INDIAN SOLAR ENERGY SECTOR

AN ANALYSIS OF THE VARIOUS PROJECT AND POLICIES.

Bibhu Prasad Biswal (40) | Chandu Bommareddi (41) | Tima Chaudhary (42) | Batch 18 (A)
23 RD FEBRUARY, 2014|ENVIRONMENTAL ISSUES|XIME, BANGALORE

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INDIAN SOLAR ENERGY SECTOR

INTRODUCTION Energy is critical, directly or indirectly, in the entire process of evolution, growth and survival of all living beings and it plays a vital role in the socio-economic development and human welfare of a country. Energy has come to be known as a strategic commodity and any uncertainty about its supply can threaten the functioning of the economy, particularly in developing economies. Achieving energy security in this strategic sense is of fundamental importance not only to Indias economic growth but also for the human development objectives that aim at alleviation of poverty, unemployment and meeting the Millennium Development Goals (MDGs). Due to rapid growth in industrialization and population, demand of power is also increasing at an alarming rate. In order to meet the power requirement man always depends upon various sources of energy. Due to over dependence on non-renewable energy resources, the current consumption level has not only made the non-renewable energy resource stock scarce but has made the environment polluted by all possible means, hence leading to all possible ecological imbalances. As a result, now the world is searching for various energy sources which are renewable in nature and provide a cleaner environment after its use, the "Green Energy". Various renewable energy sources are Solar, Wind, Hydro, Tidal, Geothermal etc. Solar energy is genesis for all forms of energy. This energy can be used in two ways the Thermal route (i.e. using heat for drying, heating, cooking or generation of electricity) or through the Photovoltaic (PV) route which converts solar energy in to electricity that can be used for a myriad purposes such as lighting, pumping and generation of electricity. With its pollution free nature, virtually inexhaustible supply and global distribution - solar energy is very attractive energy resource. In this report we are trying to understand the solar energy market i.e. the demand and supply facilitated through various projects in Indian market. INDIAN SOLAR ENERGY MARKET OVERVIEW India is densely populated and has high solar insolation, an ideal combination for using solar power in India. In the solar energy sector, some large projects have been proposed, and a 35,000 km2 (8,600,000 acres) area of the Thar Desert has been set aside for solar power projects, sufficient to generate 700 GW to 2,100 GW. Also India's Ministry of New and Renewable Energy (MNRE) has released the Jawaharlal Nehru National Solar Mission (JNNSM) Draft Policy, by which the Government aims to install 10 GW of Solar Power and of this 10 GW target, 4 GW would fall under the central scheme and the remaining 6 GW under various State specific schemes. In July 2009, India unveiled a US$19 billion plan to produce 20 GW of solar power by 2020. Under the plan, the use of solar-powered equipment and applications would be made compulsory in all government buildings, as well as hospitals and hotels. On 18 November 2009, it was reported that India was ready to launch its National Solar Mission (also known as JNNSM) under the National Action Plan on Climate Change, with plans to generate 1,000 MW of power by 2013. From August 2011 to July 2012, India went from 2.5 MW of grid connected photovoltaic to over 1,000 MW. On 16 May 2011, Indias first 5 MW of installed capacity solar power project was registered under the Clean Development Mechanism. The project is in Sivaganga district, Tamil Nadu. India is planning to ENVIRONMENTAL ISSUES ASSIGNMENT
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install the World's largest Solar Power Plant with 4,000 MW Capacity near Sambhar Lake in Rajasthan.

According to a 2011 report by Bridge to India and GTM Research, India is facing a perfect storm of factors that will drive solar photovoltaic (PV) adoption at a "furious pace over the next five years and beyond". The falling prices of PV panels, mostly from China but also from the U.S., has coincided with the growing cost of grid power in India. Government support and ample solar resources have also helped to increase solar adoption, but perhaps the biggest factor has been need. India, "as a growing economy with a surging middle class, is now facing a severe electricity deficit that often runs between 10% and 13% of daily need. Reaching grid-parity for solar has great significance for India for several reasons, those are as follows.

