Indian government pushes states to ultra-mega projects

Details of how the INR500 crore ($81 million) allocated in the recent Indian budget to develop ‘ultra-mega’ solar power projects will be put to use have begun to emerge.

Last month’s budget speech put an emphasis on projects bigger than 500 MW in scale – ultra-mega schemes – and a report in today’s Business Standard newspaper says five state solar programs have announced a willingness to work with the national government on such large scale projects.

According to the report, the central government fund will be used to provide financial support to developers – viability gap funding, to pay for the power generated before it is sold on to utilities, to finance ‘special purpose vehicles’ so the resulting schemes can attract private investment and generate attractively cheap power and, in at least one instance, to act as developer.

An unnamed government official told the Business Standard, energy minister Piyush Goyal has called for the interested states – Andhra Pradesh, Telangana, Gujarat, Rajasthan and Madhya Pradesh – to sign agreements with the central government by the end of the month.

The source said the government-owned National Thermal Power Corporation (NTPC), which has so far developed 95 MW of solar schemes, would act as developer for Andhra Pradesh’s 1 GW ultra-mega project.

Energy to be sold to SECI

According to the official, Madhya Pradesh would form a special purpose vehicle with the Union government to bring about its 750-800 MW project before seeking private investment and selling the power generated to the Solar Energy Corporation of India (SECI), a subsidiary of the Ministry of New and Renewable Energy (MNRE).

The Business Standard report adds the ultra-mega plans of Telangana which, like those of solar pioneer Gujarat, did not have a capacity target specified, would also involve selling power to SECI, which would then be sold on to utilities.

According to the report, Rajasthan has plans to generate 4 GW from ist huge solar schemes.

It remains to be seen where the panels will come from for such a huge quantity of solar projects with the Narendra Modi government yet to announce whether it will follow the recommendation of the ministry of finance to impose anti dumping (AD) duties on panels and cells from China, Taiwan, the U.S. and Malaysia.

Given the limited capacity of India’s domestic manufacturers, developers will be hoping the ultra-mega solar fixation of the government indicates the AD issue will be brushed under the carpet but Indosolar, one of the four complainants that pressed for AD duties to be applied, re-opened its main manufacturing unit near New Delhi last month.