The Indian Solar Saga Part 3 of 3 – Off-Grid Solar Policies and Ground Realities

In part 1 and 2 of the 3 part series we covered the Indian power generation scenario, Gujarat, Centre (JNNSM) and State Solar policy with some insights into their application and risks. Our final part covers the Central Government’s Off-grid Policy as well as ground realities on technologies for Solar Power in India.

The Ministry of New and Renewable Energy (MNRE) for India has identified solar off-grid as one of the key aspects of rural electrification. Almost half of the Indian population still without access to basic needs such as electricity, continue to burn biomass and fossil fuel to meet energy needs.

A major cause of the South East Asia brown haze is due to the wasteful burning of agricultural waste, fossil fuel and biomass for cooking, lighting, heating which in turn has had an enormous ecological impact on the subcontinent. More than 70% of the country’s population depends upon biomass for its energy needs, consisting of 32%+ of the total primary energy use in the country.

The current set of solar policies in the country focus primarily on grid connectivity of solar projects whereas in the recent past solar was primarily led by off-grid applications which helped grow the decentralized model. Prices for solar have also fallen drastically in the past two years but the off-grid uptake has increased only marginally. The scope and inclusivity for solar applications leaves a lot of room for growth in this space and also in terms of securing the nation’s energy supply.

Off-grid Solar Policy

Under the First Phase of Jawaharlal Nehru National Solar Mission (JNNSM) to be implemented between 1st April 2010 and 31st March 2013, a target of 200MW capacity equivalent off-grid solar PV systems and 7 million square meter solar thermal (heating) collectors is to be installed.  In its first year of the first phase of 2010-11, an installation of 32 MW solar PV off-grid systems and 5 lakh square meter solar thermal collector area were targeted, to be achieved by using a combination of Renewable Energy Service Providing Companies (RESCOs), Financial Institution’s including MFIs acting as Aggregators, Financial Integrators, System Integrators and Programme Administrators.  As of February 2011, the installed base was 38.5 MW for off grid PV systems and 1.2 Lakh square meter solar thermal collector area.

Compared to the fact that 400 million people live without a power connection, the actual installed base off off-grid solar is truly miniscule compared to the energy needs of the population. The potential for generation runs into the large multiples of GigaWatt hours allowing tremendous scope for implementation at the grass root level. Solar PV has significant potential in replacing diesel in cellphone towers, powering irrigation pumps as well as street / home lighting, while current thermal usage is skewed toward residential and hospitality based water heating. The MNRE is also promoting the concept of solar cities to reduce dependency on conventional grid power.

Table 1: Currently Deployed Off-grid and Decentralized renewable energy systems 

Source : MNRE Annual Report

The real potential of renewable energy lies in its off-grid application, promoting independence from the grid as well as generating local jobs while availing of the advantages of consistent power especially in remote hamlets which are a significant loss making proposition for state electricity distribution agencies. The nation’s commitment to provide financial support for electrification of remote unelectrified census villages and unelectrified hamlets of electrified census villages where grid-extension is either not feasible, cost effective or not covered is also under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVYR), in which villages are being provided basic facilities for electricity/lighting through various renewable energy sources.

Financial support is available in the way of Capital and / or Interest Subsidies. To reduce this dependency and ensure rural upliftment, the government has subsidized remote rural electrification to almost 90% of capital costs in special category states whereas for areas with grid connectivity, a subsidy of 30% and soft interest rates are available as well. Small Hydro Power Generation systems, biomass gasification based electricity generation systems, solar photovoltaic power plants, etc., in distributed power generation mode may be used depending upon the availability of resources for generation of required electricity. Hybrid solutions of Solar + Wind and Solar + Bioenergy are also covered under the policy as well rural mini-grids of up to 250KW are being promoted to create a sustainable energy ecosystem.

The table below highlights the maximum size and type of support available for different categories of applicants / use.

Table 2: Capital Support for off-grid solar PV

Source: MNRE

To promote the use of solar while reducing the load on the grid in residential, commercial establishment’s upto 100KW, MNRE has provided for soft loans with an interest cap of 5% to be availed through Non-Banking Financial Companies and scheduled commercial banks through IREDA. Banks are also being provided with incentives for promotional activities as well as cash prizes for villages that have a minimum installed base of 75% of solar lighting.

While all these seem to be steps in the right direction, a lot of confusion exists at the ground level. With a number trying to avail of the interest subsidy but the banks refusing to lend, growth rates have slowed significantly. While Bio energy does have its own strengths, health problems, issues with fuel harvesting, storage with management; have and will create a ceiling for its use. Solar has the potential to meet the lighting and basic needs for remote off-grid users without the overhead of feedstock procurement and management thus creating a large positive environmental impact. The Kerosene subsidy provided

Solar PV and CSP have the highest availability but lowest generation of any clean energy source however given its high capital costs and unfulfilled storage needs for night generation, the potential is stunted. Government schemes are also normally rife with middlemen who prey on end users creating a huge deterrent to increased off-take.

