The government may have to take a second look at the National Solar Mission guidelines in order to bring more clarity in them
At a time when the Indian government is pushing hard to promote clean energy generation and meet the country’s carbon emission commitments, the industry has warned that the government may have to take a second look at the National Solar Mission guidelines in order to bring clarity in the new policy measures introduced.
“This is a policy-driven industry. The format of Power Purchase Agreements (PPAs), for instance, has to change. A PPA must be assignable to the lender,” said Deepak Puri, Chairman and Managing Director, Moser Baer India. “Suppose a developer fails. Then the lender can at least have some recourse,” he added.
Puri was speaking as part of an expert panel discussing “India’s Solar Future” during the last day of the India Economic Summit of the World Economic Forum in New Delhi.
National Solar Mission (NSM) is one of the eight missions under the National Action Plan on Climate Change (NAPCC) launched by Prime Minister Manmohan Singh early this year and aims at setting up over 20,000 Mw of solar power generation capacity by 2020.
In order to bring down the high cost of generation of solar power in India, the government has planned to pool this high-cost power with low-cost conventional power and sell it to the government’s power trading arm, NTPC Vidyut Vyapar Nigam Ltd (NVVN), which will further sell it to State Electricity Boards (SEBs). The perennial ill health of SEBs has cast a doubt over their repaying capacity.
“PPAs are not clearly outlined. For example, what happens when the production is not fully achieved?” asked Alessandro Magnoli Bocchi, Chief Economist at the global investment firm KCIC, who was also one of the panelists. “Also, coordination between the Centre and the states is not clear. It needs to be made clear who is going to enforce the contract and impose fines,” he added.
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He also said that the success of the solar mission could also be constrained by the lack of a “comprehensive and transparent regulatory and tariff structure”.
Ironically, the hurdles to the achievement of the solar mission were highlighted by the government too. “We must remember that this solar power fashion has come in the context of the fact that our power policy is in a colossal mess. We must get our fossil fuel policy right. If we are going to wait for the day when SEBs are reformed, we will lose the opportunity to light up millions of homes,” said N K Singh, Member of Parliament (MP), who was also a part of the panel.
Singh called for comprehensive solar legislation which should do away with the current regime of multiple regulatory approvals. “The solution to the problem also lies in promoting an off-grid solar model,” he said. Other members of the panel included Pankaj Sehgal, managing director of the Sun Group, and Harish Hande, managing director of SELCO Solar Light, India.