The Jawaharlal Nehru National Solar Mission (NSM) has mapped out a three-phase strategy of achieving the 22 GW target, says Rabobank’s report titled When will the clouds clear over Indian’s solar power sector?
The grid-connected solar power will be equally divided between solar photovoltaic (PV) and concentrated solar power (CSP).
Phase I will be carried out from January 2010 to March 2013, in two batches, and will aim at installing 1.3 GW of solar power.
Phase II will commence from April 2013 and will look to install 3.7 GW of solar power by March 2017.
Phase III will be the longest and largest in terms of capacity, with 17 GW of solar power installation scheduled to be installed between April 2017 and March 2022.
Rabobank’s report highlights the efforts of theIndian Government to ensure the target is achieved, and also presents the challenges facing the Indian solar industry.
One of the Government’s first moves was to offer a 25-year feed-in tariff (FiT) for solar developers during Phase I to provide them with the security of a stable cash flow.
The NSM provides vast financing opportunities with the capital expenditure expected to reach INR147 billion (€2.2bn) over the next three years for grid-connected projects, according to the Central Electricity Regulatory Commission (CERC).
The above opportunities are offset by policy weaknesses and a lack of clear planning for Phases II and III, says the report. Additionally, a weak power purchase agreement (PPA) pricing could also hamper the progress of Indian solar initiative.
The policy weakness and a general lack of transparency have hurt investors’ confidence.
On the installation front, CSP installations face a relatively low quality of the transmission and distribution network, and water scarcity issues.
With the Government aiming for a strict auctioning, developers might face problems in securing finance.
Industry insiders are also concerned by the fact that the developers for Phase I were chosen for their discounts on the feed-in tariff rather than their experience in handling such projects.
The primary scarecrow for Indian and foreign investors and technology providers is that the low margins could force developers to go for lower quality components.