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Greater reliance on solar power will boost the countrys energy security and loosen its heavy (and costly) dependence on coal. Contrary to the belief that India has huge domestic coal reserves, the country in fact must import coal to meet its energy demands. Currently, Indias top power producer, National Thermal Power Corporation Ltd, meets about 15 percent of its needs through imported coal, and it plans to increase coal imports to 16 million tons this fiscal year due to local shortage. Already this year, the company has called bids seeking 7 million tons of imported coal to supply its 16 power stations. This import reliance makes India not only politically vulnerable, but also economically shaky. Fossil fuel subsidies contribute to Indias mounting public deficit in the fuel sectora deficit that has led rating agency Standard and Poor to consider downgrading Indias debt from investment-grade to junk status. Cheaper solar power will help thousands of Indian homes gain access to electricity for the first time ever. According a 2010 report from the International Energy Agency, the government of India has pledged that the entire nation will have access to electricity by 2012-13. This plan appears to be ambitious, however, because India would need to install an estimated 200 GW of generation capacity to sustain economic growth of 8 percent. Solar power at grid-parity can help address Indias 9 percent power deficit. The nationwide blackout that affected India last July, which has been attributed to poor grid management and over-drawing of the power supply, is still fresh in the countrys memory. Such problems will likely continue unless new power supplies are identified and connected to the grid.

Comparable costs for solar and conventional generation could lead to an increase in solar energys share of Indias power generation portfolio. This in turn would contribute to an associated decrease in the power sectors greenhouse gas emissions. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION (JNNSM) "Our vision is to make India's economic development energy-efficient. Over a period of time, we must pioneer a graduated shift from economic activity based on fossil fuels to one based on non-fossil fuels and from reliance on no-renewable and depleting sources of energy to renewable source of energy. In this strategy, the sun occupies center-stage, as it should, being literally the original source of all energy. We will pool our scientific, technical and managerial talents, with sufficient financial resources, to develop solar energy as a source of abundant energy to power our economy and to transform the lives of our people. Our Success in this endeavor will change the face of India. It would also enable India to help change the destinies of people around the world."
Dr. Manmohan Singh, Prime Minister of India National Action Plan on Climate Change

Jawaharlal Nehru National Solar Mission is a major initiative of the Government of India with active participation from States to promote ecologically sustainable growth while addressing India's energy security challenge. It plays a major role in Indias contribution to fight against the issues of climate change which is a big concern across the globe. Based on this vision Jawaharlal Nehru National Solar Mission was launched under the brand name "Solar India".
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JNNSM OBJECTIVE

The objective of the Jawaharlal Nehru National Solar Mission is to establish India as a global leader in solar energy, by creating the policy conditions for its large scale diffusion across the country as quickly as possible. The Mission adopted a 3-phase approach, spanning the period of the 11th Plan

and first year of the 12th Plan (up to 2012-13) as Phase 1, the remaining 4 years of the 12th Plan (2013-17) as Phase 2 and the 13th Plan (2017-22) as Phase 3. At the end of each plan, and midterm during the 12th and 13th Plans, there will be an evaluation of progress, review of capacity and targets for subsequent phases, based on emerging cost and technology trends, both domestic and global. The immediate aim of the Mission was to focus on setting up an enabling environment for solar technology penetration in the country both at a centralized and decentralized level. The first phase (up to 2013) focused on capturing of the low hanging options in solar; on promoting off-grid ENVIRONMENTAL ISSUES ASSIGNMENT
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systems to serve populations without access to commercial energy and modest capacity addition in grid-based systems. In the second phase, after taking into account the experience of the initial years, capacity will be aggressively ramped up to create conditions for up scaled and competitive solar energy penetration in the country. The Mission has set the ambitious target of deploying 20,000 MW of grid connected solar power by 2022 is aimed at reducing the cost of solar power generation in the country through (i) long term policy; (ii) large scale deployment goals; (iii) aggressive R&D; and (iv) domestic production of critical raw materials, components and products, as a result to achieve grid tariff parity by 2022. JNNSM is aimed at creating an enabling policy framework to achieve these objectives and make India a global leader in solar energy.
STATUS AND ACHIEVEMENTS OF PHASE I

