Capacity

India to Build 400 Megawatts of Solar, Two-Thirds Less Than Plan

India will complete 400 megawatts of solar power connected to the grid this fiscal year, two-thirds less than previously forecast by state and central governments.India has so far built 180 megawatts during the year ending March 31, the Ministry of New and Renewable Energy said in an e- mailed statement today.

Indian Solar Power Capacity in 2012

Many of the small firms have been weeded out and the developers and banks have got some experience in this new solar industry.Expect 2012 to be much better and expect at leas a doubling of the solar power capacity as both phase 1 and phase 2 winners in JNNSM complete projects.Rajasthan,Gujarat and Karnataka state subsidies should also see some projects being complted

Solar Power Capacity in India in 2012 should be around 1 GW which is not bad and will make it one of the top 10 Solar Markets in the world.

As an offbeat topic read what the Disadvantages of Solar Power are