India Expands Solar Power Target, Will Add 15 GW Over Next Five Years

The new Indian government has delivered on its promise to enhance the solar power capacity addition targets under the ambitious National Solar Mission announcing revised guidelines for capacity allocation.

The Ministry of New and Renewable Energy recently released revised guidelines for auction of solar photovoltaic power projects with a significant hike in overall capacity. As per the revised target (pdf), the government plans to add 15 GW of solar power capacity by Q1 2019. The first of the auctions to meet these new targets will involve 1,000 MW of capacity.

Under the original National Solar Mission target, India had planned to add 9 GW between 2014 and 2017 and an additional 10 GW between 2018 and 2022. The current installed solar power capacity in India is just under 2.7 GW.

The 1,000 MW capacity will be set up as a solar park or ultra mega solar power project in the southern state of Andhra Pradesh. Similar projects, with capacity of 500 MW or 1,000 MW, can be expected over the next few months. Several states, including Punjab and Telangana, have signed agreements with the Solar Energy Corporation of India to set up such projects.

A proposal (pdf) issued in July this year would have seen the SECI offering 750 MW capacity at the auction. This was to be part of bigger tranche of 1.5 GW. The capacity on offer in the first tranche of the new proposal is 3 GW. The second and third tranches will have 5 GW and 7 GW capacities on offer, respectively.

Power Sale

The mode of power sale from the solar power projects will be similar to that adopted, and in practice, during the first phase auctions of the National Solar Mission in 2010. The 1,000 MW solar power capacity will be bundled with 500 MW thermal power capacity and then sold to power utilities in Andhra Pradesh. This mode reduces the overall cost of electricity per unit and enables the utilities to procure solar power and conventional power from a single entity.

Prospective project developers will be allowed to bid for up to 50 MW per project capacity while a company can bid for a cumulative capacity of 250 MW. Developers will be selected through a process of reverse auctioning.

Domestic Content Requirement

Another interesting aspect of the revised proposal is the reduced proportion of capacity that is required to be commissioned using domestically manufactured PV modules. In the earlier proposal, a third of the 1.5 GW capacity was reserved under the domestic content category while under the new proposal, only a fourth of the 1 GW capacity will be under this obligation.

The decision to reduce this proportion comes weeks after the Indian government decided not to levy anti-dumping duties on imported PV modules.

Wafers (in case of crystalline PV modules) and starting substrate (in case of thin-film modules) can be imported but the final assembly of modules would be required to be completed in India. This may encourage international module manufacturers to set up assembly plants in India.

The enhanced capacity addition targets are in line with the government’s overall target to have installed renewable energy capacity of 100 GW before the end of this decade. The government also plans to add 10 GW wind energy capacity every year. India’s current installed renewable energy capacity stands at about 32.5 GW.

Image Credit: Gujarat Power Corporation Limited