Business Standard

Big targets in solar power need back-end push

Experts say are investors waiting for a govt policy that would allow companies to invest more than Rs 1,000 crore in a single solar power project

Shreya Jai New Delhi
A solar power generation target of 100 gigawatts in five years could be a tall order without strong back-end support. Experts point to a lack of domestic equipment manufacturing capability apart from issues over financing and land availability.

“The government’s intention of taking the Jawaharlal Nehru National Solar Mission target to 100 gigawatts over the next five years with a simultaneous ‘Make in India’ push offers a never-before opportunity for solar power in India. We see growth in both solar power generation and photovoltaic cell manufacturing over the next five years,” said Vivek Chaturvedi, chief marketing officer, Moser Baer Solar Ltd, a leading photovoltaic cell maker.
 

Under the Jawaharlal Nehru National Solar Mission, the flagship solar power programme of the United Progressive Alliance (UPA) government, the original target was a capacity of 20,000 Mw by 2022.

The solar story as it stands
Current solar capacity of the country: 2,765 Mw
India’s domestic solar cell manufacturing capacity: 1,260 Mw
Operational capacity: 240 Mw
India’s annual demand: 3,000 Mw, slated to increase to 4,500 Mw by next year
Govt plans to set up 20,000 Mw solar capacity every year, targets 1,00,000 Mw by 2019
Original target under JNNSM: 20,000 Mw by 2022
More than 75 per cent of solar power projects based on imported material
Cost of domestic solar cell: 44-48 cents per watt
Cost of cells coming from China: 58-61 cents
US-based First Solar: 65 cents per watt
Other importers from US and countries Singapore, Japan, Canada, European nations: 75-90 cents per watt

However, a recent directive from the prime minister’s office has raised it to 1,00,000 Mw by 2019. The renewable energy ministry has been asked to ready a plan by next week and meet the target before the next general elections.

A senior industry executive said the target was steep. Though solar power capacity is being planned along highways, canals and vacant stretches, land acquisition remains cumbersome. Also state governments face problems in feeding solar power to the grid.

The vital constraint is the local capacity for solar equipment. According to the renewable energy ministry, of the 1,260 Mw solar cells installed in the country, only 240 Mw is operational, while the yearly demand is 3,000 Mw. “For massive capacity addition, power producers will have to import solar cells. There is not enough local production,” said Sumant Sinha, chairman and chief executive of ReNew Power.

Power producers said Chinese solar cells cost 58-61 cents per watt and locally made cells 44-48 cents. The price of cells made in Singapore, the US, Canada, Japan and the EU is 75-90 cents. An anti-dumping investigation against solar cell makers from these countries has lapsed.

Experts said investors were waiting for a government policy that would allow companies to invest more than Rs 1,000 crore in a single solar power project so that returns could improve.

Some big names in the solar power industry are ramping up capacity. Even the government is rolling out giant tenders for solar power projects on the lines of ultra mega power projects of 4000 Mw.

“We are ready to invest around Rs 5,000 crore in clean energy projects, with a target of investing Rs 15,000 crore in the next five years,” said Vineet Mittal of  Welspun Energy, a leading solar and wind power developer that has set up 600 mw of renewable energy capacity.

India’s solar power capacity has grown by 60 per cent in three years to 2,700 mw. Prices of solar modules have come down by 85 per cent  over this period. Excess capacity in the international market and increasing demand from countries like India are likely to pull down solar energy input costs.

“The speed with which new developments are taking place, we are under pressure to meet the expectations the government has from us,” said Chaturvedi.

Scaling up solar power generation will also depend on tariffs and grid parity with thermal power. The price of solar power has fallen 60 per cent in three years to Rs 6.5-7 a unit. The latest batch of bids in the Jawaharlal Nehru National Solar Mission had set a tariff of Rs 5.45 per unit, supported by viability gap funding.


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First Published: Nov 01 2014 | 1:42 PM IST

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