Indian Government Eyes $2 Billion funding for Solar Rooftop Projects

The Ministry of New and Renewable Energy (MNRE) has planned to mobilise about $2 billion from international financial institutions to fund rooftop solar projects in the next five years as part of the government’s green energy target of 1,75,000 megawatts (MW) by 2022.

The MNRE is working to get $2 billion from the World Bank and Asian Development Bank to fund the rooftop solar projects in the next five years, Upendra Tripathy, the ministry’s secretary said. The government has received a commitment of 1 million euros from KfW, a German government-owned development bank while the ministry has already got Rs 5,000 crore from domestic sources, he said.

Once the government receives the overseas funds, they can be passed on to the banks to finance the rooftop projects at softer rates of interest, Tripathy said.

Of the 1,75,000 MW of green energy, the government aims to generate 1 lakh MW from solar power and 60,000 MW from wind power. By increasing the generation, the government aims to provide green power at less than Rs 4.50 per unit in the next five to seven years, the MNRE secretary said.

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China’s Hareon Solar has 160 MW Solar Project in India

China-listed solar PV company Hareon Solar announced that its wholly-owned subsidiary Hareon Solar Power Private Limited (Hareon India) will sign an agreement with Keshav Power Private Limited (KPL) – which belongs to Dalmia Group – for the establishment of a joint venture (JV) that will work together on the creation of a 160 MW solar PV project in India.

As part of the agreement, Hareon Solar will invest around $40 million in the project, the company revealed.

A second JV is also in the pipeline in India between Hareon Solar and Aurora Trust and Nereus Holding L.P. Hareon’s investment in this JV is thought to amount to $35 million, with Hareon Solar developing the solar plant and selling the completed installation to Aurora Trust via a share transfer.

At the beginning of July, Hareon announced its inaugural venture into India’s growing solar market. Hareon Solar had announced that it will enter the growing Indian solar market for the first time after entering into an agreement with Indian renewable energy company ReNew Power to develop a 72 MW solar plant in the Indian state of Andhra Pradesh. The PV manufacturer will supply more than 230,000 of its modules to the project, which is to be located in the Kurnool district of the state.

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Japan’s Foreign Aid Arm Plans to Fund Solar Parks in India

Japan’s foreign aid arm Japan International Cooperation Agency (JICA) plans to fund solar power parks in the country, giving a fillip to India’s green energy plan.

Initially, JICA may invest $500 million in the proposed solar parks. Other institutions such as Germany-based KfW Bankengruppe and World Bank also want to invest in solar parks. Multilateral financial institutions such as KfW, World Bank and JICA are very keen on funding solar parks.

KfW is already involved in India’s clean energy sector through its commitment to lend €1 billion for green energy transmission corridors. JICA disbursed 162.2 billion yen in official development assistance loans to India in 2014-15. The amount disbursed is the highest among countries where JICA extends such assistance.

The rationale behind such overseas institutions’ interest in financing solar parks is this- the largest solar park in the world is of 550MW. In comparison, some of the solar parks in India are in the range of 1,500MW. The scale of solar parks in India is the main attraction. There is high probability of five such parks of 1,000MW each.
Foreign loans are cheaper than those offered by local banks and financial institutions. However, even though the interest costs of foreign loans are lower, project developers have to hedge their foreign currency exposure.
Analysts believe that India’s green energy plans have found global traction. “The government has identified 13 solar parks in 15 states,” Deutsche Bank AG wrote in a 19 July report adding, “Annual investments in solar could surpass investment in coal by 2019-20, with $35 billion committed by global players.”
India needs as much as $200 billion to meet its target of installing 100,000MW of solar power capacity and about 60,000MW of wind power capacity by 2022. The government aims to provide green power at less than Rs.4.50 a unit. Experts believe the prices are going down. “Solar power is likely to become cheaper than or equivalent to conventional thermal energy prices over the next two to three years and reach Rs.4-4.5/kWh by FY18,” India Ratings and Research said in a 22 July report.
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India and the US join hands for promoting energy access

India and the United States of America signed a Memorandum of Understanding (MoU) on Cooperation to Establish the PACESetter Fund – A fund to support the Promoting Energy Access Through Clean Energy (PEACE) track of the US – India Partnership to Advance Clean Energy (PACE) to accelerate the commercialization of off-grid clean energy through early-stage grant funding grants to develop and test innovative products, systems, and business models.

