Indian hydropower company SJVN has announced start of construction of a large solar power park in the northern state of Rajasthan.
On January 3rd, the President of India laid the foundation for a 1 gigawatt solar power park at Bikaner, Rajasthan. The project is being developed by SJVN Green Energy Limited, a wholly owned subsidiary of SJVN — a government owned hydropower generation company. SJVN has a portfolio of 45 gigawatts across hydro, thermal, and renewable energy technologies.
The project was allocated to SJVN Green Energy in a competitive auction. The solar park will be developed on 5,000 acres at an estimated cost of Rs 55 billion ($660 million). It is expected to be commissioned by March 2024. The company secured debt funding worth Rs 44 billion ($530 million) from the Indian Renewable Energy Agency (IREDA) in December 2022.
The solar park was allocated as part of the central public sector undertaking, or CPSU, scheme. As part of the scheme, companies owned by the central government are encouraged to set up large scale solar power projects. Power generated from these projects may either used by these companies for captive consumption or sold to other government-owned companies.
All projects allocated under this scheme are mandated to use solar modules manufactured in India. This scheme was launched in response to the World Trade Organization striking down the domestic content requirement India had introduced in solar power tenders in the early 2010s.
In some of the large scale tenders issued in India during the initial phases of the National Solar Mission, a portion was set aside to be constructed using domestically manufactured solar modules. This clause was added in order to support domestic manufacturers. However, this clause was successfully challenged by the United States at the WTO and the Indian government was forced to cancel some tenders.
The CPSU scheme was launched by using a loophole in the WTO rules that allow a country to make use of domestic equipment mandatory if the final beneficiary of the project is a government entity. The CPSU scheme targets setting up 12 gigawatts of solar power capacity.
This is the reason only government companies are allowed to participate in tenders under the CPSU scheme and power generated may only be consumed by or sold to government companies.
Subsidies & Other Winners
The objective of this scheme is to promote the use of domestic solar modules, however, they are substantially more expensive than imported modules. Hence, subsidies for project developers becomes an important incentive. In the latest round of auction, the government offered a subsidy worth Rs 5.5 million ($66,650) per megawatt. All participating companies quoted bids of around Rs 4.5 million ($54,530) per megawatt.
The auction for the latest round of auction under the CPSU scheme was held in September 2021. The largest winner in that auction was NTPC — India’s largest power generation company with an installed capacity of over 60 gigawatts. NTPC secured rights to develop just under 2 gigawatts of capacity. NHPC, another hydropower generation company, also secured 1 gigawatt of capacity. NLC India — a lignite mining and thermal power generation company — and IRCON International — a construction company under the Ministry of Railways — secured rights to develop around 500 megawatts of capacity each.
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