Indian solar power mission set to make India a global leader in the sector

LUCKNOW: The latest World Bank report on the the state of India's solar power mission has said the Jawaharlal Nehru National Solar Mission Phase 1 (JNNSM), which was launched in 2010, is well-poised to make India a global leader in the development of solar power. The report says the Mission mode project has, in a span of three years, taken India forward in implementing its green growth agenda by increasing its installed capacity of solar power from around 30 MW to more than 2,000 MW.

What is significant is that JNNSM has been instrumental in bringing down the cost of solar power to a level that is competitive across the world, says the report. It has reduced the costs of solar energy to $ 0.15 per kWh, making India amongst the lowest cost destinations for grid-connected solar Photovoltaic (PV) in the world.

The report, 'Paving the Way for a Transformational Future: Lessons from JNNSM Phase1', says solar power can reduce India's dependence on imports of diesel and coal for power generation, reduce greenhouse gas emissions, and contribute to energy security. Growth in this sector will help India increase its share of clean energy and help meet its target of reducing emissions per unit of its GDP by 20-25 percent by 2020 over 2005 levels.

 The report identifies two unique features of the solar program which has helped reduce tariffs - bundling of solar power with unallocated thermal generation and adoption of reverse auctioning. Such bundling of solar power with cheaper conventional power helped reduce solar power tariffs for distribution utilities. The reverse bidding mechanism enabled qualified bidders to benefit from declining global prices for solar components, thereby reducing the purchase price of both solar PV and Concentrating Solar Power (CSP) for the utilities.

"In a short span of three years, India has made impressive strides in developing its abundant solar power potential. With more than 300 million people without access to energy and industry citing energy shortage as key growth barrier in India, solar power has the potential to help the country address the shortage of power for economic growth," said Onno Ruhl, World Bank Country Director in India. "However, while India is clearly emerging as a global leader in the area of solar power, to achieve its target of adding 20,000 MW of solar capacity by 2022, it needs to address the key barriers and constraints that could come in the way of scaling up the solar program," Ruhl added.

The report highlights several challenges that could act as a barrier to India achieving its solar targets by 2022. These include lack of access to low cost financing; inadequate solar infrastructure; lack of raw materials for several solar PV manufacturers; and an underdeveloped supply chain leading to high inventory costs.

"Building on the success of Phase 1, the program now needs to focus on promoting financing of solar projects by commercial banks, developing shared infrastructure facilities such as solar parks and identifying comparative advantage of Indian manufacturing across the supply chain", said Ashish Khanna, Lead Energy Specialist and one of the authors of the report. The report also identifies various key challenges, including the need for active participation of commercial banks to scale up to investments in the solar power sector. The government, the report says, also needs to design risk reducing financing instruments such as subordinated public finance in order to attract long-term commercial lending to ensure long-term viability, the report says.

The report recommends publicly developed infrastructure such as solar parks to help increase efficiency and lower costs. A Solar park in Charanka (Patan district) in Gujarat is today the largest solar park in Asia. Such shared infrastructure facilities helps in developing critical infrastructure, including facilities for power transmission, roads and water, thereby ensuring the rapid development of solar projects as well as local employment generation, the report adds. In addition, India's plans to develop ultra-mega solar projects will help showcase the potential for large scale grid connected solar projects to the entire world, it says.

Facilitating public funding, creating an enabling environment for manufacturing and focusing on cluster-based project development will go a long way in achieving the outcomes of JNNSM during the subsequent phases, the authors conclude.

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