NTPC’s Expensive Solar Power Finds No Takers

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Plans to install 15,000 MW of solar power in next five years may become unviable with states being reluctant to buy costlier clean energy
Reluctance on part of states to buy expensive clean energy has put a question mark on the feasibility of the country’s biggest power generator NTPC’s plans to install the targeted 15,000 megawatt of solar power in the next five years.The Cabinet had last month given its nod to NTPC to set up solar capacity of this magnitude in three tranches. The first tranche of 3,000 MW is to be set up under a mechanism of `bundling’ two units of solar with one unit of unallocated thermal power so as to bring costs down. In executing this project, NTPC is faced with a two-pronged problem.

One, that there is no availability of unallocated thermal power, and two, that even after bundling the high cost of solar energy remains unattractive for buyers, mainly state governments.

“Power beyond ` . 3.5-3.6 per unit is not saleable. We’re big on solar, but where will this loose thermal power come from? The government should come out with a clearer bundling scheme and show us the way for this target. Else, there is no point to produce so much solar and being stuck with it without takers,“ a senior NTPC official said, requesting not to be named.

Putting pressure on the power generator to produce renewable energy will transfer load on the selling point, that is distribution companies or consumers, the official added. Little wonder then that the loss-laden distribution companies (discoms) of Rajasthan, which are poised to overtake Gujarat this year as the largest producer of solar energy, do not buy more than their renewable purchase obligation (RPO) of 1-1.5% of total power consumption.

“We’re meeting our wind and solar RPOs but we’re not buying solar any more than our RPO,“ said Rajasthan power secretary Sanjay Malhotra. State distribution com panies in the country, according to industry executives, have cumula . 3.5 lakh crore. Most tive losses of ` of them are not meeting their RPOs because clean energy is ex pensive, they said.

“The government is working in silos on the question of clean energy.They’re not seeing that people can’t buy expensive power,“ the CEO of a private distribution company told ET on the condition of anonymity.

According to global consultancy firm KPMG, the long-term answer to make solar energy more economically viable doesn’t lie in bundling. “Solar power may be getting cheaper but not thermal power. That’s why when you start blending the two, one at around ` .6 . 5 and the other at ` per unit, you really don’t have an advantage. The cost leverage has evaporated,“ said Anish De, partner (infrastructure and government services) at KPMG.

State-owned National Thermal Power Corporation’s problem is not isolated but part of the larger inability of Prime Minister Narendra Modi’s pet project of installing 100,000 MW of solar power by 2022 to take off in 2015-16 despite the budget announcement.

India’s solar energy installation currently stands at 3,000 MW. None of the government departments, including finance, urban development, revenue, power and agriculture, approached by the clean energy ministry, agreed to make the commitments required to meet this target in an interministerial meeting held in early March.

Consequently, the solar energy target for 2015-16 remains the same as that last year, at 1,100 MW, instead of at least five times this number as expected earlier in view of the 2022 target.

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