Despite vast solar potential, Indias solar power capacity was almost non-existent until recently. Serious development in Indian solar industry came with the announcement of JNNSM in 2010. Before announcement of JNNSM, Indias solar power capacity was mare 17.8MW in early 2010. The aim of National Solar Mission is to achieve a wide range of ambitious objectives, with the overall stated goal of establishing India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible. Phase 1 of the Mission was largely focused on grid-connected projects. To achieve 500 MW of PV and 500 MW of solar thermal, the central government conducted two batches of reverse auctions. These bidding processes offer feed-in tariffs and long-term power purchase agreements (PPAs) to the selected least-cost developers. The feed-in tariffs to developers are complemented by support to power utilities through the bundling of solar power with conventionally produced electricity, reducing the average per-unit cost of solar power.
BUILDING OF SOLAR PO WER

In order to facilitate grid connected solar power generation under the first phase, without any direct funding by the Government, Government approved NTPC Vidyut Vyapar Nigam (NVVN) as the nodal agency to purchase 1000 MW of solar power from the project developers, bundle it with the unallocated power available from the NTPC coal-based stations and sell this bundled power to the Distribution Utilities. Bundling concept was introduced to keep the cost of bundled power approximately Rs 5/kWh. It was decided to select projects of 500 MW capacity each based on solar thermal and solar photovoltaic (PV) technologies. Considering the relatively longer gestation period of Solar Thermal Projects i.e. over two years, the selection of projects for 500 MW was completed in FY 2010-11. The size of solar thermal projects was in the range of 20 MW to 100 MW per project developer.
PROJECTS UNDER BATCH 1, PHASE 1

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The selection of Solar PV projects of 500 MW capacity was decided to be undertaken in two batches over two financial years of Phase 1 i.e., 2010-2011 and 2011-2012. The size of PV projects in the first stage in 2010-11 was fixed at 5 MW per project. Under Migration scheme NVVN started the process of short listing the on-going projects to migrate to the JNNSM. A total of 16 projects of 84 MW capacity were selected. These project developers signed PPA with NNVN in October, 2010 and reported financial closure. The last date for commissioning of 54 MW capacity PV projects was by end of October, 2011. The 30 MW capacity solar thermal projects are to be commissioned by March, 2013. Later in August 2010, NVVN started the process of selection of new grid solar power projects comprising of 150 MW of Solar PV and 470 MW of solar thermal capacities. This yielded a tremendous response and applications were received for over 5,000 MW capacity. The projects were selected based on tariff discounting. Total 30 SPV projects were selected after bidding process and subsequently 28 project developers signed PPAs for 140 MW capacity with NVVN. Similarly seven solar thermal projects were selected after bidding process and signed PPA with NVVN. In batch-I, a total of 704 MW capacity grid connected solar power projects have been selected, which comprise of 500 MW capacity of solar thermal power projects and 204 MW of PV power projects.
PROJECTS UNDER BATCH 2, PHASE 1

Under Batch II of Phase I, the total aggregate capacity of grid connected Solar Projects was 350 MW for the deployment of Solar PV Power Projects. NVVN had been designated as the nodal agency for procurement of solar power and for carrying out the bidding process. On August 24, 2011, NVVN invited Request for Selection (RfS) from interested developers to develop 350 MW solar PV projects with a capacity in multiple of 5 MW, Minimum capacity 5 MW & Maximum Capacity 20 MW for each project. Total Capacity for each bidder was limited to 50 MW.
RPSSGP SCHEME

