Its All About Power Sector

JNNSM Phase-II to Mind these Facts Before Unveiling

A simple and easy yardstick to measure the growth of the solar sector is capacity addition. The Phase-I targets have largely been achieved. However, the JNNSM Phase-II (2013-2017) targets, which are consistent with XII FYP targets, are quite large and pose a challenge to the Government. This is so because the initial capacity has come up with a generous support of Feed-In Tariff (FIT), VGF and compliance of RPOs. A sustained financial and regulatory support will be essential to meet these targets.

Another yardstick could be reasonability of tariffs, lt is also a matter of satisfaction that the tariffs in the solar sector have come down considerably from an average tariff of INR 12.12 per kWh in 2010-11 to INR 7.50 per kWh in recent times. In spite of the happy developments, the area of concern are the following.

The Phase-ll of the JNNSM provides for achievement of growth in grid connected solar capacity by 9,000 MW, off-grid by 800 MW and solar collector area by 8 min sq metres MNRE has proposed policy guidelines, which envisages a split of the grid connected target of Phase-ll into 3000 MW for Central sector, and 6000 MW for the State sector. It has also proposed a slew of measures to achieve the targets for different solar applications. Broadly, the policy envisages achievement of the targets of the Central Government through VGF support to be sourced from Plan funds, NCEF and other Central Government funds including through the PSUs, etc. However, there is no detailed proposal for providing funds to the State Governments to achieve their targets. One more effective measure to fund the growth of this high cost power, could have been feed-in tariff supported by blending other sources of cheaper power at the State level. However, this has not found ready support from most States in India, as is evident by poor implementation of RPO targets.

(Also Read what is instore for JNNSM-PhaseII)

While arranging funds for capacity expansion is a major area of concern, an appropriate policy towards domestic content requirement (DCR) is also important for self-reliance, tapping The employment potential, and development of an appropriate technology for the Indian conditions. However, this has to be developed consistent with international trade related commitments. The evacuation of solar power also poses a major challenge due to its infirm nature, concentration in a few States and effective trading of this higher priced power by non-resource bearing States. As the Electricity Act, 2003 is in the administrative domain of the Ministry of Power, which is also the controlling ministry for PGCIL, CERC, NLDC, CEA and other supportive organizations which have a vital role to play in the omnibus power sector, MNRE needs to liaise continuously, to obtain a congenial atmosphere for the solar sector. Poor trading in RECs is an area of concern. The power exchanges have been flooded with RECs due to poor compliance of RPO by different States. There is a need to provide a statutory backing to ensure this compliance. The present status of RPOs and REC market is indicated below which presents a grim situation.

Status of Solar RECs Trade (2012-13)

Unmet Obligation in FY 2012-13	14414
(A) REC availability in FY 2012-13 (B)	4328.2
REC exhausted (C)	2589.8
REC Available for meeting obligation in FY 2012-13 (B-C)	1738.4
Demand remaining unmet (A-B-C)	12675.2

Meeting of RPOs could provide a necessary fillip to the growth of solar sector in the country. With the rapid growth of different forms of renewable energy including wind power and solar power, both intra-State and inter-State evacuation infrastructure has come under stress. The problem is more grave in the wind sector, but the strengthening of the grid would also be essential for the solar sector to play a major role in the power sector. With multiple sources of power being available to the grid, application of smart grids, strengthening of the grid with related equipment, forecasting tools and state of the art communication technology will also be essential. As renewable energy is intermittent and seasonal, the dedicated capacity created for this source of power would have high revenue cost implications on per unit of renewable energy due to under-utilisation. Hence, this also needs funding support over and above the support for development of capacities of renewable energy generation. The strategy adopted by the MNRE for obtaining concessional international loans for evacuation infrastructure in the wind sector, is an example that has to be emulated by the solar sector, too.

Along with the above issues, work has to be initiated in development of the right regulatory policy framework for different kinds of solar power, including roof top, mini - grids, net metering, forecasting, scheduling etc. There are different options available in the above areas, which have been tried out with varying degree of success both internationally and in different States of India. A view may be to be taken as to which practice best serves the Indian conditions. In this regard, a recent compilation of success stories in the Indian solar sector, prepared by the Planning Commission brings out the variety of measures adopted in different States. Similarly, in the R&D sector, MNRE has funded several initiatives in different segments of the industry, both to academia and other institutions of the country. The PACE-R programme under the India - US Energy Dialogue has also dedicated a component to the solar energy sector. There is a need to examine the results of the on-going research, as well as identify other R&D areas.

Way Forward:
This Task Force has been formed recognizing the need for coordinating a large number of different functions, essential for the long term growth of the solar power sector in India. The target of growth of 10 GW of solar power during the XII FYP envisages a near 10 fold increase over the capacity obtaining at the beginning of this Plan period. As the traditional subsidy oriented growth strategy can no longer be pursued due to paucity of funds, an imaginative approach is needed. The recent trends in the larger power sector driven by market discovered prices, raise possibility of market driven tools for financing the solar sector too. The option of overseas equity and debt need to be examined, keeping the prevailing high hedging costs in mind. Therefore, the Task Force would look- forward to participation of the departments and private sector institutions in the finance area to suggest the way forward. Similarly, the concerns of the solar developers and solar manufacturers, which are often not aligned need to be addressed as well. The other areas of concern, as identified in the previous section relating to policy, R&D, technology, etc., are also proposed to be addressed.

The Task Force may consider dedication to identified major areas of concerns, and seek inputs from related experts/institutions. As the need of giving a fillip to the solar sector is important, the Task Force may Endeavour to produce its report in a maximum period of six months. The participation of industry and financial institutions could bring in the flavour of actual field level experience to the Ministries/Departments concerned for addressing the same. The Task Force has been empowered to induct other experts as invitees as per felt need.

The Task Force may aim at long-term growth of the solar sector beyond the tenure of the JNNSM, which dedicated itself to achievement of targets leading up to the year 2022. The Task Force may also suggest targets for solar power capacity in the medium term (the end of 15 FYP - 2032) or even longer and devise a strategy to achieve the above targets which would help meet the NAPCC determined target of 3 % solar power component by 2022 and its further growth leading up to the year 2032.