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Indian Government to spend at least Rs 20 billion on solar mission

According to reports, the government may have to spend at least Rs.2,000 crore to get private solar companies to generate clean electricity, and keep the ambitious Jawaharlal Nehru National Solar Mission (JNNSM) on track. The mission aims to generate 20,000 megawatts (MW) by 2022.

Two officials in the ministry of new and renewable energy (MNRE) said that under the second phase of the solar mission, which begins in 2013 with the aim of adding 3,000 MW by 2017, the ministry plans to subsidize companies by bearing a portion of the cost of setting up a solar manufacturing plant.

With India facing a massive power crunch, evidenced most recently by a widespread blackout that left some 620 million without electricity in July, the government is counting on alternative sources of power such as solar energy to reduce a widening gap between demand and supply.

Solar power currently contributes less than 0.5% of India’s energy mix; with schemes such as the JNNSM, the government hopes to raise that to 5-7% by 2022.

“We’ll fix the price at which project developers must sell their power and invite bids and those who require the least financial help from government will be able to set up their plant,” said Tarun Kapoor, joint secretary, MNRE.

The ministry used a similar approach to seek bids for developing solar plants in the first phase of the mission in which 1,000 MW are to be commissioned by 2013. Power utilities in various states bought the costlier solar power from these companies and were compensated with a certain percentage of coal-based power from the central government.

“This year too, we’ll have some of the coal-based power but we’re trying to do several things to boost volumes of the solar power supplied,” Kapoor added.

The first phase of the solar mission that began in 2010 ran into controversy with nearly half the successful bidders behind schedule in setting up the projects and with some companies accused of using complicated corporate structuring methods to gain more than their fair share of rights for production of solar power.

“More than 90% of the 500 MW (solar photovoltaic projects) are on track,” said Gireesh Pradhan, secretary, MNRE. “The other 500 MW are solar thermal projects and have to complete their projects only by 2013.”

The 3,000 MW to be generated by 2017 includes both solar thermal and solar photovoltaic, which are two different methods of generating solar power.

During the bidding for the first phase, solar power producers were to quote the lowest price at which they would produce solar power. The average price during the first phase bidding was about Rs.8 per MW. The government had signed agreements with around 57 solar power project developers in the first phase of the mission.

The government would have done some homework in setting that price, said K. Subramanya, an independent solar energy consultant.

“New evolution is happening and there is no harm in experimenting as there is no perfect model till now,” he added.

Subramanya said the ability of solar power producers to take risks will increase because funding was a sign of government support.

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