JNNSM Part 2 Quick Guide – Indian Solar Policy Second Phase Draft needs a lot more work

In Greenworldinvestor we have already covered the India’s Federal Solar Subsidy Policy JNNSM from its inception 2 years ago. Now as the Government embarks on the second part of the three part policy we give you a heads up of the important parts of the draft of JNNSM Part 2.

Introduction to JNNSM

The mission National Solar mission under the brand name “Solar India” set an ambitious target of adding 20 GW of Grid connected and 2 GW of Off-grid capacity by 2022 in three phases 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

JNNSM Phase 1 Status

Status of Completion of Projects under JNNSM Phase 1

As you can see that most of the solar thermal projects have not been completed so far though the deadline for most is March 2013. Many of these plants have not achieved closure and contradict the assertion that JNNSM Phase 1 has been a success. The success has been mainly in the Solar PV part thanks to the unexpected crash in global solar panel prices.

Targets for JNNSM Phase 2

National Solar Mission envisages installation of around 10 GW utility scale and 1 GW off-grid solar power projects by the end Phase-II. Out of this 10 GW target, 4 GW would be developed under central scheme and 6 GW under various State specific schemes. The Phase II of JNNSM would target deployment of 1,000 MW of rooftop projects both at off-grid and grid connected levels This is a bit disappointing, you would have expected a much higher target for distributed rooftop solar projects compared to the large utility scale solar power plants.

Subsidy for JNNSM Phase 2

The Indian Government intends to fund the subsidy through 3 schemes:

a)Bundling Scheme

This is the same scheme used to fund the solar projects earlier in which unallocated low cost power generated by NTPC is bundled with the high cost solar power to lower the overall cost of the power. However the Government does not have enough unallocated power left so it is exploring other options to fund this gap through two other schemes.

b) Viability Gap Funding

Under this Implementation Strategy, Central Government would provide viability-gap-funding support for setting up grid connected solar PV power projects. The projects will be selected based on international competitive bidding for viability gap funding to make available generated solar power at a pre-fixed levelized tariff of. The VGF would be provided on deferred payment basis to ensure completion of project as per guidelines of the scheme. National Clean energy Fund (NCEF) is proposed to be used for used as a viability gap funding.

c) Generation Based Incentive

The size of projects will be in the range of 500 kWp to 2.5 MWp and capacity can increase in multiples of 500 kW only. Selection of projects would be done by Solar Energy Corporation of India on the basis of discount to be offered by Project Developers on CERC / SERC Approved Applicable Tariff, whichever is lower. GBI shall be payable to the purchasing utilities for a period of 12 years from the date of commissioning of the project. A target of up to 60 MW is proposed for support under this scheme. While working out the state-wise targets, the minimum and maximum solar capacity has been kept at 1.0 MW and 5.0 MW, respectively.

States responsible for 60% or 5400 MW of grid connected capacity generation

Indian states particularly Gujarat has been very successful in implementing their own solar subsidy schemes with almost 70% of the current solar capacity coming from Gujarat. Recognizing this, the federal government wants to push the onus of 60% of JNNSM Phase 2 capacity on the states.

The center wants the state to meet their SPO obligations which would fulfill most of the 5.4 GW target without the center providing any funding. India’s current installed capacity is 1,050 MW by Aug 2012, whereas requirement capacity is around 1,414 MW which shows a deficit of around 26%.

Targets till 2014-15 for JNNSM Phase 2

Summary

The JNNSM Phase 2 Draft is short on a lot of things and only details out the targets till 2017. It leaves 60% of the burden on the states and does not specify how some of the poor states are going to fund their obligations. It leaves out on what will happen to domestic content requirements and fails to address the fact that solar thermal technology is failing. We feel that a lot more work needs to be done.

You can read the entire 60 page draft document here.