New Solar Policies in India Could Increase Investment

A recent article published in PV magazine authored by Jasmeet Khurana states that the new solar policies in India will preferably increase demand and also contribute towards increasing the margins.


A recent article published in PV magazine authored by Jasmeet Khurana, head of market intelligence at Bridge to India, states that the new solar policies in India will preferably increase demand and also contribute towards increasing the margins. New installation of photovoltaic projects in India is already expected to increase to 1 Gigawatt (GW) in 2013 and 2 GW in 2014.

A funding model called Viability Gap Funding (VGF) has been envisaged for the second phase of the country’s Jawaharlal Nehru National Solar Mission (JNNSM). The Viability Gap Funding Scheme provides financial support in the form of grants, one time or deferred, to infrastructure projects undertaken through public private partnerships with a view to make them commercially viable.

Solar Panel. Pic : Creative Commons

Solar Panel. Pic : Creative Commons

This funding model focusses mainly on projects that have high economic return but abstains from having a majority of private investors as the project no longer remains a profitable investment until the government pitches in to meet a portion of the cost. The second leg of the JNNSM is scheduled to start this June. Under this mechanism, a standard tariff will be provided by the power distribution companies. This would typically be higher than their standard price of procurement as this would allow them to also meet their Renewable Purchase Obligations (RPOs).

According to Ms Khurana:

A clear trend that is emerging from the recent biddings and a flurry of announcements is that the competition for projects (and the aggressive bidding) is reducing. While some developers bid aggressively in Andhra Pradesh, we have seen L1 bids for certain locations in the state as high as INR 8.89 ($0.18)/kWh.In Tamil Nadu too, while some bids were aggressive, the average bid came out to be in the range of INR 8/kWh ($0.16)/kWh. We can expect a similar trend to continue in Uttar Pradesh and Punjab.

Shifting away from feed-in tariffs and moving towards VGF would contribute to the promotion of substandard projects. The guideline issued under this model states that 25 percent payment has to be made at the time of delivery of at least half of the major equipment to the site, 50 percent will have to be made on completion of the plant and the remainder has to be settled after the project has been in operation for one year. Investment companies which had earlier dropped India from their investment focus will have to reevaluate their decision and look towards Indian markets as new solar policies will prove beneficial and will contribute to an increase of solar project investments in India.

Author: Ajay Pal Singh Chabba/ RESET editorial

Originally published on RESET, an information portal and online platform for environmental protection and humanitarian action and re-published here through a partnership


  ABOUT THE AUTHOR
RESET (www.in.reset.to) aims to use innovative technologies to develop new solutions that turn knowledge about sustainable development into effective action, thus making a sustainable future possible. more

   FOLLOW US

   SUBSCRIBE TO OUR NEWSLETTER
  Top Stories on TA






  Top Stories in BUSINESS






   Get stories like this in your inbox

  ABOUT THE AUTHOR
RESET (www.in.reset.to) aims to use innovative technologies to develop new solutions that turn knowledge about sustainable development into effective action, thus making a sustainable future possible. more
   What's Good

Discuss this article on Facebook