Handling queries on India's NSM

My previous blog post was on India's National Solar Mission (NSM). For those who came late, this mission is one of the eight key National Missions, which comprise India’s National Action Plan on Climate Change. It has twin objectives – to contribute to India’s long-term energy security as well as its ecological security.

Now, a lot of interest is currently being generated within the country regarding solar PV. In fact, a lot of folks have got into conversations with me on the subject. I've tried to handle some queries -- the ones that are possible, and then, went up to the industry experts to try and get some replies.

For instance, the central government is going to create a middle-layer organization to deal with permissions, power purchase agreements (PPAs), etc. How soon is this department going to start functioning? Well, it is expected to happen soon, according to Rajiv Jain, Associate Director - Govt. Affairs, India Semiconductor Association (ISA). Another question raised was -- what will be the price per kWh produced? Generally, this should be as per the Central Electricity Regulatory Commission (CERC) regulations.

There was another query on whether all of the power generated by a producer will be bought by the utilities? As far as we are given to understand, power is to be purchased by India’s largest power company, NTPC Vidyut Vyapar Nigam (NVVN).

Yet another question raised has been: what, if there is excess capacity? As per NSM, 1000 MW is the target for the phase I.

In the battle between the big vs. small players, will the government show favoritism in purchasing the power from big producers first and then from the small guys? A 50-MW cap per company has been proposed, but this can be easily worked around. As of now, guidelines regarding the same are awaited.

Here's another interesting query. Does anyone have any insight into “back-out” clause? For example, what if the government decides not to buy power from any particular producer, all of a sudden? Are there any penalties and damages to be paid by the government? I had Rajiv answer this query, who said that the power developer will enter into a PPA, which is a comprehensive agreement.

Whew! It has been quite an experience handling queries from interested parties. At least so far, they have been manageable.

Pradeep

Dec. 11, 2009