Solar power industry faces several issues like land acquisition costs; power evacuation; high cost of capital; continued muted interest from investors and dealing with bankrupt state-run distribution companies. In addition, to the usual transmission losses and pilferage, which is ‘normal’ in this industry!
Recently, while meeting foreign investors and a group of industry executives, it is reported in the press, that Piyush Goyal, Union Minister for Power, Coal and Renewable Energy, appears to have stated that from the current production of one trillion units of energy, India would be able to double it up and have a surplus, by 2019! As at December, according to available information, India's total renewable energy installed capacity is 33,792 MW. And the government has set an ambitious target of reaching 175,000 MW of energy through renewable energy sources, latest by 2022.
It appears that guidelines have already been issued for setting up 25 solar parks, each with a 500 MW capacity, across the country. Industry estimates that as much as Rs250,000 crore investment would be needed to reach such ambitious targets.
At the moment, 32,000 MW of thermal capacity is over 25 years old and the government was encouraging to phase them out by capacity expansion at the same location with super critical power units. Other plans include the revival of 14,000 MW of gas-based power units, which closed for lack of gas, will now be revived, according to the minister.
In the Re-invest 2015 investors meet, according to the press reports, Prime Minister Narendra Modi was given assurances by members present for creating huge energy capacity in the country. For instance, First Solar, the US based Solar power project developer, assured the PM that they will first set up a 5000 MW green energy projects in India by 2019. It may be noted that, recently, Apple Inc committed $848 million to buy solar electricity from this company for the next 25 years - this being one of the largest commercial deals in the solar sector. Their interest in India opens up new opportunities for developments in the country.
Apart from the foreign investors, many Indian corporations have shown renewed interest in the development of solar and other renewable energy sources. Adani Enterprise, for instance, has signed a memorandum of understating (MoU) with the Rajasthan Government for developing solar parks with a total capacity of 10,000 MW in 10 years, but the first 5000 MW will be set up in the first five years. At the same time, Adani Enterprise has signed another MoU with US based SunEdison Inc to jointly invest $4 billion for setting up India's largest photo-voltaic making plant at Mundhra in Gujarat.
In the meantime, the Union Cabinet is reported to have cleared the setting up of a 15,000 MW of grid-connected solar power project through NTPC through its subsidiary NTPC Vidyut Vypar Nigam Ltd (NVVN). With the active support of Solar Energy Corporation of India, the Madhya Pradesh Government is setting up the world's largest solar power plant. Its power generating capacity will be 750 MW. It is estimated to cost Rs4,500 crore and it will soon be able to produce power at Rs5 per unit, lower than any other project in the country!
But the solar power industry in the country is facing various challenges. Rama Bethmangalkar of VenturEast, an Indian venture capital company, which has invested in renewable energy companies, points out the difficulties faced by the industry including land acquisition costs; power evacuation; high cost of capital; continued muted interest from equity investors and dealing with bankrupt state owned distribution companies. In addition, to these, there are the usual transmission losses and pilferage which is ‘normal’ in this industry!
In order to encourage the growth and meet the needs of the consumers, it is essential that the government seriously looks into the issues of cheaper credit so as to access low cost funds for development. If necessary, the government may stipulate a minimum economically viable solar power plant capacity that may be allowed to issue tax free bonds and competitive rates for linking into national power grids for distribution.
One of the most successful solar power generation programmes can be derived by designing small scale units that can be sold to individual house owners, setting them up on their roof tops, and offering a link to the state grid, so that the excess power can be made available to others. When such a compact unit can be designed, at competitive rate, India will have surplus power - not before!
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US