2.1 Jawaharlal Nehru National Solar Mission
Jawaharlal Nehru National Solar Mission, officially launched in November 2009 is a major initiative of GOI and the state governments to promote ecologically sustainable growth on one hand, and to cater to the energy security challenge for the country on the other. It also constitutes a major contribution by India to the global effort to meet the challenges of climate change.
The objective of the JNNSM is to establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible. It aims to incentivize the installation of 22,000 MW of on- and off-grid solar power using both photo voltaic (PV) and concentrating solar power (CSP) technologies by 2022. It also expects to enable the adoption of a large number of other solar applications such as solar lighting, water and air heating, and water pumping.
The mission targets can be broadly summarized as:
- Creating an enabling policy framework for the deployment of 20,000 MW of solar power by 2022
- Creating favorable conditions for solar manufacturing capability, particularly solar thermal for indigenous production and market leadership
- Moving towards grid parity by 2022 through economies of scale, technological innovation, and indigenous manufacturing to bring down the costs of solar power substantially
- Achieving 15 million square meters solar thermal collector area by 2017 and 20 million by 2022
The deployment targets across the application segments are tabulated in Table 2.1.
The mission expects to pursue its targets through more attractive feed-in tariffs, a single-window application process, and solar-specific renewable purchase obligation (RPOs) within a 3-phase approach.
Phase 1, 2010–2013: Phase 1 is focused on creating a market for solar power in India by bringing in investors, engineer-procure-construct (EPC) contractors, and equipment manufacturers. The policy framework to achieve the objectives of the National Solar Mission by 2022 is also expected to be formulated in Phase 1. Apart from this, Phase 1 acts as a platform for testing the concept of tariff discounting in renewable energy. A target of 1000 MW grid-connected solar power has been set for this phase (with solar PV and solar thermal in the ratio of 50:50).
Table 2.1 Mission Targets
Source: Jawaharlal Nehru National Solar Mission document. Available at http://india.gov.in/allimpfrms/alldocs/15657.pdf, last accessed on 24 August 2012
Phase 2, 2013–2017: During Phase 2, experience of Phase 1 will be built upon to facilitate substantial increases in capacity addition, significantly bring down cost per kWh, and achieve additional installations of 3,000 to 10,000 MW of combined PV and CSP capacity. JNNSM identifies the need for international support in the form of technology transfer and financial assistance in order to meet the higher goal. The central government will work to create a favorable environment for solar manufacturing, particularly for solar thermal technology. By 2017, 15 million square meters of solar thermal collector area is expected to be installed as also off-grid solar capacity of 1,000 MW. For Phase 2, JNNSM proposes mandatory use of indigenously produced cells and modules. The aim is to (a) create large enough domestic market and (b) create favorable conditions for the uptake of the Indian products thereby providing the impetus to local manufacturing. It is hoped that eventually the country becomes a solar hub catering to domestic as well as global demands.
Phase 3, 2017–2022: Solar power is expected to achieve grid parity by 2022 wherein off-grid solar capacity installations will reach 2,000 MW, on-grid capacity will reach 20,000 MW, 20 million square meters of solar thermal collector area will be installed, and 20 million solar lighting systems will be deployed in rural households under the third phase of JNNSM.
There will be evaluation of progress, review of capacity, and targets for subsequent phases, based on emerging cost and technology trends, both domestic and global through the 11th to the 13th Plan as also during their mid–term assessments. The aim would be to protect the government from subsidy exposure in case expected cost reduction does not materialize or is more rapid than expected.
The key features of JNNSM are listed below:
- An RPO mandated for power utilities, with a specific solar component will drive utility scale power generation in either solar PV or solar thermal. The solar purchase obligation will be gradually increased while the tariff fixed for solar power purchase will decline over time. The solar power purchase obligation for states may start at 0.25% in the Phase 1 and go up to 3% by 2022. This could be complemented with a solar specific renewable energy certificate (REC) mechanism to allow utilities and solar power generation companies to buy and sell certificates to meet their solar power purchase obligations. Recognizing that solar power is expensive, in Phase 1, a novel way of reducing financial burden on distribution utilities has been devised by way of bundling of solar power with unallocated, conventional power.
- The mission in its first two phases will promote solar heating systems, which are based on a commercially viable and proven technology. The mission is setting an ambitious target of ensuring that all applications, domestic and industrial, below 80°C are solarized.
