Solar power sops set to

Notwithstanding the unprecedented interest in the sector, thanks mostly to the ambitious targets set by Prime Minister Manmohan Singh for solar power generation capacity, the National Solar Mission (NSM) could put the solar rush in the country on the slow burn initially.

According to sources in the know, as against the state objective of 20,000 mw by 2020, incentives will be available only for the first 1000 mw in the first phase of the NSM.

This could translate into a total investment of close to Rs 20,000 crore on solar power generation over the next three-four years depending up on the mix of technologies.
The policy could also impose a capacity cap per project, as in the case of the previous MNRE scheme, with a view to getting in as many players as possible.

The silver lining, however, is that this will be at an attractive feed-in tariff of between Rs 15 and Rs 20 per kWh for a period of 20 years or more, which will result in the most attractive internal rates of return (IRR) in the world for solar power.

The NSM, which was earlier expected to be announced on November 14, a date committed by the Prime Minister, will now be unveiled anytime this week if one is to go by union minister for new and renewable energy Farooq Abdullah’s statement.

Indications are that the policy framework and mechanism for its implementation will be cleared by the Union Cabinet on Thursday, the day when it usually meets, said an official in Delhi.

Suggestions of the Prime Minister’s Council on Climate Change have already been incorporated into the NSM and the approval of the Union cabinet is only seen as a formality.

While the focus of the Phase I of the programme will be on testing out various technology options available with an emphasis on getting the subsidy mix right, the focus in Phase II will be a graded reduction in sops to the industry while Phase III will concentrate on rapid build-up with a massive subsidy dole out, the sources said.

However, the 1000 mw Phase I capacity cap could come as a disappointment for the industry which was expecting a scale game in solar energy to kick off in India. The stated target of 20,000 mw by 2020, according to an estimate by IFC could translate into an investment of $42 billion during the period.