National Solar Mission back with a bang

The govt has issued guidelines for setting up 1,500 Mw of solar power plants, the largest tender issued till now

After facing delays, trade disputes and industry tiffs, the Jawaharlal Nehru National Solar Mission (JNNSM) appears to be back on track.

The ministry of new and renewable energy (MNRE) has issued guidelines for setting up 1,500 Mw of solar power plants, the largest tender issued till now. It has also roped in NTPC Vidyut Vyapar Nigam (NVVN) to expedite the phase and meet the mission's targets.

NVVN would also bundle the solar power generated with cheaper conventional power and sell at an average rate.

"The selection of grid-connected solar photovoltaic (PV) projects of 1,500 Mw total capacity shall be carried out by NVVN through a transparent, tariff (rate)-based reverse bidding process. NVVN will purchase the power from the successful developers at their bid tariff and sell bundled power to distribution companies/utilities/other bulk consumers," say the guidelines issued by MNRE.

NVVN is the trading arm of the nation's largest thermal power producer, NTPC. It was responsible for carrying out the very first bidding of the JNNSM, in 2010.

That helped the solar power rates go down from Rs 17 a unit to Rs 10-12 a unit. Subsequently, the cost of solar power has come down to Rs 6.5-7 a unit, a 60 per cent decline in three years. The previous batch of bids under JNNSM had a fixed rate of Rs 5.45 a unit, supported with viability gap funding.

"We are hopeful that during this bidding, the rate would come down to at least Rs 5 a unit. There are now serious players in the sector, expected to bid aggressively," said Tarun Kapoor, joint secretary, MNRE. He said the tender process would take off as soon as consultations with the stakeholders concluded, most likely by the end of August.

The government is also hopeful of achieving grid parity that is solar power at the same cost as conventional power, by 2017, scaling down from the earlier target of 2022.

The mission guideline has divided the phase target in two portions. "In order to avoid the difficulty that may arise in achieving financial closure of projects, selection of PV projects shall be done in a phased manner. The total capacity of solar PV projects to be selected in the first tranche, in FY2014-15, will be 750 Mw. The projects for the remaining capacity of 50 Mw for solar PV projects will be selected in the second tranche, that is, in FY2015-16," say the guidelines.

The second phase of JNNSM got delayed by more than a year, due to a dispute at the World Trade Organization over the Mission's domestic content requirement guidelines and dumping charges by Indian manufacturers on solar cells from China, US, Malaysia and Taiwan.

This batch of tender has also put aside as much as 500 Mw to be built from domestic content. The current capacity of the domestic industry is 1,260 Mw, of which 240 Mw is operational.

The bidding, part of the second batch of phase-II of JNNSM, aims to achieve a capacity addition of 10,000 Mw by 2017. The government tendered 750 Mw of projects this January, as a part of this phase. In the first phase, it achieved a capacity addition of 1,100 Mw. The country's current solar power capacity is 2,600 Mw and the government hopes to cross 20,000 Mw by 2022.