November 23, 2009
India's ambitious mission to ramp up its solar energy hundredfold in the next 13 years and reduce dependence on fossil fuels was unveiled in New Delhi on Monday. The mission anticipates achieving parity with cost of electricity on the grid by 2022 and parity with coal-based thermal power by 2030. The plan is to produce 20,000 MW through solar energy by 2022, up from just 200 MW now.
The mission, to be coordinated by the Ministry of New and Renewable Energy (MNRE), will improve India's energy security by reducing dependence on imported petroleum. "Already, faced with crippling electricity shortages, price of electricity traded internally, touched Rs.7 per unit for base loads and around Rs.8.50 per unit during peak periods," says the mission document released by MNRE Minister Farooq Abdullah.
"The situation will also change as the country moves towards imported coal to meet its energy demand. The price of power will have to factor in the availability of coal in international markets and the cost of developing import infrastructure. "It is also evident that as the cost of environmental degradation is factored into the mining of coal, as it must, the price of this raw material will increase. In the situation of energy shortages, the country is increasing the use of diesel-based electricity, which is both expensive - - costs as high as Rs.15 per unit - - and polluting.
The mission, called the Jawaharlal Nehru National Solar Mision after the nation's first prime minister, will adopt a three-phase approach, spanning the remaining period of the 11th Plan and first year of the 12th Plan (up to 2012-13) as Phase 1, the remaining four 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 mid-term 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 aim would be to protect the government from subsidy exposure in case expected cost reduction does not materialise or is more rapid than expected.
The first phase will focus on solar thermal; on promoting off-grid 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 key driver for promoting solar energy would be through a Renewable Purchase Obligation (RPO) mandated for power utilities, with a specific solar component. The obligation will be gradually increased while the tariff fixed for solar energy purchase will decline over time.
The mission in its first two phases will promote solar heating systems which are already using proven technology and are commercially viable. It will:
- Firstly, make solar heaters mandatory, through building bylaws and incorporation in the National Building Code,
- Secondly, ensure the introduction of effective mechanisms for certification and rating of manufacturers of solar thermal applications,
- Thirdly, facilitate measurement and promotion of these individual devices through local agencies and power utilities, and
- Fourthly, support the upgrading of technologies and manufacturing capacities through soft loans, to achieve higher efficiencies and further cost reduction.
The mission plans to provide solar lighting systems under the ongoing remote village electrification programme of MNRE to cover about 10,000 villages and hamlets. It will also set up standalone rural solar energy plants in Lakshadweep, Andaman & Nicobar Islands and Ladakh region of Jammu and Kashmir.
The mission proposes to provide a soft re-finance facility through Indian Renewable Energy Development Agency (IREDA) for which the government will provide budgetary support. IREDA would in turn provide refinance to NBFCs and banks with the condition that it is on-lend to the consumer at rates of interest not more than five%. A Solar Research Council will be set up to oversee the strategy, taking into account ongoing projects, availability of research capabilities and resources and possibilities of international collaboration.
NTPC subsidiary NTPC Vidyut Vyapar Nigam Ltd. (NVVN) will be designated as nodal agency by the Ministry of Power (MoP) for entering into a Power Purchase Agreement (PPA) with solar energy developers.
The PPAs shall be signed with the developers who will be setting up solar projects within next three years and are connected to the grid at 33 KV level and above. The PPAs will be valid for a period of 25 years. For each MW of solar energy installed capacity for which PPA is signed by NVVN, MoP shall allocate to NVVN an equivalent amount of MW capacity from the unallocated quota of NTPC stations.
One of the mission objectives is to make India a global leader in solar manufacturing and target a 4-5 GW equivalent of installed capacity by 2020, including setting up of dedicated manufacturing capacities for polysilicon material to annually make about 2 GW capacity of solar cells.
India already has PV module manufacturing capacity of about 700 MW, which is expected to increase in the next few years. The present indigenous capacity to manufacture silicon material is very low, however. It is envisaged that at the end of the mission period, the solar industry will employ at least 100,000 trained personnel. The mission will be implemented by an autonomous Solar Energy Authority and or an autonomous and enabled Solar Mission embedded within the MNRE.
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