Solar mission delicately poised

India's ambitious solar energy initiative (the Jawaharlal Nehru National Solar Mission) now depends on how hiccups in the initial procurement of 620 MW of installed capacity are sorted out.

First of all, there should have been an announcement from the nodal agency – NTPC Vidyut Vyapar Nigam Ltd – as to how many of the 29-odd solar PV and the 7 solar thermal projects have cleared the financial closure stage and are going ahead with commissioning, under Batch-I of phase-I of the 22 GW Solar Mission. Together, the Batch-I projects would create 620 MW of solar power capacity, and kick off the programme. There has been none.

A senior official of NVVN told Business Line that the matter is now under examination from a legal perspective. For sure, as NVVN officials point out, we don't know yet even if there is any violation of tender conditions. But remember, the documents were submitted on July 24. “If things were okay, they would have announced something by now,” notes Mr Vijay Lakhanpal, COO, Forum for Advancement of Solar Thermal (FAST).

A change in the ownership structure — a tender condition attracting a potential disqualification — would delay the project, and the absence of funding arrangements would derail it. Any delay begs the question whether the prescribed deadlines would be relaxed. It is not clear as to how many projects have financing in place – the industry buzz is, not many. Would they be able to execute the projects out of their balance-sheets? Surely not the big-ticket thermal projects? And, thermal projects add up to 470 MW.

The overhang of confusion needs to be cleared fast, especially because the bidding process for the Batch-II, which would complete the 1,000 MW phase-I, is about to begin soon.

What would really help the developers planning to bid for batch 2 is if the MNRE declared the tariffs of the projects that achieved financial closure and those that have submitted resolutions for equity financing of project, says Mr Vineeth Vijayaraghavan, an industry observer and editor of online newsletter panchabuta.com.

This will also help clear the belief among industry observers that only projects with unviable tariffs, that otherwise would have to be cancelled, have given these equity financing letters, in order to buy time to find strategic partners or buyers, Mr Vijayaraghavan says.