Policy Review: National Solar Mission

[Profile of the author: The author, Dadhich Indrodia is a first-year student at Tata Institute of Social Sciences. He was also a research intern with Niti Manthan Summer School Phase - II under the Climate Change Laws project]

INTRODUCTION

India a country where the sunny days are on average more than 300 proves to be one of the most encouraging countries for the development of a solar-based energy system (Figure 1). The National Solar Mission is an initiative of the Government of India and State Governments to promote solar power. It is one of the 8 major policy interventions of the National Action Plan on Climate Change. The objective of the National Solar Mission 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 (Atreyesh & Murthy, 2014). The target of achieving an installed power capacity of 100 GW by 2022 has been set under this mission. To meet the target of 100 GW, it’s been proposed to achieve through 60 GW of large and medium scale solar projects, and 40 GW through rooftop solar projects. Though the initial target was much lower than the currently planned targets (Figure2,3), it is a commendable leap from fossil to renewable and has been recognized internationally.

Supply chain from the perspective of beneficiaries:

The National Solar Mission (NSM) focused on 2 broad categories (TN, 2019) of beneficiaries while framing the policy:

1. Utility Category- This focuses on the sale of solar energy to distribution licensees or 3rd party. The connections here would be fed in through gross metering interface.
2. Consumer category- The objective here is of self-consumption and export of the surplus generated net metering.

The supply chain for the solar power generation, distribution and utilization can be majorly divided into four components.

1. Grid-Interactive Solar Power: The major solar power projects like solar parks that generate power in huge quantity and fed into electricity grid are the main product under this mission. Currently, NVVN (National Vidhyut Vyapar Nigam Limited) manage the trading of such power from solar power developers to DISCOMs (LEAD, 2015).
2. Off-grid solar power: This system works independently grid connection and directly gets used for various purposes.
3. Solar Water heating Collectors: This refers to the provision of solar water heaters and caters to the consumer category.
4. Grid Connected SPV Rooftop Projects: The rooftop solar is a priority for the mission and 40% of the generation of solar power is targeted to come from rooftop solar.

Institutional Framework for National Solar Mission:

India’s electricity sector comes in the “concurrent” list of subjects and thus it is the responsibility of the state as well as of the central government. Central government facilitates policies whereas the state government distributes the services. The institutions responsible for the functioning and implementation of the NSM are shown in the diagram below.

The roles and responsibilities of the institutions can be understood in brief from the following explanations:

• Ministry of New and Renewable Energy (MNRE): The cabinet body responsible for production, development and applications of solar energy. The R&D of non-conventional and renewable sources of energy is also a responsibility of this ministry. The assistance to industries in achieving standards, specifications and performance parameters is provided by MNRE.
• Indian Renewable Energy Development Agency Ltd. (IREDA): Under the MNRE, which provides financial support for electricity generation through renewable sources.
• Solar Energy Corporation of India (SECI): Another body under MNRE which had the nodal authority for development, commercialization and implementation of the solar mission. SECI had deployed solar lights at rural places to promote cottage industries.
• Ministry of Power: Another cabinet-level ministry which works with MNRE and oversees electric power nodal bodies like NTPC and NVVN. The power supply, generation and distribution mandates for states and UTs are formulated by this ministry.
• National Thermal Power Corporation (NTPC): Stakes of 75% owned by GOI, the NTPC is the country’s largest power producing company and thus assist in the distribution of energy generated by solar.
• NTPC Vidyut Vyapar Nigam Ltd. (NVVN): The power trading and optimum utilization of power are done by this body. The inter-state trading of power is done through NVVN and is also the agency that signs Power Purchase Agreements for 25 years in order to purchase solar power from developers and supplies it to Distribution Companies (DISCOMS). IREDA also finances solar projects under NVVN (LEAD, 2015).

The other regulatory agencies and their basic roles have been described in the diagram itself. These agencies which work at the center and state level have been the major drivers for the regulation of the solar power projects as well as encouraging the deployment of state-level policies and thus solar power projects.

IMPLEMENTATION STATUS

The success of NSM can be quantitatively measured by the below figures 5 and 6, which show the tremendous increase in capacity to 25 GW as well as the budget allocated for solar power projects. Moreover, the quality of success can be measured by India leading a strategical international body called International Solar Alliance that has the multilateral scope and developmental agenda. (Baruah, 2019). Parallelly there are major setbacks for India while reviewing NSM. The first setback refers to the utility category wherein the funding dimensions are very bleak as banks have very limited capacity for funding the solar projects while the nature of operational limitations of solar projects faced by project developers leads to their inability to prove the viability of the projects. This has made the developers land in a vicious cycle (figure 7) (LEAD, 2015). The second major drawback of NSM refers to the manufacturing industry of Solar panels and cells as the strategy to increase installation quantity while keeping the tariff price as low as Rs 2.44/ unit has resulted into import dependence of almost 90% and discouraged domestic production as well as encouraged international trade conflicts (Behuria, 2019) (Siddiqui, 2016).

FUTURE SCOPE

The NSM though created a huge quantity of solar power energy, also needs to now focus on its main proponents- the project developers. Creating specialized financial institutions and instruments as well as sound and efficient manufacturing environment is the need of the hour. This will not only encourage developers but lead India towards a global leader in Solar power generation.

Disclaimer: This article is an original submission of the Author. Niti Manthan does not hold any liability arising out of this article. Kindly refer to our Terms of use or write to us in case of any concerns.

References

1. Atreyesh, V., & Murthy, V. (2014). India's Solar Energy Future- Policy and Institutions. Centre for Strategic and International Studies.
2. Baruah, A. G. (2019). How can India become a Global Leader in Solar Power Generation? Economics & Political Weekly.
3. Behuria, P. (2019). The politics of late development in renewable energy sectors: Dependency and contradictory tensions in India's National Solar Mission. World Development.
4. LEAD, I. (2015). Jawaharlal Nehru National Solar Mission. Centre For Development Finance.
5. Siddiqui, S. (2016). Will Strategy prevail over economics? An analysis of Charanka Solar Park in Gujarat. South Asian Journal of Business and Management Cases, 162-167.
6. TN. (2019). Tamil Nadu Solar Energy Policy 2019. Tamil Nadu State Government.