Some of the impediments to the success of policies for both grid and off-grid are

  1. Inadequate financial closure for large projects and bank lending for small projects
  2. Increased cost of capital
  3. Unproven product performance
  4. Pollution and weather conditions affecting power generation
  5. Actual on the ground implementation expertise is sorely lacking
  6. Actual power generation is poor compared to conventional source i.e. A solar panel produces a fourth of the power for twice the costs further reducing its viability
  7. Centre policies are difficult to implement at the grass root, states pay a lot of lip service but aren’t serious in implementation
  8. No real single window clearance or finance
  9. Corruption is rampant at all levels in the government as well as villages especially those with executive and approval authority, with favours granted to close associates and middlemen
  10. Some state boards aren’t serious or don’t have the incentive for providing power to the disenfranchised
  11. Accountability and audits are insufficient to reduce mismanagement
  12. Transmission and Distribution losses of more than 30% result in poor utilization of power generation capacities
  13. Bankrupt Discoms

Though the scenarios may seem dismal, the recent actions against corruption have instilled a fresh enthusiasm in the populace that the corrupt will be brought to justice. The lokpal bill that allows for action against corruption which hasn’t been passed for the past few decades due to political resistance, has now received fresh backing and interest.

An accountable government will hopefully strive to meet promises and deliver on their commitments

On the ground technology realities for grid connected projects

Another unclear aspect of the entire solar industry has been the confusion around use of type of technology. The vast majority of projects allocated in the centre – Jawaharlal Nehru National Solar Mission (JNNSM) were given to heat based energy generation due to its large scale potential with affinity for storage and similarity to thermal technology

Within Photovoltaic’s (PV), there have been proponents both of crystalline and thin film, with both sides claiming advantages over the other. Current crystalline installations have generated efficiencies of much lower than 20% pant load factor, with prices dropping as much as 30% as on last year. The risk in investing is highlighted by the number of grid solar developers who have opted out of the process but are offering their PPAs to more seasoned industry players in the Indian market. The advantages of PV have been the quick procurement, low maintenance and quick commissioning time without too many complications especially for off-grid projects. Expected average generation for crystalline is expected to be around 1.3-1.5 million KWh units per MWp across most states which translate into PLF’s of less than 20%, thin film proponents promise a much better 1.5 million and more KWh units per MWp. The true winner in PV will be apparent come the winter of 2012 once most plants have at least run a single annual cycle.

Concentrated Solar Power (CSP) has the highest potential in dry and heat intensive areas of Rajasthan and Gujarat with almost 70% of PPA’s allocated in JNNSM. This technology though seemingly low tech, uses trackers, heating and power generation similar to thermal technologies, with higher efficiencies for similar costs. This gives it a slight edge in the overall power generation scenario over PV especially for grid connected plants but the water requirement is tough to meet locally. The high maintenance, moving parts and long time to commissioning, combine to make it a complex and cumbersome technology for power generation. Another consideration is the Intellectual Property management which is mainly controlled by the creator.

However, the potential for CSP is highlighted by Torresol Energy’s 19.9MW gemasolar plant launched in May 2011, designed using central tower technology, is the first CSP plant to generate 24 hours of electricity using molten salt as the storage mechanism. The plant is capable of generating almost 2 to 2.5 times the average CSP plant’s energy with a plant load factor of 50% and more bringing it almost on par with conventional energy generation.

The technology using both light and heat is still continuously evolving with higher efficiencies being pushed until parity with conventional power sources is achieved. Solar while being an abundant resource still suffers from our ability to convert all available to usable energy and until all solar power technologies cross a 50% plant load factor, these will be only a good to have and not a must have.

True utilization of solar will depend on the widespread availability of higher efficiencies, lower costs and integrated storage solutions that will help bridge the gap between conventional power sources. Currently JNNSM and Gujarat do not allow for energy storage as part of their subsidy but this is a dire requirement if solar has to meet base load parameters and emerge as the main driver of energy for the planet.

The MNRE has now called for the second batch of the JNNSM Phase 1 mission with unclear capacities due to the failure of some of the first batch to achieve financial closure. A few states have also begun calling for interest in building capacities in a similar manner. The process will stay the same, thus creating a poor market for opportunists and a stable though unattractive market for serious players.

The author leads an Advisory organization focused on Renewable Energy Projects and also runs two of the largest renewable energy forums on dedicated to the Indian subcontinent.

You can reach him at ritesh [at] and the forums on LinkedIn at Renewable Energy and Cleantech Forum – India as well as Solar Energy Professionals – India

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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