As the euphoria over the unveiling of the National Solar Mission wanes, policy makers are facing tough questions on their ‘mainframe’ approach to solar power generation. The mission, with an ambitious target of generating over 20,000 MW of solar power by 2022, leans heavily on fostering large, centralised, grid-connected solar power plants. But wouldn’t the ‘personal computing’ way of creating and nurturing  thousands of small solar power plants, in villages, in deserts and plains, on mountains and islands, be the right way to solar solace for India?

The mission document does dwell on the virtues of small, decentralised systems and the reasons it is critical for rural and inaccessible areas but bares restraint by pitching for a mere 1,000 MW or so by the year 2017.

The manner in which the policy is cast veers towards large centralised plants, either of the photovoltaic (PV) or the Concentrating Solar Power (CSP) technologies. In fact, a few pilot CSP demonstration plants of 50-100 MW capacities are to be built by 2013, during the first phase of the mission.

Tale Of Two Technologies

CSP technologies are different from the usual PV systems, which generate power directly from fields of PV modules. In CSP, large arrays of mirror reflectors concentrate the sun’s radiation to generate steam, which in turn drives a conventional turbine, to generate electricity. In the United States and in Europe, there is a renewed effort on building large utility-scale CSP plants and the trend is beginning to reflect here in India.

“There is no rationale whatsoever for adopting the centralised route,” says N Venkataraman, Managing Director, Solartherm, a Delhi based technology development start-up. The variation in the intensity of solar radiation between the best solar zones in the country—in Rajasthan and Gujarat—and other regions in India is around 10%. “This means that the increase in cost of a project, between one located in Rajasthan and elsewhere will be a mere 6%,” he says, and therefore the potential for seeding hundreds of solar power plants.

I don’t believe we need a winner in technology. (Concentrating Solar Power vs PV systems). It is application that drives technology.Rajiv Arya, CEO, Moser Baer Photovoltaic

The power of the sun does away with the need to be location specific, as in conventional thermal power plants, which need to be close to coal blocks. The argument to crowd solar power plants in the north-west region of the country and then transmit and distribute the electricity doesn’t really hold much water. A single location 3,000 MW solar project, for instance, is in the works in Gujarat.

Interestingly, the argument for small is coming from a CSP evangelist who was instrumental in building India’s first tower-based solar thermal plant for the Acme Group to be commissioned shortly. The general belief is that CSP is ideal for plants in the 50-100 MW range and above, and that PV is the chosen one for small plants. Venkataraman says it’s a myth waiting to be busted. He says small CSP plants in 1-3 MW capacities, or even smaller 100kw plants, can be built in villages across the country.

Each village as an energy centre is indeed enticing. There are several examples already of solar PV plants with mini grids, especially in the Sunderban islands, run by government agencies and also those managed by solar entrepreneurs elsewhere. A decentralised approach can therefore foster a legion of solar entrepreneurs. The advantage in CSP would be that in addition to generating power, the steam produced could be utilised for a range of other applications. For instance, setting up of cold storages for farm produce.

Each village as an energy centre is indeed enticing. A decentralised approach can foster a legion of solar entrepreneurs.

Rajiv Arya, CEO, Moser Baer Photovoltaic and Yogesh Mathur, Group CFO, Moser Baer, sitting on production capacities of 80 MW of crystalline silicon modules and 40 MW of thin film, the largest in the country, are wary of a technology debate though the mission is often projected as technology agnostic.

“There is a definite bias, it is unstated though. The slant is in favour of CSP in a 60:40 ratio,” admits Amit Kumar, Director, Energy & Environment Technology Development Division, The Energy Research Institute (TERI). But he finds nothing wrong with it. The mission is expected to undergo iterations as the years go by.

“The priority now is to create a demand for solar power,” explains Mathur. “It should be profitable for the installer and the downstream players. The choice of technology will depend on how well PV or CSP players get their act together,” he says. “I don’t believe we need a winner in technology. It is application that drives technology,” says Arya, indicating there is space for everyone to thrive.

Letting The Sun Shine

An entire solar ecosystem is slowly emerging. The Ministry of Power, the Central Electricity Regulatory Commission (CERC), the Ministry of New and Renewable Energy and a host of other agencies are now acting in tandem to roll out the mission plan. Earlier, they worked in silos.

Insulate IREDA from political processes. Infuse it with huge equity. Turn it into the REC for solar power.Anil Kumar Lakhina, Chairman, Forum for Advancement of Solar Thermal

The Feed-in-Tariffs (FiT), seen as a temporary measure to develop solar markets the world over, are slowly falling into place. This is a key driver of the mission. The FiT is basically a system where a solar plant developer is allowed to feed the power he generates into the country’s electricity grid and is also awarded a premium tariff for doing so.

