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India, with its high annual solar yield and large number of sites ranks # 4 in solar power
destinations*. The annual solar energy yield ranges between 1700-1900 kWh per m2
per year which ranks India amongst the highest solar radiation receiving countries of the
world*. Furthermore, favourable policy support from the government is making India a
hot-spot for solar generation.
Policy Support
The recently announced Jawaharlal Nehru
National Solar Mission (JNNSM)** is a ma-
jor initiative of the Government of India to
address India’s energy security challenge us-
ing solar energy. The mission seeks to kick-
start solar generation capacities, drive down
costs through local manufacturing and R&D
in order to accelerate the transition to clean
and secure energy. It promises to provide
the much-required impetus for the devel-
opment of solar power in India by provid- Andhra Pradesh have announced solar poli- as manufacturers generally guarantee the
ing for feed-in tariffs as well as support for
Figure 1: Levelised Cost per Unit of Generation (INR) ****.
indigenous manufacturing of components
for solar projects (PV cells and modules,
parabolic mirrors, etc). The Mission will cies, providing for feed-in tariff and other products for 20+ years. However newer
adopt a 3-phase approach, Phase 1 ends in support (like development of infrastructure technologies like thin-film and concentrat-
2012 with a 1000 MW target; Phase 2 ends and provision of waste-land for develop- ed PV, may provide lower up-front costs,
in 2017 with a 3000 MW target, and Phase ment) for the projects. but are unproven and therefore considered
3 ends in 2022 with a 20,000 MW target. more risky.
The proposed tariff for Phase 1 Solar PV is Challenges for Financing Power Purchase Agreements – the
INR 17.91 per unit. Despite the favourable policies and support current draft of the JNNSM provides for a
Under RPO stipulations, State Distribu- being provided by the centre and state gov- “trader PPA” with NVVN (NTPC Vidyut Vya-
tion companies (discoms) must purchase a ernments, solar power remains a risky and par Nigam Ltd. – a wholly owned subsidi-
certain percentage of power from renew- expensive option for power generation. It is ary of NTPC Ltd incorporated for the pur-
able energy sources within their jurisdictions; expected that solar projects may reach grid pose of trading power), which passes on
some regulators have already placed power parity in the coming years, however, that is the risk of default by state discoms to the
purchase orders to meet these obligations. a distant dream and currently the cost of developer. Given that many state discoms
In addition, the central government has generation (levelised) far exceeds conven- are notorious about delaying payments and
mandated the creation of Renewable Energy tional as well as other renewable power. even defaulting, financial institutions refuse
Certificates (REC), which is a market based The graph below (4) shows the levelised to consider these PPAs bankable.
instrument intended to facilitate compliance cost of generation of electricity using differ- Estimation of Solar Radiation – The re-
towards renewable purchase obligations ent sources of power. turns of a solar project are highly sensitive
(RPO). RECs are designed to address the mis- In addition to the above, particular to radiation levels. High quality solar radia-
match between availability of RE resources risks to solar projects that make financial tion data is a pre-requisite for proper mar-
in various states and their concomitant obli- institutions uncomfortable are: ket assessment and project development.
gation. The CERC has mandated*** a floor Technology- Solar technologies are at Hence, solar radiation assessment is a very
and ceiling price for solar RECs at INR 12,280 a nascent stage in India and there are con- important activity and typically requires sev-
and INR 17,230 respectively. siderable risks in execution of the projects. eral months for ground measurement of
In addition to the above measures, Crystalline cells and modules are com- solar radiations. Any error in solar resource
various states like Gujarat, Rajasthan and paratively easier to execute and less risky estimation adds an uncertainty to expected