Jawaharlal Nehru

National Solar Mission - 2010, INDIA

PricewaterhouseCoopers

January 2010

*connectedthinking
Status of Solar Energy Development in India

• India – has been undertaking a country wide • At 1900 kWh/sq M, India receives one of the
solar programme for more than two decades: highest levels of solar irradiance globally.
• Remote village electrification – amongst • Most parts receive irradiance of 5-7 kWh per
the largest decentralised solar sq meter per day - average power
programmes globally generation potential of 20 MW per square
• Approximately 95% of all remote kilometer
villages electrification using SPV • Certain sites receive higher levels of
• insulation (Rajasthan, TN, AP, Ladakh,
Promotion of solar in Urban, Industrial &
Gujarat) - average potential of 35 to
Commercial applications
40MW/sq Km
• Cumulative Capacity Added till upto 31.12.2009 High
• Grid Based Solar Power - 6 MW Solar
• Decentralised Solar Power Projects & Incidence
Street Lights – 2.39 MWp Zones
• Solar Home Lighting Systems - 5,10,877
• Solar Lanterns - 7,67,350
• Solar PV Street Lighting Systems - 82,384
• Solar PV Pumps - 7,247
• Solar Water Heating - 3.25 Million square
metres (Collector Area)
• Solar Cookers – 6,72,000
Slide 2
The Jawaharlal Nehru National Solar Mission: Key Highlights
Objective of the National Solar Mission
• To achieve volume production at a scale which leads to cost reduction and rapid
diffusion and deployment of solar technologies across the country
• For this purpose set up enabling policy environment and regulatory framework.
Road Map for the Solar Mission
Jawahar Lal Nehru Solar Mission Roadmap
S.no Application Segment Target for Phase 1 Target for Phase 2 Target for Phase 3
(2010-13) (2013-17) (2017-22)

1 Solar Collectors 7 Million Sq meters 8 Million Sq meters 5 Million Sq meters

2 Off Grid Solar applications 200 MW 800 MW 1000 MW

3 Utility grid power, including 1000 MW 4000 MW 16000 MW

roof top

National Solar Mission’s Strategy for Phase 1 & 2

• Supporting Utility scale power generation
• Expanding off-grid applications
• Developing rooftop installations
• Accelerating Research and Development
• Enhancing the Domestic manufacturing base
Slide 3
Key Action Points under JNNSM – Off-Grid, Rooftop &
Demonstration Projects under JNNSM
Off Grid Solar Applications
JNNSM proposed to add 200 MW capacity in I st phase for off grid applications like solar lighting,
rural power supply, telecom towers etc
• Soft loans up to 5% annual interest rate
• 30% subsidy for select applications
• 90% subsidy for niche applications in special category states and other remote areas.

Rooftop Based Solar Generation

JNNSM – targeting 100 MW of rooftop solar PV connected by 2022 to replace conventional
power/ diesel-based generators.
• Operators eligible to receive the feed-in tariff fixed by the SERC.
• Generation Based Incentives payable to utility to cover difference between solar tariff less the
base price of Rs. 5.50/kWh with 3% p.a. escalation.
• Tariff to be fixed by concerned SERC & utility to pay a minimum of Rs. 5.50/unit - increasing
annually @3%

Demonstration Projects
JNNSM to identify new technology configurations not covered under 1,100 MW capacity target
• Focus on large scale Solar Thermal projects and new solar thermal technologies
• PFC to prepare bidding documents for these projects - tariff based bidding - initiated in 2010
Slide 4
Key Action Points under JNNSM - Grid Connected Solar Power

