Government promoting solar parks to reduce the cost of solar power

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By EB Bureau

The initial cost for setting up these projects may be very high, but once the plant is set up, the cost of generating solar energy comes down.

The government has taken yet another step to bring down the cost of solar power in a bid to encourage wider usage. At a recent conference organised by The Energy and Resources Institute (TERI), Minister for Renewable Energy, Farooq Abdullah, stressed on the government’s plan to accord a high priority to developing large solar parks to generate 5000 MW of energy by 2017. These parks will account for 25 per cent of the total target capacity under the second phase of the National Solar Mission. The mission aims to generate 20,000 MW of solar power by the next 10 years.

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Government finance scheme

The solar park concept is similar to an economic zone dedicated to solar power generation. The idea is to accelerate the development of solar power generation projects by lowering the risk for single investments. This will be done through the availability of large areas of suitable land, common infrastructure, speeded up permit processes, etc. The government’s aim is that these solar parks should generate 3000-5000 MW of solar power.

Under this plan, the government also plans to launch a scheme providing central financial assistance to the states for site and soil surveys, to prepare detailed engineering reports, as well as to aid infrastructure development including evacuation facilities, which will speed up the work of developing these solar parks.

Solar parks can reduce costs

A solar park can reduce the cost of solar power significantly. “The initial cost for setting up these projects may be very high, but once the plant is set up, the cost of solar energy comes down,” informs Vivek Chaturvedi, chief marketing officer, Moser Baer Solar Ltd. After the plant is set up, there is no extra cost, except managing a few aspects like the mirrors. In fact, there is no fuel cost. A solar plant can keep running as long as the sun shines. Of course, arrangements need to be made for the plant to run during cloudy weather, as well.

However, for the cost of solar power to come down significantly, solar plants have to be built on an adequately large scale and in clusters. “These solar plants have to be deployed in sufficient numbers to spawn a local equipment and manufacturing industry, and receive initial financing at lower than current commercial rates,” said Farooq Abdullah at the TERI conference.

According to industry experts, the cost of solar power generation in India will come down to Rs 5-6 per kWhr/unit in the next five years. And this will be lower than the cost of a coal-fired plant.

Says Vivek Chaturvedi, “At least 20 per cent of India’s power requirements are met by using diesel gensets, which cost about Rs 15 per kWhr. But by using solar power, this cost can be reduced as presently, solar power generation costs Rs 14 per kWhr. Moreover, the capex required and the cost of transporting power to a remote village is far greater than powering that village. So, here again, solar power transported from a solar park somewhere near these remote areas will be much cheaper.”

Solar park projects

A large solar park is being set up in Gujarat. Recently, the Clinton Climate Initiative (CCI), a programme of the William J Clinton Foundation, has selected Gujarat to set up a solar park which will generate 3000-5000 MW of solar energy. The cost of the project would be about US$ 8-10 billion for 3,000 MW; and US$ 15 billion for 5000 MW. The plant will start operations in 2012. About 10 international developers have already shown interest, and CCI is in talks with the Asian Development Bank to finance these developers. CCI is also setting up solar parks in Rajasthan.

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