With Phase 1 of India’s National Solar Mission seemingly complete, focus has now shifted to Phase 2 which is to triple the current installed capacity by 2017. When the Jawaharlal Nehru National Solar Mission (JNNSM) was first released in 2010, it set a target of 20GW of solar installed capacity by 2022. The JNNSM strategy was to initially focus on building the necessary frameworks that would be required to sustain the rapid growth needed to reach 20GW by 2022. In an exponentially stepped approach, 1,100MW were targeted under Phase 1, 4,000-10,000MW (cumulative) under Phase 2, and 20,000MW (cumulative) by the end of Phase 3. Note: target capacities include both solar PV and solar thermal technologies.
|Application Segment||Target for Phase 1 (2010-2013)||Cumulative Target for Phase 2 (2013-2017)||Cumulative Target for Phase 3 (2017-22)|
|Grid Solar Power (large plants, roof tops & distribution grid plants)||1,100 MW (50:50 Solar PV to Solar Thermal)||4,000-10,000 MW (70:30 Solar PV to Solar Thermal)||20,000 MW|
|Off-grid solar applications||200 MW||1,000 MW||2,000 MW|
|Solar Thermal Collectors (SWHs, solar cooking/cooling, Industrial process||7 million sq meters||15 million sq meters||20 million sq meters|
|Solar Lighting System||5 million||10 million||20 million|
From 8MW in January 2010, India’s installed capacity has grown to 1,839 MW as of July 30th, 2013 with 1658MW of capacity addition under the JNNSM against a Phase 1 target of 1100MW. Phase 2 draft guidelines were released in April 2013 and served to address some of the financing concerns that arose during Phase 1. The final guidelines are anticipated to be released later this quarter, but the Ministry of New and Renewable Energy has already started accepting bids for 750 MW of Solar PV under the Viability Gap Funding scheme of Phase 2 – Batch 1.
Viability Gap Funding
Viability Gap Funding (VGF) is a proposed Phase 2 mechanism that provides funding for grid-connected solar PV projects between 10-50MW, with a total of 750 MW eligible under this scheme. The 750MW is further divided into two equal parts of 375MW each; Projects allocated under Part A will be subject to domestic content requirements for modules and cells whereas projects allocated under Part B will be open to foreign manufacturers. The VGF mechanism covers a maximum of 30% of the benchmark capital costs up to a maximum of USD 502,500/MW. The bidding process has been structured to favour developers with the lowest funding requirements per MW. Thus, it is anticipated that most developers will bid well below the maximum funding limit. VGF will be distributed to successful developers in three stages with 25% of allocated capital being disbursed at the time of delivery of a minimum of 50% of the equipment to the site, another 50% being disbursed after successful commissioning of the full capacity of the plant, and the final 25% being disbursed after one year of successful operation. Under this scheme, the generated solar power will be sold to distribution companies at a fixed levelized tariff of USD 0.11/kWh or USD 0.10/kWh with Accelerated Depreciation through a 25-year PPA. The tariffs are substantially lower than in the past, but with the front-loaded aspect of the VGF scheme, they still provide substantial incentives for developers.
India’s first phase of solar development experienced both successes and failures – but overall it exceeded its goals for solar PV. Phase 2 of the National Solar Mission signals a maturing of the market in India and a new set of challenges and opportunities for industry participants.
As part of its ongoing research into emerging global solar PV markets, ClearSky Advisors has recently published an analysis of the policy and market fundamentals that form the basis of the Indian renewable energy sector, focusing primarily on solar PV. If you are interested in more information about our Global Emerging Solar PV Market and Policy Intelligence service, please contact us at firstname.lastname@example.org or call +1-877-333-5821.
Photo Credit: Dennis Jarvis