MNRE announced the Guidelines for Rooftop and other Small Solar Power Plants connected to distribution network (Below 33 kV) in June 2010. This component of the Mission was designed essentially as a State driven scheme to encourage the States for grid connected projects focusing on distribution network and to strengthen the tail end of the grid. Under this scheme, the state utilities purchase power from any of the generation companies based on the tariff fixed/approved by the respective State Electricity Regulatory Commissions (SERCs). Another purpose of the scheme was to encourage as many States as possible to set up small solar grid connected projects. This would also help to create a database of performance of solar plants under different climatic and grid conditions. This was considered necessary for large-scale replication in future, particularly for meeting rural needs in the next phase of the Solar Mission. Under these guidelines, a cap of a maximum 20 MW capacity projects per State was put. The project size was limited to a maximum of 2 MW capacity to be connected to distribution grid. The role of the Ministry was limited to providing a fixed generation based incentive (GBI) to the State utilities at a rate equal to the difference of the CERC tariff for 2010-11 (Rs. 17.91 per kWh) and a reference ENVIRONMENTAL ISSUES ASSIGNMENT
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rate of Rs. 5.5 per kWh. The projects were registered with nodal agency IREDA through a webbased process, and 78 projects were selected to set up 98 MW capacity projects from 12 States.

CURRECNT STATUS OF P HASE I PROJECTS

Phase I of JNNSM has been a success story with encouraging response from solar project developers. During Phase-I, grid connected solar power projects were selected on the basis of discounts offered by the project developers on CERC approved applicable tariff. This mechanism was found to be very useful in selecting projects in a transparent manner and also leading to a substantial reduction in solar tariffs because of competition. Scheme Batch I, SPV Migration, SPV Migration, Solar Thermal RPSSGP Batch I, Solar Thermal Batch II, SPV Total (MW)
STATE LEVEL INITIATIVES

Allotted Capacity (MW) 140 54 30 98 470 350 1142

Commissioned as on Sept 05, 2012 (MW) 130 48 2.5 87.8 Scheduled to be commissioned by March 2013 Scheduled to be commissioned by March 2013 268.3

In addition to initiatives at national level, there are several policy initiatives and solar power development programs were announced by State Governments in order to fulfill the Solar RPO (Renewable Purchase Obligations) targets specified by SERCs and to garner capacity in view of strong interest within the solar industry during Phase-I. The status of various State level programs and Solar Installed capacity in States is shown in table below: Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. State Gujarat Maharashtra Karnataka Rajasthan Odisha Madhya Pradesh Tamil Nadu Total Solar Specific Program Announced: 968.5 MW Commissioned: 690 MW Announced: 205 MW Commissioned: 40 MW Commissioned: 8MW, Plans for 600MW Bids Invited: 80 MW Announced: 200 MW Awarded: 25 MW Announced: 50 MW Awarded: 200 MW Announced: 3000 MW Announced: 5000 MW (approx.)

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MAJOR SOLAR INITIATIVES IN INDIA

5 MWP SOLAR PV POWER PROJECT AT SIVAGANGA DISTRICT, TAMIL NADU

On 16th May 2011, Indias first 5 MWp of installed capacity solar power project registered under the Clean Development Mechanism that uses solar PV technology for power generation. This project is now eligible to earn carbon revenue from year 2011 onwards. Please find following details relevant to the project activity; Project Developer: Sapphire Industrial Infrastructures Private Limited (SIIPL is a subsidiary of Moser Baer Clean Energy Limited) Capacity: 5 MWp Type: Grid connected solar PV Location: Rettaipillai Ayyanarkulam Village, Sivagangai, District - Sivaganga, Tamil Nadu Land Area: 66 acres Expected power generation: 8322MWh of net electricity per annum Electricity buyer/PPA with: Tamil Nadu Electricity Board (TNEB) (southern grid) Total project cost: Rs. 96,78,84,274 Power tariff: 4.50 Rs/KWh (+10.50 Rs/KWh MNRE incentives)