The present FiT is around Rs 18 per kwh for PV and Rs 13 kwh for CSP.  This is being revised to Rs 15.2 for PV and Rs 14.2 for CSP.  The rationale: PV related costs and prices are going down globally. On the other hand, CSP is virtually absent in India. Moreover, the first set of CSP developers will have to depend on imports and foreign technology for setting up thermal pants. Finance Minister Pranab Mukherjee has already announced a 5% customs duty cut on such solar equipment imports. 

“For the first 500 MW of CSP capacity in India, the cost of setting up a power plant will hover around Rs 16 crore per MW. If we can manage this, it will be a good start,” says Anil Kumar Lakhina, Chairman of the Forum for Advancement of Solar Thermal (FAST). He is certain that state support can ease out for the next 500 MW capacity, by which time Indian manufacturers of components for CSP plants are expected to come of age.

The FiT mechanism also mandates state power utilities to buy solar power. It starts with 0.25% and is expected to go up to 3% by 2022, thus creating a robust demand for solar power in the country.

The NTPC Vidyut Vyapar Nigam (NVVN) has been designated the nodal agency for buying expensive solar power from developers across the country, bundling it with cheap conventional power and selling it to state utilities at CERC determined prices. This will help state utilities meet their Renewable Purchase Obligations (RPO) mandated by the Electricity Act, 2003. The mechanism makes life easy for solar power plant developers. “Now, I don’t have to deal with 20 different utilities,” says Arya of Moser Baer.

The mission, however, doesn’t address a question: what happens to solar power projects already in various stages of completion in the states? A plan to allow migration of state projects to the national plan is being tweaked, but the norms, which include net worth criteria and even bank guarantees at Rs 50 lakh per MW, are seen as too stringent.

Gujarat had announced its FiT for 10 years at a lower rate while the national scheme is for 25 years. Obviously, state project developers are seeking inclusion in the national scheme. “This is a grey area, which needs immediate sorting out,” admits Kumar of TERI.

The state governments and other entities, meanwhile have also begun to jockey for quotas in the solar generation plan of 1,300 MW in the first phase. Even the National Thermal Power Corporation (NTPC), which has taken a fancy for solar power generation, is reportedly asking for 350 MW of the first phase pie. Policy makers had not bargained for a scramble of this sort.

The arguments that the National Solar Mission is centralised, too RPO driven, and supports large enterprises, also gain credence because it does little to rope in the common man into the big solar energy gameplan.

There is no rationale whatsoever for adopting the centralised route.N Venkataraman, Managing Director, Solartherm

While the policy does plan for rooftop solar systems, it is limited to large commercial and government buildings. Some European countries, like Germany, incentivise individual householders to install solar panels on the roof, generate power, and sell excess power to the grid. When they do need conventional power they can draw from it also, through a ‘net metering’ device.

The West Bengal government has demonstrated it can be done in India as well. It has built a housing colony with net metering in all the houses. “We need to encourage solar systems on a million roofs. Within six months, you would have thousands of individuals putting in 1kw each” says Venkatarman.

Arya disagrees. “The US didn’t have net metering till about five years back,” he says. “If we do everything together, it will be difficult. Net metering will be a natural progression.” Kumar too speaks in the same vein and would like to wait till the roof systems mature, technology improves and prices fall. “Once all of these things happen, it will be accessible to individuals,” he explains.

Where Is The Money?

The single biggest hole in the national gameplan is the utter lack of articulation on finances. Where is the money going to come from for such a massive solar mission? Is India largely going to be dependent on international climate-change funds?

A small move has been made by Pranab Mukherjee with the announcement of a pathbreaking plan to tax carbon. Every tonne of coal produced and also imported coal will contribute Rs 50 per tonne to a National Clean Energy Climate Fund. India produces over 500 million tonnes of coal a year. The fund can indeed foster a sea change in financing of solar tech projects.

What the country now needs is a strong bank focused on renewable energy. India already has the Indian Renewal Energy Development Agency (IREDA), which channelises financial support and all renewable energy subsidies to projects. IREDA lending to energy projects stood at Rs 2,532 crore in 2009 but is a bit player, hemmed in by governmental constraints. It cannot tackle the present challenges considering the enormity of the task on hand. 

Lakhina of FAST has a financing solution at hand—the Rural Electrification Corporation (REC) model. REC, now a navratna, had a hugely successful initial public offering (IPO) in 2008 and a follow-on public offer in February 2010. The REC, in 2008-09 disbursed Rs 22, 278 crore for rural power infrastructure projects. In the same year, profit after tax was Rs 1,272 crore, up 48% from Rs 860 crore in the previous year.

“Insulate IREDA from political processes. Infuse it with huge equity. Turn it into the REC for solar power,” says Lakhina. He is certain the model will work. He should know, for he headed REC until recently. “Have you ever heard of shortage of money in the power sector?” he asks. If his advice is heeded to, India may well have a true-blue green bank.