The MoU was signed by Shri Upendra Tripathy, Secretary, Ministry of New and Renewable Energy from Indian side and by Shri Richard Verma, United States Ambassador to the Republic of India from USA side on 30th June, 2015 at New Delhi. India-U.S. corpus of about Rs.500 Million ($8 Million U.S. Dollars) have been drawn on 50:50 sharing basis. Under this, a Steering Committee comprising the Secretary of the Ministry of New and Renewable Energy and the United States Ambassador to India, and three representatives from each side has been constituted.

It was agreed to cooperate through technical and commercial innovation and the advancement of clean energy in off-grid space. This initiative will boost entrepreneurship in the solar off-grid market segment.

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Swaminomics article on solar makes little sense

On July 5th, 2015, The Sunday Times of India published at article by Swaminathan S Anklesaria Aiyar, a noted Indian columnist, on solar power. After reading his views on solar power in his ‘Swaminomics’ column, I was disappointed with the quality of data collection and interpretation that a person with the most venerable newspaper real-estate the leading English daily is expected to have. Mr. Aiyar has come to a conclusion that promoting solar power will derail the ‘Make in India’ drive. He suggests that India should postpone its solar plans until solar power becomes cost competitive with coal.

Mr. Aiyar’s conclusion is based on an important assumption that solar power in India is expensive. To support his statement, Mr. Aiyar mentions that the bulk conventional power costs Rs 6-7/unit or more in most states and solar power is more expensive – costing Rs. 9.5/kWh without subsidies. Source of his information seems to be inaccurate because according to bid results for solar project allocations in Andhra Pradesh in late 2014, the lowest solar tariff was Rs. 5.25/kWh, with a 3% annual escalation (source). If we observe the tariff trends across the globe, I believe that the tariff rates in India for centralized solar power generation will be below Rs. 5/kWh before the end of 2016. His premise that expensive solar power will derail ‘Make in India’ is based on an erroneous assumption.

In the column, Mr. Aiyar incorrectly explains that 100,000MW of solar power will constitute 25% of the total power supply and it will negatively affect the country’s power equation. But this target, even if it would be achieved, will actually constitute approx. 10% of the total power supply of India by 2022. With this small portion of the power pie, the fear that substantial thermal power will lay idle during the daytime is baseless. Solar power, in its current avatar, is meant to augment, not replace conventional power, thereby bridging the power demand-supply gap during hours when industries and offices are operational. This augmentative relationship between solar power and coal-based power means that the worries that the plans of industrialists to procure cheaper power are threatened due to rise of solar power are baseless. While the government has set ambitious targets for solar power, it has also committed to developing unprecedented capacity of coal power. Also, our grid infrastructure needs to be upgraded anyway, whether India adds coal capacity or solar capacity.

Mr. Aiyar asks why shouldn’t we wait for solar power to become cost competitive? The more important question that we should ask is, that over the next 25 years, will the total cost of generation from a solar power plant be more than generating equivalent power from a coal plant, if we start building a plant NOW? The answer, which may come as a surprise to many myopic observers, is that solar power is cheaper in the longer run. It doesn’t take an award winning economist to conclude that coal, which is limited in supply, will get costlier in future. So if we develop an additional 100GW of conventional power capacity instead of solar, it will be dearer to the Indian taxpayer, even at current price points. Currently at approximately 4,100MW capacity, Indian solar sector is still in its infancy. Since the solar tariff has dropped from Rs. 17.90/kWh to approx. Rs. 6/kWh within six years, while we have just achieved 4% of the total target, I think we are right on time. The bulk of our solar capacity will be added at tariff rates competitive with coal (this point of intersection on conventional-renewable tariff graph is known as grid-parity). Compare this to Germany, where more than 30GW of solar capacity was added at considerably higher spending, and the market is already past its prime while the costs are falling globally.