GUJARAT SOLAR PARK A T CHARANKA, PATAN DI STRICT

Gujarat Solar Park is the name used for a group of solar parks being constructed in Gujarat, India. This makes Gujarat as Asia's largest solar park hub .Certificates of completion were issued on April 19, 2012. "Solar Park also accounts for 3,42,400 tons Carbon Emission Reductions (CERs) which is one of the largest CERs contributing Project in the Renewable Energy Sector. Project Developer: multi developer (around 17), multi facility and multi beneficiaries. Project Commissioned by: Gujarat Power Corporation Ltd. (GPCL) Capacity: 590 MWp Type: thin film solar PV power systems Location: Charanka village, District Patan in Gujarat Land Area: 5384 acres Expected saving of CO2 : 8 million tonnes Expected saving of natural gas: 900,000 tonnes Total project cost: Rs. 4500 crores

5 MWP SPV PLANT AT RAWARA, RAJASTHAN

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5 MWp Solar Photovoltaic Power Plant has been installed at village Rawara, Taluka Phalodi in the state of Rajasthan under Jawaharlal Nehru National Solar Mission. The location is ideally suited for taking all the advantages of Photovoltaic systems as in Western Rajasthan the solar insulation is very good and number of sunny days is also very high. This Power plant is designed to feed power to 33/132 kV Grid Sub Station at village Bap which is situated at 18 km from plant site Rawara. Project Commissioned by: Rajasthan Electronics & Instruments Ltd. (REIL) Total capacity: 5 MWp Expected Energy Generation: 67 Lac KWh / year Cost of the project: Rs. 67.00 Crore (approx.) Project Owner: Indian Oil Corporation Ltd. Date of commissioning: 31st January 2012

NATIONAL SOLAR THERMAL POWER TESTING, SIMULATION AND RESEARCH FACILITY

The facility envisages a grid connected Solar Thermal Power Plant of 1 MW capacity. This will also include a test set up that enables companies and research institutions to test the performance of different solar concentrators, coatings and materials, components and system for a Solar Thermal Power Plant. The project is being implemented by IIT Mumbai and a consortium partners consisting of Tata Power, Tata Consulting Engineers, Larsen & Toubro, Clique, KIE Solatherm.
INSTITUTIONAL ARRANGEMENTS

Solar Energy Corporation of India (SECI) was set up on 20th September 2011, as a not-forprofit company under Section-25 of the Companies Act 1956 as an implementation and facilitation institution dedicated to Solar Energy sector. SECI is established under the administrative control of the Ministry of New and Renewable Energy, Government of India. Mandate of SECI allows wide ranging activities to be undertaken with an overall view to facilitate implementation of JNNSM and achieving the targets set therein. The Corporation has the objective of developing Solar Technologies and ensuring inclusive solar power development throughout India. Solar Energy Industry Research Advisory Council - Ministry of New and Renewable Energy (MNRE) has constituted 'Solar Energy Industry Advisory council' (SEIAC) to advice the ministry on various technology related matters, attract investment across the value chain, suggest steps required to encourage R&D and drive down costs and make the Indian solar industry globally competitive. Solar Energy Centre established in 1982, is a dedicated unit of the Ministry of New and Renewable Energy, Government of India for development of solar energy technologies and its related science and engineering. To achieve its objective, the Centre has been working on various aspects of solar resource utilization and technology development in collaboration with other research institutions, implementing agencies and industry. Over the years, the Centre has developed a variety of technical facilities for technology evaluation and validation, testing and standardization, performance reliability, monitoring and data analysis apart from training. ENVIRONMENTAL ISSUES ASSIGNMENT
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CHALLENGES OF SOLAR ENERGY PROJECTS IN INDIA Key challenges facing the growth and development of solar energy sector in India include: Cost and Transmission & Distribution (T&D) Losses: Solar PV is some years away from true cost competitiveness and from being able to compete on the same scale as other energy generation technologies. Adding to the cost are T&D losses that at approximately 40 percent make generation through solar energy sources highly unfeasible. However, the government is supporting R&D activities by establishing research centers and funding such initiatives. The government has tied up with world-renowned universities to bring down the installation cost of solar power sources and is focusing on up gradation of substations and T&D lines to reduce T&D losses. Land Scarcity: Per capita land availability is very low in India, and land is a scarce resource. Dedication of land area near substations for exclusive installation of solar cells might have to compete with other necessities that require land. Funding of initiatives like National Solar Mission is a constraint given India's inadequate financing capabilities. The finance ministry has explicitly raised concerns about funding an ambitious scheme like JNNSM. Manufacturers are mostly focused on export markets that buy Solar PV cells and modules at higher prices thereby increasing their profits. Many new suppliers have tie-ups with foreign players in Europe and United States thereby prioritizing export demand. This could result in reduced supplies for the fast-growing local market. The need for focused, collaborative and goals driven R&D to help India attain technology leadership in PV. The need for a better financing infrastructure, models and arrangements to spur the PV industry and consumption of PV products. Training and development of human resources to drive industry growth and PV adoption The need for intra-industry cooperation in expanding the PV supply chain, in technical information sharing through conferences and workshops, in collaborating with BOS (balance of systems) manufacturers and in gathering and publishing accurate market data, trends and projections. The need to build consumer awareness about the technology, its economics and right usage Complexity of subsidy structure & involvement of too many agencies like MNRE, IREDA, SNA, electricity board and electricity regulatory commission makes the development of solar PV projects difficult.

