Funding of solar projects under JNNSM is a major concern

- Advertisement -

By Richa Chakravarty

By July 9, 2011, the first batch of solar projects under the Jawaharlal Nehru National Solar Mission (JNNSM) ought to have received funding. But that deadline has passed, with only 17 photovoltaic (PV) projects out of 30, and two concentrated solar power (CSP) projects out of seven providing financial closure details to the Ministry of New and Renewable Energy (MNRE). These projects, which were approved in the first batch, amounted to a generating capacity of 620 megawatts.
This lack of funding has put the brakes on India’s ambitious solar mission, which is also said to be the world’s largest. The first phase of the government tender under the 2020 plan to install 20 GW of solar energy had attracted an overwhelming number of companies, but about half failed to secure funds; their licences would probably stand cancelled.

Ignorant bidding
Financing the projects was one of the major problems faced by the winners of Phase 1 of the auctions. Many participating companies with no background in the industry or experience in bidding had bid low to win these projects. “Since the bids were irrationally low and the company could not have made profits, banks and financing institutions refused to fund these projects. Some bidders were so ignorant that they bid as low as Rs 10-12 per unit, which is why the banks did not find their projects viable. In fact, information about how many kWhr of energy will be generated from a particular solar farm is also essential for a finance company to ensure an assured pay back,” explains Vivek Chaturvedi, global head, Sales and Marketing, Moser Baer India Ltd.

- Advertisement -

A lesson learnt?
In the first week of August 2010, the government had invited bids for Rs 30 billion (Rs 3000 crore) worth of solar power projects with a capacity of 300 MW, and projects were awarded to the lowest bidder regardless of their previous experience in developing such projects.
Learning a lesson from this gloomy situation, MNRE has decided to increase the generating capacity in the next batch of projects, based on the size of the cancelled projects, and will soon announce new policy guidelines.

Challenges for financing

Finance companies and banks face a few challenges while funding a project. Solar technologies are at a nascent stage in India. While crystalline cells and modules are comparatively easier to execute as they are proven technologies, newer technologies like thin film and concentrated PV are unproven and, therefore, considered risky.
Power purchase agreements (PPA) are another obstacle in funding projects. JNNSM provides for a ‘trader PPA’ with NTPC Vidyut Vyapar Nigam Ltd, which passes on the risk of default by state discoms to the developer. Given that many state discoms are notorious for delaying payments and even defaulting, financial institutions and banks refuse to consider these PPAs bankable.

It is high time that the government came up with some sort of arrangement for the guarantees, which would instills confidence amongst investors and banks.

- Advertisement -

Related Artcles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Buzz

German Electronics Manufacturer Hama Enters India

0
The company has tied up with various distributors and retailers; initially plans to launch over 300 products in India Germany-based Hama, a leading global manufacturer...

Irani Srivastava Roy: Signify’s New Chief HR Officer for India

0
The lighting company appointed the 23-years-of-experience holder for aligning the organization's people strategy with business objectives I look forward to further strengthening the...

MoS Inaugurates Digital India Startup Hub at STPI-Davanagere

0
The start-up hub was inaugurated at the 'Software Technology Park of India', which is the 63rd STPI centre in India and the fifth in...

Exclusive

German Electronics Manufacturer Hama Enters India

0
The company has tied up with various distributors and retailers; initially plans to launch over 300 products in India Germany-based Hama, a leading global manufacturer...

Irani Srivastava Roy: Signify’s New Chief HR Officer for India

0
The lighting company appointed the 23-years-of-experience holder for aligning the organization's people strategy with business objectives I look forward to further strengthening the...

Fujitsu Joins SettleMint to Utilize Blockchain Tech

0
The global strategic agreement aims to accelerate enterprise blockchain technology and promote its use cases Japanese ICT company Fujitsu and blockchain platform SettleMint recently announced...

Important Sectors

German Electronics Manufacturer Hama Enters India

0
The company has tied up with various distributors and retailers; initially plans to launch over 300 products in India Germany-based Hama, a leading global manufacturer...

Irani Srivastava Roy: Signify’s New Chief HR Officer for India

0
The lighting company appointed the 23-years-of-experience holder for aligning the organization's people strategy with business objectives I look forward to further strengthening the...

EVs Set to Drive Telematics Demand: Report

0
Telematics shipments in India to reach 50 mn units in 2030 The report expects that the rising Electric Vehicle (EV) demand, enhanced 4G...

Printed Electronics for Smart Building Solutions

0
The two companies will collaborate to scale novel water detection tape solutions based on printed electronics Sensor-maker LAIIER and Germany-based chemical and consumer goods company...

India Assumes Chair of Global Partnership on AI

0
MoS Rajeev Chandrasekhar represented India at the Global Partnership on Artificial Intelligence (GPAI) Summit He believes National Data Governance Framework Policy with Indian...

Manufacturing

First Private Company in India Builds its Own Mission Control Centre

0
Agnikul Cosmos is set to operate from this new facility at Sriharikota which was inaugurated by Shri S. Somanath,  Chairman, ISRO. India’s first launchpad and...

New Product Distribution Center by TI in Germany

0
The centre in Frankfurt enables same-day delivery to central Germany next-day delivery capabilities to most European-based customers.  Texas Instruments, a global semiconductor company whose presence...

Redwood to Supply High-Nickel Cathode to Panasonic

0
Despite the increasing demand, there is no cathode production at scale in North America today: Battery material maker Redwood As per the latest reports, Panasonic...
Infineon, CoolSiC

Infineon Planning New Factory in Dresden

0
The semiconductor major has enhanced its long-term financial targets after witnessing a remarkable FY22 Germany-based Infineon Technologies recently released its results for the fourth quarter...

Uno Minda To Invest Rs 400 Cr In New Light Plant

0
The plant is intended to be commissioned by Q4 FY24 The group registered its highest-ever quarterly performance recently As per the latest reports, the...