If we would have waited and watched, solar tariff rates wouldn’t have fallen on their own. The cost of solar power is plummeting partially because India, like other large economies, is creating demand through policy incentives and thus paving the way for a free market. Our policy makers, who envisioned the National Solar Mission, have done a descent job until now. Compared to other countries, India has reached 4GW grid-connected solar capacity mark by spending the least on subsidizing solar energy. By 2020, India is positioned to have third largest solar capacity, developed by spending lesser than what it would have spent on equivalent coal power over the lifetime of the projects – thereby becoming the quickest country to do so.

Solar power will remain a small, though rapidly-growing part of the Indian power mix for some time. Ambitious solar power targets are not at an expense of conventional power targets, or the ‘Make in India’ drive. To fuel our growth, we need to get cheap power from any source that we can find – unfortunately, we don’t have the luxury of choice. Before concluding, it should be reiterated that in the longer run, solar power is not as expensive as it is made out to be, and the timing to place our bets on solar is perfect.

To read the original article on LinkedIn, click here.

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Tamil Nadu Offers Subsidy for Solar Rooftop Plants

The Tamil Nadu Government would like installation of solar rooftop plants to become a people’s movement, as had happened with rain water harvesting in the State.

The State offers a subsidy of Rs. 20,000 to install solar rooftop plants units. This is in addition to the 15% subsidy offered by the Centre. It would cost Rs. 46,000 to set up a 1 kW solar rooftop plant. However, the annual saving in electricity charges would be nearly Rs. 10,000, said R Viswanathan, Tamil Nadu Minister for Electricity and Non-Conventional Energy, inaugurating the 14th edition of Green Power 2015 organised by the Confederation of Indian Industry.

Energy Secretary Rajesh Lakhoni too requested the public to install solar rooftop plants. If you buy a one tonne air-conditioner, also purchase a 1 kW roof top solar unit to balance the cost of electricity charges. It makes economical sense to put up solar rooftop plants.

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National Clean Energy Fund crosses Rs 17,000 crore mark

While the National Clean Energy Fund (NCEF) has crossed Rs 17,000 crore, not much has been allocated to the Renewable Energy sector. After raising the coal cess to Rs. 200 per tonne, NCEF has crossed Rs, 17,000 crore mark. “But not much has been allocated to the RE sector from this fund. Immediate steps should be taken to ensure the money from this fund flows into the renewable energy project,” said Ramesh Kymal, chairman, Renewable Energy Council – CII.

Kymal said the government could take some important steps to unleash the full potential of the renewable energy sector. They include stricter enforcement of RPO across all states, either through amendment of Electricity Act or Indian Penal Code with penalty for non-compliance, power evacuation and grid integration allowing wind power generators in Tamil Nadu to feed power into the grid especially during the peak wind season, simplification of land acquisition and conversion norms by providing deemed non-agricultural permission for land for renewable energy projects as in Maharashtra and Andhra Pradesh.

He also urged the government to look at extension of accelerated depreciation to all renewable energy systems, single window system for statutory and environmental clearances and deemed industry status and deemed open access permission for renewable energy projects in all states.

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India’s $100 Billion Solar Plan

India’s $100 billion push into solar energy over the next decade will be driven by foreign players as noncompetitive local manufacturers fall by the wayside, no longer protected by government restrictions on the sector. The money pouring into India’s solar industry is likely to be soaked up by foreign-organised projects such as one run by China’s Trina Solar – not the country’s own solar panel manufacturers.

Last week, Softbank became the latest foreign player to enter India’s solar market, leading an investment of up to $20 billion. The Japanese firm said it would consider making solar panels locally, but with Taiwan’s Foxconn rather than a local manufacturer.

Many Indian solar panel producers have benefited over the past six months from a surge in demand for panels not yet fulfilled by foreign companies. But their small scale and outdated technology will quickly make itself felt when the global players arrive.

India’s solar panel makers can no longer turn to the Indian government for help. The government is more concerned about creating jobs quickly and ensuring plentiful power supply in a country known for its many blackouts.

