India aims for 20,000 MW of solar capacity by 2020

NEW DELHI, INDIA - The Indian government is reported to have finalized the draft for the National Solar Mission, outlining ambitious long-term plans to attain an installed solar power generation capacity of 20,000 megawatts (MW) by the year 2020, which would be increased to 100,000 MW by the year 2030, and further to 200,000 MW by the year 2050.

The plan also aims to reduce the cost of solar power generation to between $0.0846 and $0.1058 per kilowatt-hour (kWh) by 2017-20 in order to make solar power competitive with power generated from fossil fuels.

In order to achieve the proposed targets, the government is likely to make investments of approximately $18 billion to $22 billion over a period of 30 years. An estimated investment of about $1.06 billion-$1.27 billion will be required during the current Eleventh Five-Year Plan period, 2007-12, while an investment of $2.54 billion-$3.18 billion will be required during the Twelfth Five-Year Plan, 2012-17.

The Mission envisages 20,000 MW of solar power generation capacity to be installed across five application segments by 2020. These segments include 12,000 MW of power connected to the utility grid, 3,000 MW of power from 1 million captive and grid-connected rooftop solar photovoltaic (PV) installations with an average individual capacity of 3 kilowatts (kW) each, 3,000 MW of rural installations, and 2,000 MW of distributed solar PV applications such as telecom towers. In addition, about 20 million households are envisaged to have access to solar lighting, while solar heating applications would be set up over 20 million square meters of collector area by 2020.

The plans are proposed to be implemented in three phases during 2009-2020. The first phase will focus on achieving economies of scale and validating the economic and technological viability of different solar applications. Some of the plans to be implemented during this phase include promotion of large-scale solar utility plants, and mandatory deployment of onsite or rooftop PV applications in buildings and establishments owned by the government and public sector undertakings to achieve a target of 100 MW through this initiative by 2012.

The government also plans to mandate installation of solar power generation capacity of at least 5% of the total installed capacity of upcoming thermal power plants based on oil, gas and coal. Further, vacant land available in existing power plants would be used for setting up solar power units.

Solar applications are planned to replace diesel generators to meet peak daytime power requirements. Solar PV panels will be used to charge inverter systems in residential and commercial establishments.

The government also plans to develop two or three large-scale concentrating solar power (CSP) plants with capacities of 50 MW, 100 MW with storage, and a 150-200-MW solar/gas hybrid model, to demonstrate economic and technological feasibility. Pilot projects will be undertaken for large-scale rural electrification based on solar power.

Solar lighting systems will be promoted in rural and urban sectors through micro-financing business models to provide access to lighting for 3 million households by 2012. The government is expected to invest up to $254 million in this initiative.

There will also be a focus on the promotion of solar heating systems, for which the target has been set at 7 million square meters of solar heating applications by 2012. The government plans to mandate installation of solar water heaters in functional buildings such as hotels, hospitals and guesthouses, subject to availability of at least 500 square meters of land area.

The first phase of the Mission would also see the establishment of technology parks to promote local manufacturing capacities. This target has been set at 1,000-1,500 MW of manufacturing capacity by 2012-13.

In the second phase of implementation, during the period 2012-17, the plan is to achieve 6,000-7,000 MW of installed solar power generation capacity by 2017. This would be accomplished by scaling up validated applications with focus on grid-tied installations, implementation of validated business models for rural electrification, commercial deployment of solar thermal power projects with storage capabilities, and pilot deployment of advanced technologies such as CSP, thin film applications, storage systems and dish/Stirling systems.

In the third phase, during the period 2017-20, the target is to achieve an installed capacity of 20,000 MW by 2020 and attain tariff parity between solar power and conventional grid power. This phase would see commercial deployment of storage technologies and other advanced technologies indigenously developed through research and development. The Mission envisages the deployment of more than 1 million rooftop systems with an average capacity of 3 kilowatts by the year 2020.

In order to promote rapid and large-scale capital investments in this sector, the government is proposing to provide incentives in the form of feed-in tariffs, tax holidays up to a period of 10 years, and relief from excise duty and customs duty on critical materials and capital equipment. Similar incentives are already in place for projects in the infrastructure and information technology sectors.

Feed-in tariffs would be determined through a market-based price discovery mechanism such as inviting bids for large-scale projects. The incentive would be distributed among the utility and the central and state governments, with the utility bearing a cost of $0.0741 per kWh, while the balance amount would be borne by the central and state governments in the ratio of 70:30. Costs of solar power generation are expected to decline at a rate of 7-9% per year by 2020.

India currently has a PV-module manufacturing capacity of 700 MW. However, there is no indigenous manufacturing capability for solar thermal power plants. The government intends to promote the establishment of new plants to manufacture concentrator collectors and receivers required by CSP plants.

The proposed plans to increase solar power generation capacity to 20,000 MW by 2020 are estimated to result in a reduction of 42 million tons per year of carbon-dioxide emissions. Solar lighting and heating initiatives are expected to further reduce emissions by 3 million and 15 million tons per year, respectively, by eliminating the use of kerosene and other fuels.

Additionally, solar heating applications are expected to result in peak-load shaving of about 7,500 MW, free up 4,500 MW of installed power capacity that is currently used for heating applications, and save about 350 million liters per year of fuel oil. Rooftop PV systems, estimated to reach 3,000 MW by 2020, could save about 1,050 million liters per year of diesel and reduce carbon dioxide emissions by 2.36 million tons per year.