Has Modi bitten off more than he can chew?

The Gujarat government had announced that about 45 MoUs with a combined worth of Rs 61,019 crore,at least on paper...

Written by Gaurav Sharma | Ahmedabad | Published:January 22, 2009 1:15 am

45 MoUs worth Rs 61,019 crore project power generation of 3,275 MW when state’s Solar Power Policy caps it at 500 MW

The Gujarat government had announced that about 45 MoUs with a combined worth of Rs 61,019 crore,at least on paper,were inked at the Vibrant Gujarat Global Investors’ Summit (VGGIS) this year,projecting to generate a whopping 3,275 MW of solar power in the state. But if those MoUs signed over a span of 24 hours are taken seriously,the state would be violating its own generation ceiling prescribed in its solar policy that was announced barely a week earlier,by no less than six-and-a-half times,and the Central government ceiling by over 65 times.

But that is nothing compared to what the state government will need to cough up to buy all the phenomenally expensive Solar Power Generators (SPG),if even a portion of the MoU signatories actually mean business.

The state government had announced its Solar Power Policy 2009 on January 6,less than a week before the VGGIS,with an operating period up to March 31,2014. The policy clearly said only a maximum of 500 MW SPGs shall be allowed for installation during the operative period of the policy.

According to V H Buch,Director of the Gujarat Energy Development Agency (GEDA),which is the nodal agency for facilitation and implementation of the Solar Power Policy,this meant the total solar power generated in Gujarat cannot exceed 500 MW until 31/03/2014.

“This is the combined cap in Gujarat for generation from both Solar Photo Voltaic (SPV) as well as Solar Thermal (ST) projects,” he affirmed to this newspaper.

Incidentally,the MoU signing flurry at VGGIS,which saw a total of 8,500 of them rushed through in less than 48 hours,was even after the government had firmed proposals for setting up Solar Power Projects from firms such as Euro Ceramics (100 MW),Reliance,Surya Chakra,Tata Power (200 MW),Essar (50 MW),Indiabulls (150 MW),among others.

No answers could be had on how and why the government got MoUs signed for an additional 3,275 MW at VGGIS,while its own cap remains 500 MW. “I am too small a man to answer that. You should ask those above,” maintained the GEDA chief,who is directly responsible for solar power in Gujarat. Industries Minister Saurabh Patel and Principal Secretary S Jagdeesan remained unavailable for comments.

Government sources say a firm cap on Solar Power generation is because it is a very expensive affair. According to data from the Ministry of New and Renewable Energy (MNRE) of the Government of India,the estimated cost of setting up a solar power plant is in the range of Rs 16-20 crore per MW and the cost of electricity generation comes to around Rs 12 to 15 per unit,depending on the technology used.

In comparison,the capital cost of a coal-based power plant is Rs 4 crore per MW and that of Hydropower is Rs 6 crore per MW,and the cost of electricity generation from these are an average Rs 3 to 4 per unit.

It is because solar power generation is costlier and the tariffs a lot higher that the state governments chip in with sops. The Gujarat government has announced a tariff of Rs 13 per unit for the first 12 years for SPV projects,and Rs 10 for ST projects commissioned before December 31,2010; for projects commissioned after that date and before March 31,2014,the tariffs would be Rs 12 per unit for the first 12 years for SPV and Rs 9 per unit for the ST projects.

Since such sops are obviously unaffordable beyond a point,a firm cap is placed on solar power generation. As in the case of the Central government,under its generation based incentive scheme,putting the cap at 50 MW for the whole country during the entire 11th Five Year Plan. The Rajasthan government,too,has already announced a solar policy with a firm 50 MW cap.

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