Harnessing Solar energy, Options for India

Table 6: Net Present Value of Outlay towards Phase 1 of the JNNSM
2010 2011 2012 2013
Annual installation 30 120 120 230
Generation (million kWh) 53 210 210 403
Price/W p 180 170 159 150
Tariff/kWh 17.91 17.91 16.3 15.4
Net present value of cash outlay
of installations in that year
(billion `)
8.54 34.2 31.1 56.3
NPV of Phase I (billion `) 108
4.1.2. Off-grid Targets
The mission targets 200 MW of off-grid solar PV installed capacity by 2013 and 2,000 MW by 2022.
Given the lack of electrification and access to clean energy sources in Indian villages coupled with
T&D losses, decentralised distributed systems make very good sense. Therefore, the targets set for
off-grid capacity could be bolder. A capital subsidy of `150 per W p is available for rural microgrids as
against `90 per W p for other applications. The problem associated with the current capital subsidy is
that the projects might not be self-sustainable and there is no incentive to continue operation of the
microgrid plant once it is set up. Even if all the 200 MW was allocated to rural microgrids, the total
subsidy would amount to only `30 billion (this outlay is expected from tax revenues). Even if the
capacity is increased substantially (set aside for utility-scale PV), the total subsidy would work out to
be still considerably less than the incentive offered for the utility scale.
Just to demonstrate an alternate subsidy regime, a load of 35 kW, as worked out in the section on
rural electrification, to meet the minimum electricity needs of a village of 150 households is
considered. At this level, a 500 MW capacity can meet this minimum need of 14,290 villages. The
total capital subsidy for this would be only `75 billion. If a generation-based tariff of `4.25 per kWh
is added to this subsidy, the additional cost would be `32 billion. Hence, the total cost to providing
minimum electrification to 14,290 villages will be in the same ballpark (Table 7) as the budget to pay
investors for generation from 500 MW.
India’s Solar-specific Policies CSTEP | Page 44