Foreign players making panels in India are expected to compete with local manufacturers to fulfil so-called domestic content requirements for government projects. Trina has unveiled plans for a $500 million plant and US-based SunEdison is investing up to $4 billion in a manufacturing facility. Both are tying up with Indian power firms to build the plants.

India has said it expects peak power demand to double over the next five years from around 140,000 megawatts today. To help meet that demand, 100,000 MW of new capacity is to come from solar panels, and of that it wants at least 8,000 MW to come from locally-made cells. Foreign players manufacturing in India will probably win the bulk of those orders. Indian rivals like Indosolar and Moser Baer produce panels, but they cost 8 to 10 percent more than foreign producers.

As for some of India’s small panel makers, they are looking to complement the efforts of foreign players instead of trying to derail them.

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Infosys plans to go Green by 2018

Infosys, India’s second largest IT services exporter, has set an ambitious target of meeting all of its electricity requirements only from renewable resources by 2018. It also plans to set up solar power units that generate a sum total of 170MW by 2018.

Infosys, which met 29.11% of its overall electricity requirements from renewable sources of energy with investment in 15 MW solar photovoltaic plants in FY15, plans to generate 57 MW of solar power in the current fiscal alone.

The IT major has also lined up an investment outlay of $65 million to explore carbon-offset projects in an attempt to meet the commitment of 100% renewable energy by 2018.

Besides the plan to setup a 40MW solar power plant in Karnataka, Infosys will set up a 7 MW unit in Hyderabad and additional rooftop solar power units totalling 8 MW across its various locations in the country.

Infosys had became the first Indian company to join RE100, a global platform for major companies committed to 100% renewable power. There is a three fold objective of joining this platform: sharing experience on renewable power, demonstrating the benefits and achieving carbon neutrality.

The economics of moving towards solar energy also works in favour of Infosys as it realises the payback in seven-and-a-half-years with the life span of this power panel being around 20 years.

Haryana government is also pushing for solar energy. The state has made it mandatory for all buildings on plot size of 500 square yards or more to install rooftop solar power systems by September 2015. Companies located in Haryana can take a leaf out of the Infosys commitment to renewable energy generation.

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MNRE Releases Statewise Targets for Grid Connected Solar Rooftop Systems

Government of India has set a target of installing 40 GW grid connected solar rooftop systems in the country by 2022. And to achieve this target of 40GW by 2022, MNRE has released statewise targets for grid connected solar rooftop systems. The ongoing Grid Connected Rooftop and Small Solar Power Plants Programme aims to promote installation of grid connected solar rooftop systems in residential, industrial, commercial and institutional sectors in the country.

The State Nodal Agencies, Solar Energy Corporation of India and Distribution Companies (DISCOMs) of the respective States are the designated agencies for the implementation of grid connected solar rooftop programme. The Subsidy or Central Financial Assistance (CFA) for the programme is provided through these implementing agencies.

Ministry of Power is implementing an Integrated Power Development Scheme (IPDS). IPDS has a provision for promoting Grid Connected Solar Rooftop Systems with net-metering in Government buildings, all new grid sub-stations to be established under IPDS and any other grid-substation to be strengthened under IPDS. The support for project will be 60% as grant (85% for Special Category State). 15% as additional grant (5% for Special Category State) will also be available on achieving milestones defined under the scheme.

The Ministry of New & Renewable Energy (MNRE) has proposed state wise tentative targets for installation of the grid connected solar rooftop systems. This has been arrived at by dividing the 40,000 MWp country target in proportion of the State wise power consumption and consequent solar power requirement to meet the corresponding Renewable Purchase Obligations.

Maharashtra (4700 MW), Uttar Pradesh (4300 MW), Tamil Nadu (3500 MW), Gujarat (3200 MW), Karnataka (2300 MW), Rajasthan (2300 MW) and West Bengal (2100 MW) are the top states for the proposed target.

Along with the targets being allotted to Indian states, MNRE has also allotted targets for grid connected solar rooftop systems to SECI. Solar Energy Corporation of India (SECI) will install 750MWp of grid connected solar rooftop systems with a 15% subsidy provided by MNRE and it has to install 500 MWp of grid connected solar rooftop systems without the subsidy.

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