- A key opportunity for solar power lies in decentralized and off-grid applications. In remote and far-flung areas where grid penetration is neither feasible nor cost effective, solar energy applications are cost-efficient. They ensure that people with no current access to light and power, move directly to solar, leap-frogging the fossil fuel trajectory of growth.
- Currently, market-based and even micro-credit based schemes have achieved only limited penetration in this segment. The government has promoted the use of decentralized applications through financial incentives and promotional schemes. While the 1000 MW target of the solar mission by 2017 appears small, it has the potential to transform the lives of millions of households. The strategy will be to learn from and to innovate on the existing schemes to improve effectiveness.
- The bulk of India's solar PV industry is dependent on import of critical raw materials and components including silicon wafers. Transformation of India into a solar energy hub will only be enabled if low-cost, high quality solar manufacturing is possible within the country, including balance of system components. Proactive implementation of special incentive package (SIPs) policy, to promote PV manufacturing plants, including domestic manufacture of silicon material can facilitate this development.
- A major research and development (R&D) initiative to focus: first, on improvement of efficiencies in existing materials, devices and applications and on reducing costs of balance of systems, establishing new applications by addressing issues related to integration and optimization; second, on developing cost-effective storage technologies which would address both variability and storage constraints, and on targeting space-intensity through the use of better concentrators, application of nano-technology and use of better and improved materials. The mission will be technology neutral, allowing technological innovation and market conditions to determine technology winners.
- A Solar Research Council will be set up to oversee strategy, taking into account ongoing projects, availability of research capabilities and resources and possibilities of international collaboration.
- Pilot demonstration projects would be closely aligned with the mission's R&D priorities and designed to promote technology development and cost reduction. The JNNSM is divided broadly in two categories, as described below.
2.1.1 Off-Grid and Decentralized, Roof-Top and other Small Solar Plants
The solar mission has set a separate target for the off-grid and decentralized roof-top and other small solar plants. These guidelines were released on 16 June 2010. In the first phase, JNNSM aims to build 200 MW of off-grid solar energy applications to meet/supplement power, heating and cooling energy requirements, and to promote 100 MW of tail-end and other small grid connected solar power plants. This will address four critical areas: access to rural households for lighting and daily power requirements; reduction in consumption of kerosene and diesel; energy demand management through solar thermal systems; and improvement of efficient transmission by feeding power at consumption points.
Off-grid and decentralized solar applications
Off-grid solar PV systems/applications up to a maximum capacity of 100 kW per site and mini grids for rural electrification up to a maximum capacity of 250 kW per site would be supported under this scheme. Soft loans for projects, including a component for working capital, will be available for technology upgradation and improvement and expansion in production facilities through refinance facility implemented through Indian Renewable Energy Development Agency (IREDA).
Multiple channel partners to upscale the program rapidly would include:
- Renewable energy service providing companies;
- Financial institutions including microfinance institutions acting as aggregators;
- Financial integrators;
- System integrators; and
- Program administrators.
Ministry of New and Renewable Energy (MNRE) would provide financial support through a combination of 30% subsidy and loans at an interest rate of 5% per annum.
List of projects selected by MNRE under this scheme is given in Appendix I.
Roof-top and other small solar power plants (below 33 kV) connected to the distribution network
In order to give a thrust to rooftop PV and other small solar power plants connected at the distribution network at voltage levels below 33 kV envisaged under Phase 1 of the JNNSM, the MNRE proposed to launch a program of generation-based incentives (GBIs). The local distribution utility in whose area the plant is located, would sign a power purchase agreement (PPA) with the project proponent at a tariff determined by the appropriate State Electricity Regulatory Commission (SERC). The GBI shall be equal to the difference between the tariff determined by the Central Electricity Regulatory Commission (CERC) and the base rate, which will be Rs 5.50 per kWh (for the financial year 2010–11), which shall be escalated by 3% every year.
Projects under this category in Phase 1 comprise:
- Projects connected to HT voltage at distribution network (i.e. below 33 kV): 90 MW aggregate capacity
- Projects connected to LT voltage i.e. 400 volts (3-phase) or 230 volts (1-phase): 10 MW aggregate capacity
The issues related to grid integration, metering, measurement and energy accounting for projects to be connected at LT level with installed capacity lower than 100 kW is complex. Detailed guidelines for such schemes will have to be issued once the clarity on such grid integration standard emerges. As a result, the present guidelines are applicable to Category 1 projects that is, with installed capacity of 100 kW and up to 2 MW having grid connectivity at HT level (below 33 kV) of the distribution network.
