India: Coal plants to subsidize solar

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The government of Indian Prime Minister Narendra Modi has ordered state utility NTPC to bundle and sell electricity from coal-fired power plants and solar farms to the grid — a move aimed at making PV more competitive, according to Bloomberg.

The order, issued on July 17, is expected to reduce the price distribution companies pay for solar power and force them to purchase more renewable energy.

"The lower price ensures the competitiveness of this power in the wholesale market, thus easing the search for alternative buyers," Bharat Bhushan Agrawal, a solar analyst for Bloomberg New Energy Finance in New Delhi, told the news agency.

The ruling makes it easier for India’s state-run distribution companies, which have had difficulties covering the costs of electricity bought in the market, to acquire solar power and support Modi’s ambitious target of achieving 100 GW of solar capacity by 2022. India’s current solar capacity stands at just over 4 GW. The NTPC is to build 15 GW of solar plants by 2019 as part of the program, according to Bloomberg.

The government’s push to increase the use of solar power may meet with opposition, however. Praveer Sinha, CEO and executive director of Tata Power Delhi Distribution, told Bloomberg that distribution companies may resist purchasing bundled power, pointing out that “the average cost of procurement is already higher than the billing rate” and bundling coal and solar power would increase prices.

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