Harnessing Solar energy, Options for India

4.1.3. Policies for Grid-connected Solar Power
At present, the financial health of utility distribution companies have raised concern among
developers and investors that this might impede the possibility of loans to solar projects.
However, with the discounts offered by potential bidders, the tariffs are lot lower than those
announced by the CERC. This might ease the budgetary constraints on the DISCOMS;
however, they might decrease the profitability of investors. The NVVN should ensure that
there is no confusion surrounding the execution of PPAs to give confidence to investors.
There should be clear long-term policy mechanisms in place to ensure that interest in solar
investment remains. The current tariff of `17.91 is for PV plants commissioned in the year
2010–11. Infusing certainty into the system with a degression algorithm, much like the
German model, could go a long way in providing certainty and resulting in sustained
investor interests.
It is not at all clear to any of the stakeholders what the mechanism to buy solar power in
Phases 2 and 3 will be. Without a clear roadmap, targets alone will not lead to any of the
prerequisites for reduction in the cost of solar power, namely, manufacturing set-up,
corporate R&D or high-level human resources development (HRD). It is necessary to clearly
define the objectives and possible ways and means to achieve them, as well as the financing
needs and the ability of Indian markets to absorb the capacity addition. Some of the specific
action points emerging from this are:
o Assessing financing needs and possible sources of funding the solar mission,
including international support.
o A target-driven R&D policy for developing indigenous solar technologies.
o An aggressive initiative on HRD to ensure adequate availability of manpower for
ground-related (implementation, operations and maintenance) as well as high-level
research work.
With most of the country facing a tremendous shortage of electricity, it is unclear where this
‘unallocated quota’ used for bundling of power comes from. This mechanism has several
limitations and several uncertainties. For example:
o Some of the states that were receiving this unallocated quota will not be able to get it
any more, worsening their power situation.
o Even if it is presumed that the bundling would work well for the first phase and
higher commitments can be ascertained from DISCOMs, that provides no clarity on
the quantum of unallocated quota available or to be made available for second and
third phases.
Currently SERCs have the power to mandate RPOs, which is the proportion of total power
purchased from renewables by distribution companies. Since the solar mission and the
targets therein refer to a national-scale RPO, central intervention is a must; otherwise states
may not set up the solar-specific RPOs. Legislation on renewable energy would be of great
help if the targets under the NSM in particular and the National Action Plan on Climate
Change (NAPCC) (15% by 2020) in general are to be met. The mechanism of renewable
energy certificates, which is in advanced stages now and needs some push from central and
state governments, will also help in achieving NSM targets.
4.2. Solar Thermal Policies
The capital subsidy provided by the MNRE by all accounts is sufficient to make solar thermal
technology attractive. Even so, the adoption of solar thermal applications is low. The use of this
technology can substantially reduce fossil fuel consumption in the domestic and industrial sectors,
which would result in a considerable reduction in annual CO 2 emissions. There are only a limited
India’s Solar-specific Policies CSTEP | Page 46