Monday, August 11, 2014: India is following the footsteps of Germany and Spain in emerging as one of the biggest markets of solar power energy. As Prime Minister Narendra Modi is looking forward to create a whole new world of renewable energy, it’s highly hoped that a solar pricing model will be soon emulated in India too.
Joint secretary at the Ministry of New and Renewable Energy, Tarun Kapoor, said, “The government in New Delhi is considering whether to grant fixed tariffs instead of holding competitive auctions for solar power.” A complete redesign would help in inviting more investors like Blackrock Inc.’s SunEdison Inc. and Welspun Group. If these investors choose India as their project sites then the solar plants will be scaled up soon meeting India’s target of 10-fold capacity increase by 2022. Apart from India other developing countries like Brazil and South Africa have avoided feed-in-tariffs which would control the scale of solar power.
Back in 2005 German market became the biggest one in solar power and it also reigned over markets like that of U.S. and Japan. Germany made it to the top through feed-in tariffs. Developers gave a boost to further installations as it was quite predictable how much cash projects would generate in two decades with minimal investment and that too without any fuel. Gaurav Sood, managing director of the India unit of French developer Solairedirect SA, said, “It’s up to the investor to put up as much capacity as he thinks is viable under the tariff so long as he can line up the funds, land and permits.” Modi government has announced plans of spending around Rs. 15,000 million on solar power projects which would reform electricity supply for farmers. As per Bloomberg’s data, Germany has installed 35 gigawatts of solar in comparison to India’s 2.4 gigawatts till now.
In India most of the power plants fall under a system of fixed payments. Till date the record shows that a rate for wind or small scale hydropower is still set by state regulators and if found profitable then only investors think to put in money for those projects. As per power minister Piyush Goyal solar projects are expected to equal the cost of fossil fuel power by 2017. Joint secretary Kapoor also said, “Tendering very often is not a good thing because you have to wait, to bid for capacity to build a project,” adding that, “Auctions have also limited the size of projects and the amount that any one company could win.” In December 2010, after the start of India’s national power program, cost of solar power projects fell sharply. The advantage was taken at the time of competitive bidding as global panel prices dropped by 64 per cent between 2010 to 2012.
But, now the government faces the challenge of calculating an appropriate feed-in tariff. One has been offered by Andhra Pradesh state government but as it was too low no investor found it suitable to install capacity. In European countries the rates were set at higher level. Rest of the Indian states need to follow the Gujarat model as they offered such a feed-in tariff which made the state the top generator of photovoltaic power in the country.
arendra Modi
