This had a direct bearing on the purchase price of solar Photovoltaic (PV) and Concentrated Solar Power (CSP).
Last week the next round of bidding for solar power projects under the Jawaharlal Nehru National Solar Mission (JNNSM) was announced. It is likely to be held in July or August of this year. This will be the second set of bidding for the Phase 2 of JNNSM.
The first set, during which solar power projects worth 750 MW were tendered, was carried out in January of this year. Over 120 projects were auctioned during the first set of bidding for Phase 2. The companies that won the bids will have to complete the projects within 13 months from the date of signing of power purchase agreements. During the second set 1500 MW of projects will be up for bidding. These solar power projects are part of a concerted effort to combine solar power with conventional power. The new government’s decision to converge the three energy ministries – coal, power and renewable energy – into one has provided a much needed boost to this plan.
Can JNNSM boost India’s clean energy plans?
It has been over 4 years since the inception of JNNSM. It is one of the eight missions that are part of the National Action Plan for Climate Change. JNNSM set out to develop solar power on a large scale as well as create world-class solar energy R & D facilities in India. Energy shortages continue to plague India 67 years after independence. Over the past couple of months reports of crippling power cuts across Uttar Pradesh and Delhi NCR have hogged the limelight. India’s dependence on fossil fuels has reached critical levels. Past governments have failed to truly exploit the potential of hydroelectric power, which could have been the answer to a number of our power woes. Today solar power is at a stage that hydroelectric power was a decade or so ago. By the end of the current government’s five-year term we will have a clear idea if the future of solar energy is headed in the right direction or if it is destined to meet the same fate as earlier attempts at developing clean energy sources.
The first phase of JNNSM concentrated on the grid-connected segment and the response from investors (both domestic and international) was encouraging. The bidding for this phase was carried out between 2010 and 2013. Solar power, which was quite expensive during that period, was bundled with the Government of India’s unallocated quota in thermal power stations. This innovative strategy reduced the price of solar power significantly, because thermal power is comparatively cheaper. Qualified bidders were also allowed to reverse bid. This ensured that the bidders could draw benefit from the reduction in prices of solar components, globally. This had a direct bearing on the purchase price of solar Photo Voltaic (PV) and Concentrated Solar Power (CSP).
A study was commissioned in 2012 by the Ministry of New and Renewable Energy to identify the key challenges for Phase 2 based on the outcomes of Phase 1 of JNNSM. This study was assisted by Energy Sector Management Assistance Program (ESMAP), a global knowledge and technical assistance program administered by the World Bank. The three challenges this study identified were increasing funding from commercial banks and private investors, developing solar parks, like the one in Charanka, Gujarat, and identifying a niche in the manufacturing value chain and focusing on that.
During Phase 1 commercial banks didn’t express much interest in investing in solar energy. This needs to change for robust growth in solar infrastructure. The other alternative is publicly built solar infrastructure. This would allow private players to focus solely on solar power generation, which in turn would increase efficiency and lead to lowering of costs. Modi doesn’t have to look too far. The solar in Charanka is a perfect example. Lack of access to high-quality raw materials and prohibitive prices are also hampering India’s solar PV manufacturing capacity. It’s the same in case of CSP as well. Identifying specific segments in the manufacturing value chain that India could specialise in is the best way forward, and it needs to be done soon.
Solar power is the solution to India’s increasing energy needs
There is little doubt about the potential of renewable energy is India, especially solar energy. What has been holding back its progress is political will. The shift from fossil fuels to renewable energy can’t take place overnight, but the process can be quickened if those in power support such a move. India’s energy needs have been growing almost at an exponential rate. And there is no chance of that demand reducing any time soon. India’s power-generation capacity, however, hasn’t been able to keep pace with this increase in demand, which has forced successive governments to increasingly depend on imported energy. India is the third-largest importer of coal in the world, even though we have the fifth-largest coal reserves in the world. The reasons are multi-fold – environmental clearances, land acquisition issues, etc. The negative impact on the economy and the environment can both be addressed by increasing focus on renewable energy. It will also allow India to achieve energy security, to a large extent.
Investing in solar energy is the answer to India’s future energy needs. It would also have other ripple effects – creation of new jobs and a much-required economic stimulus are just some of the probable effects. The JNNSM is a step in the right direction, but its objectives need to be broadened for it to have a significant enough impact on the country’s energy woes. JNNSM will proceed in three phases – Phase 1 (2010-2013), Phase 2 (2013-2017), and Phase 3 (2017-2022) – and aims to achieve grid parity by 2022. Grid parity basically means that solar energy will be used to create electricity that will be delivered at a similar cost and quality as electricity created through conventional energy. If all goes according to plan then by 2022 the 20 GW of solar power that JNNSM will deliver will satiate 10 percent of India’s energy requirement. This is inadequate, to say the least. India also voluntary committed to reduce its emissions intensity by 20-25 percent of its GDP by 2020, which will be a distant dream even if the current JNNSM plans are a success. India has the opportunity to become a global leader in solar energy. The scope of JNNSM needs to be broadened.
A Climate & Development Knowledge Network (CDKN) report, ‘Transforming India into a solar power’, points out that if JNNSM reaches its target of 20 GW solar installations by 2022, it would establish India as the global leader in solar power generation. India is currently in 10th position with a solar power generation capacity of 2000 MW. Germany (17 GW), Spain (4 GW) and Japan (2.7 GW) hold the top three positions. The same report mentions that around 400 million people in India still do not have access to electricity. That figure is higher than the combined population of Germany, Spain and Japan. So, 20 GW of solar power will not be enough to make a dent on India’s massive energy needs, even though it put India on top of that list. Plus, the JNNSM has been concentrating only on grid-connected solar power, which is its primary drawback. The people who are suffering the most because of lack of electricity aren’t even connected to grid-connected power sources. Off-grid solar applications are required, which combined with robust servicing arrangements and participatory models can solve the power woes of the rural areas and remote villages. It will empower them to meet their own power requirements.
The possibility of solar energy and other renewable energy sources replacing conventional energy sources is no longer a dream. A bit of political will, mobilisation of low-cost financing, and a strategic approach can make this a reality, not a few decades from now, but much sooner.