CONCLUSION ONE STEP FORWARD, TWO STEPS BACKWARD

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The Indian solar market is in transition, with a gradual move from an incentive driven market to a parity driven market. This transition is causing headaches for policy makers who are wondering about the most effective way of stimulating the market and is responsible for many policy delays and uncertainties. As a result, in the fourth quarter of 2013, the Indian solar market grew by only a disappointing 162 MW. One of the implications of this transition to parity driven market is that India will move from a primarily utility scale market to a more distributed generation market. It is expected that 2014 will lay the groundwork for the rooftop solar market. The direction and soundness of related policy and regulations such as net-metering will be a key determinant of the future of solar in India. To elaborate on how this transition is impacting the existing policy space: planned state level allocations in Tamil Nadu, Andhra Pradesh, Karnataka, Punjab and Uttar Pradesh continue to face delays. Most projections on market growth have turned out to be too optimistic. Among all these states, Power Purchase Agreements (PPAs) have only been signed in Andhra Pradesh for 138 MW. In Tamil Nadu, nothing is expected to move until the Tamil Nadu Electricity Regulatory Commission (TNERC) approves tariffs for solar projects in the state. In Karnataka, the process has gone into litigation and no PPAs have been signed and Karnataka Renewable Energy Development Limited is unwilling to offer any clarifications on the subject. In Punjab and Uttar Pradesh, no PPAs were signed as of 20th December, 2013. Bihar wanted to allocate a capacity of 100 MW but the process has been cancelled without any official statement. Even the National Solar Mission (NSM) appears to be getting delayed as states purportedly showing reluctance to pay any premium for solar power. On the other hand, it is encouraging to see that several state and central policies have announced measures to promote rooftop solar sector. Subsidies, feed-in-tariffs (FiTs) and net/gross metering concepts are being introduced across different policies. Uttarakhand released its FiT based rooftop solar policy in September for 5 MW. Tamil Nadu, Andhra Pradesh and Karnataka want to follow a rooftop policy with capital subsidies similar to Kerala. Gujarat also wants to provide capital subsidies for a rooftop capacity of 60 MW. However, the state rooftop policies rely largely on funding support from Ministry of New and Renewable Energy (MNRE). With the ongoing funding crunch at MNRE and the general election paralysis in India (before the national elections in 2014), there is no certainty of these schemes going through. The release of payments for Keralas rooftop scheme is already known to have suffered significant delays. Any new fund allocations can only be expected in the budget passed by the new government around August 2014.

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