Under this program, IREDA would act as a program administrator and sign memorandum of understanding with concerned state distribution utilities for disbursement of GBI as per the prevailing conditions.
List of projects, selected under this scheme is given in Appendix II.
Guidelines for grid-connected solar power projects were released on 27 July 2010. The aggregated capacity of the grid-connected solar projects to be developed under bundling scheme in Phase 1 of JNNSM will be 1000 MW, inclusive of the capacity under migration guidelines. Projects aggregating a total capacity of 84 MW (solar thermal 30 MW and 54 MW for solar PV) have been approved for migration. The projects will be selected under this scheme in such a manner so as to provide for deployment of both solar PV technology projects and solar thermal technology projects in a ratio of 50:50, in MW terms. However, within these two broad technology groups, the selection of projects would be technology agnostic. Any demonstration projects as may be approved by MNRE from time to time shall not be considered for bundling with unallocated quota of NTPC power under this scheme. The allocation of 500 MW grid-connected PV projects was slated to be done in two batches; the first batch (150 MW) will be in the financial year 2010–11 and the second in the year 2011–12. Projects under migration guidelines, migrating from older incentive schemes to new ones, should be given priority above new projects. If applications exceed 150 MW, projects will be chosen based on the tariff discount offered by project developers on the CERC tariff. The projects for first batch of Phase 1 have been selected by NTPC Vidyut Vyapar Nigam Limited (NVVN). A total of 37 projects aggregating to a capacity of 620 MW (solar thermal 470 MW and 150 MW for solar PV) have been identified. Under the second batch, projects for remaining capacity of solar PV of 204 MW will be selected. These projects will feed into the grid at 33 kV or above. Individual projects for solar PV will have a maximum capacity of 5 MW (± 5%). Each company can apply for only one PV project and one CSP project under Phase 1. The following conditions were laid down for the applicants under Phase 1 of JNNSM:
- Company should have an audited net worth of at least Rs 3 crore or equivalent US$ per MW of a project's installed capacity in at least one of the last four financial years.
- The applicant should be in a position to offer bid bond, or third-party guarantee, per MW for any discount on the offered tariff. The higher the discount, the higher the amount of the bond, ranging between Rs 10,000 and Rs 50,000 per MW on a graded scale.
- The applicant should make an earnest money deposit (EMD) in the form of a bank guarantee of Rs 20 lakh per MW along with the initial request for selection.
- A performance bank guarantee of Rs 30 lakh should be provided per MW at the time of signing the PPA.
- A project shall achieve financial closure within 180 days after signing the PPA.
- A project must be commissioned within 12 months in case of solar PV and 28 months in case of solar thermal technology after the signing of the PPA.
In case of failure to achieve this milestone, NVVN will encash the performance bank guarantee according to predefined rates. To ensure PV module quality, modules proposed for the project must qualify to the latest edition of the following International Electrotechnical Commission (IEC) PV module qualification test or equivalent from the Bureau of Indian Standards: for crystalline silicon solar cell modules–IEC 61215; for thin-film modules–IEC 61646; and for concentrator PV modules–IEC 62108. For the first batch of Phase 1, it will be mandatory for projects using crystalline silicon technology to use modules manufactured in India. Similarly, it will be mandatory for the bidders to ensure at least 30% of local content excluding land in the plants/installations of the projects.
List of projects "under migration" is attached in Appendix III and list of projects for first batch of Phase 1 (2010-11) is attached in Appendix IV. A 5 MW solar PV project from Tamil Nadu and a 10 MW solar PV project from Karnataka have made it to this list.
A comprehensive time line of development of JNNSM is shown in Figure 2.1.
Figure 2.1 A Comprehensive Timeline of Development of JNNSM
Note: IEGC Indian Electricity Grid Code; CERC Central Electricity Regulatory Commission; NVVN NTPC Vidyut Vyapar Nigam; RfP Request for proposal; RfS Request for selection; PPA Power Purchase Agreement; PPS Power Sale Agreement
Source: Jawaharlal Nehru National Solar Mission document. Available at http://india.gov.in/allimpfrms/alldocs/15657.pdf, last accessed on 24 August 2012