Here comes the sun

Here comes the sun

K.R. Balasubramanyam

April 16, 2009

When West Bengal Green Energy Development Corporation commissions its 2 MW photovoltaic (PV) solar power plant at Jamuria near Asansol in April-May, it will leave an indelible mark on India’s renewable energy sector for more than one reason. One: it is going to be the country’s largest solar plant. Two: its scale equals the combined capacity of solar plants India took decades to create. West Bengal is blazing the trail for the rest of India to catch up. By the end of this year, Astonfield Solar is set to commission two plants of 1.5 MW each in West Bengal and Rajasthan. Moser Baer’s 5 MW project in Rajasthan will go on stream early next year. Solar power plants have suddenly graduated into the “big” league— megawatt size, albeit single digits. And the flurry of activity is warming the engines of an otherwise dormant economy. What, in fact, electrified the sector was Bengal’s policy announcement in January 2008, followed by one from the Government of India the same month. West Bengal, which has already allotted projects worth 40 MW for commissioning before March 31, 2012, gives promoters a feed-in tariff of Rs 11 per unit for 20 years. The Union government’s Ministry of New & Renewable Energy (MNRE), which aims to add 50 MW during the same period, offers a generationbased incentive at or below Rs 12 a unit. A developer opting for the MNRE scheme gets Rs 15 per unit in the form of tariff plus incentive. Following these announcements, an estimated 2000 MW worth of investment proposals have reached the ministry, even though not all may be serious developers. As if this was not enough, Gujarat Chief Minister Narendra Modi announced that his government is determined to add 500 MW by March 31, 2014, and will pay the developer Rs 13 per unit for the first 12 years and at Rs 3 for 13 years after that. The developers have lapped up the scheme by promising projects adding up to a capacity of 3,275 MW. Gujarat’s attraction: tariff support for 25 years, against the MNRE’s 10 years. Gujarat’s policy prompted fellow BJP-ruled state Karnataka to plan a similar scheme. “We are also working on a policy that fits our state best. We are looking at a target and tariffs similar to that of Gujarat,” says K. Jairaj, Principal Secretary, Energy Department, Karnataka. Dr Bharat Bhargav, Director (Solar PV), MNRE, sums up the opportunity size: “If someone invests in setting up a solar plant, he will not regret it. There is 5,000 trillion kilo Watt hour (kWh) of solar radiation incidence over the land area of India. That is the size of opportunity available to investors.” And S.P. Gon Chaudhuri, Managing Director of WB Green Energy Corporation, who has championed solar and other renewable energy forms since his days as a bureaucrat, concurs: “We will have 17 MW of more solar capacity by the end of 2010, and all 40 MW during the 11th Plan period.’’ India’s leading maker of PV cells, Tata BP Solar, is equally upbeat about the opportunities. Its CEO, K. Subramanya, welcomes the MNRE policy but questions the limit of 50 MW. The current incentive is not adequate “since the cost of generation is higher than that (Rs 15/unit), given the high cost of finance as well as high cost of raw materials (silicon wafers)...The incentives should be extended for 20-25 years. The timeline for commissioning of generation plants should be extended beyond Dec 31, 2009, by one year,” Subramanya insists. But if tariffs are not exciting enough, why are investors rushing with proposals? Anil Patni, DGM, Tata BP Solar, explains: “The sudden explosion of interest could be in anticipation of the government raising both the ceiling and tariffs.’’ As Sourabh Sen, Co-chairman of Astonfield Renewable Resources, says: “Ten per cent of grid consumption should come from clean and green power as India is the sunniest nation.” Sen, whose company is developing projects of about 280 MW, however, cites one dampener: PV panels are 35 per cent cheaper in global markets than in India. Rajiv Arya, CEO of Moser Baer Photovoltaic, says he would not mind a comprehensive policy based on a single window for clearances and approvals. “The Government should design more policies that allows 1,000 MW and above with a sound framework of subsidies at every level,” says Arya. “The current policy has laborious system of checks that slows down the other processes.” Promoters cite another factor behind India’s slow progress compared with leaders like Spain or Germany: high capital costs. “Costs will come down as technology improves and the market expands. But remember, the cost of conventional electricity will keep shooting up, while that of non-conventional power will keep coming down,’’ says Patni of Tata BP. Logical: fossil fuels won’t last for ever. And India’s days in the sun have come.