• Under JNNSM, NVVN (NTPC Vidyut Vyapar Nigam) to be the nodal agency for the
procurement and sale of solar power
• NVVN to source and sell 1,000 MW solar power in Phase 1 based on
• A Solar Tariff (to be paid to solar power project developers) fixed by Central Electricity
Regulatory Commission (CERC)
• Solar tariff for FY 2010-11 tariff as per CERC - Solar PV Rs. 18.44 per unit; CSP Rs.
13.45 per unit
• NVVN to bundle an equal amount of conventional power with solar power
• Bundled solar and conventional solar power to be sold to states by NVVN @ Rs 5.5/ unit
• NVVN to sign a PPA (Power Purchase Agreement) with solar developers and NTPC as
well as a PSA (Power Sale Agreement) with state utilities
• PPA to remain valid for 25 years (in line with CERC regulations)
• NVVN shall establish irrevocable revolving Letter of Credit (LCs) in favor of the Solar
Power Developers
• Distribution Utilities shall open irrevocable revolving Letter of Credit to ensure Payment
Security.
• CERC discussing SERCs to set committed RPO’s at state level for solar
• Solar RPO to start with 0.25% in the phase-I, and increase gradually to 3% by 2022.
Slide 5
Proposed Time Lines & Requirements for New Projects
 New Projects - Timelines
 Invitation of Expression of Interest (EOI) - By 10th March 2010
 Last date of submission of Applications and Registration - By 30th April 2010
 Submission of documents by SPDs required for MOU - By 30th June 2010
 Forwarding of details to States for validation / recommendation - By 15th July 2010
 Confirmation of preparedness of SPDs and recommendations by State - By August 2010
 Selection of Developers by the Central Empowered Committee - By September 2010
 Signing of MOU with SPD - By 30th September 2010
 Readiness for signing of PPA & PSA - By 31st October 2010
• New Projects - Requirements for Setting up of Solar Projects
 Confirmation that Capacity shall be commissioned on or before 31st March 2013.
 Net worth of the SPD for the past three years and turn-over of last three years
 Technical requirements
• New Projects – Conditions for signing of MOU
 Confirmation from STU regarding availability of evacuation infrastructure at >33 kV
 Statutory (allotment of land) and other clearances as applicable & Bank Guarantee
 Complete Detailed Project Report (DPR) & Letter of comfort from Promoter(s) /FI’s
 Time-Frame for major activities
 Necessary water linkages for solar thermal from the concerned State Authorities

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Key Messages & Issues
 JNNSM’s Goal
 Play to India’s strength – Shift focus to Solar (India has very high solar potential)
 Address energy security & high cost of solar power through rapid scale-up &
technological innovation for driving down solar power costs towards grid parity.
 Mid-term appraisal (based on emerging cost & technology trends) to be undertaken
 to evaluate progress & review capacity and targets for subsequent phases
 protect Government from un-necessarily high subsidy exposure
 Shift in focus of Renewable Energy Development from State to Federal Level:
 JNNSM – Shifts focus in renewable energy development to the centre
 MNRE & NVVN emerge as main players in RE promotion from states like in wind etc
 Limited role of states – land, water allocation
 However limited or no clarity on Solar RPO’s and REC’s and how these will function
 A number of issues still to be addressed by JNNSM in conjunction with Central &
State Governments, Regulators, Power utilities etc:
 Availability of year on year funding for the JNNSM (solar tariff – 25 years – from
which budgetary head)
 Solar projects - connected at 33 kV & above grid substations & not discom
substations - escalate project costs - longer evacuation networks
 Project financial closure within 3 months from date of signing of PPA – highly
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ambitious - considering the Indian banking systems unfamiliarity with solar
Key Messages & Issues

 CERC Solar Tariff

 Duration of solar feed in tariff inadequate for developers to risk such high investment
 1 year solar FIT – does not allow a developer enough time to develop projects
 Financial closure for solar projects – solar feed in tariff window not large enough to
accommodate project gestation period – 12 months for SPV and 28 months for CSP
 Capital costs assumed for solar tariff design may not be appropriate
 Solar tariff based on capital cost prevailing in market today – however project gestation period
may move the capital costs higher – risk especially as MNRE expects a development guarantee
while awarding projects
 RoE for the first 10 years assumed at 17 % (provides an effective post tax return of 14.11
%) - on the lower side considering the risks associated with new technology
 No or limited information on CUF’s achievable by solar power projects
 CERC CUF (of 19% - SPV) might be difficult to achieve in most parts of India except Rajasthan
& Gujarat – developers of the view that this should be in the range of 16‐19%.
 Same case with CSP

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Key Messages & Issues
 Risk Mitigation for Key Stakeholders
 Risk mitigation for solar power developers & NVVN in case of default or non purchase of power by state utilities
 No clarity on ‘chain of events’ or liabilities in case a utility stops buying power from NVVN or is late in making payments to
NVVN for the power – domino effect
 MNRE & Multi/ Bi lateral institutions (WB & ADB) for development of appropriate ‘Risk Funds’ for NVVN and solar
developers
 No risk mitigation instruments for solar project developers
 Need for a technology guarantee from solar technology providers
 Development of Solar Parks
 MNRE very keen to develop solar parks in states like Rajasthan and Gujarat
 Gujarat already has a very ambitious solar policy in place and had already bid out projects with a cumulative capacity of
700 MW.
 Promotion of Solar Manufacturing
• An incentive package, similar to SIPS, to be considered for development of manufacturing for solar thermal systems
and components.
• SME’s to be supported through soft loans for expansion of facilities and technology
• Technology transfer to be built into procurement from foreign sources
– no clarity on this clause and whether projects under JNNSM would need to source all or part of their equipment from
Indian suppliers

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