The entry of India into the solar age is done with the support of Germany. In the arid steppe of Rajasthan, near the town of Anta, 500 km south of New Delhi, the German public bank (KfW) supports the construction of the first solar thermal power plant of the subcontinent, with a capacity of 15 MW. This facility is part of the Indian government’s ambitious plan for development of solar energy: it wants to install 20,000 MW in the next 12 years.
India has perfect conditions for the development of solar, with sunshine more than 300 days per year in most regions. However, although the country faces an energy shortage and 40% of villages are not supplied with electricity, the sun is so far little used as an energy source. This is what the government wants to change. “India has great potential,” observes Dr. Schulz, the member of Q-Cells executive committee, the German manufacturer of photovoltaic (PV). The company, whose turnover has seen a sharp decline due to the economic crisis and falling solar cell prices, will move to the subcontinent as a new growth engine. He is considering making a bid for the construction and operation of small PV systems with a capacity of between 5 and 20 MW. Other German companies are also trying to position themseves in the Indian market. In February 2010, the CEO of Siemens Peter Loescher said the company entered the Indian market, and since then dialogue with customers and potential partners in India. Similarly, the German SolarWorld wishes to supply the Indian manufacturers with upstream products such as silicon solar cells, counting on an increase in demand of 50-60% per year.
Despite the high solar radiation, the solar energy in India is still highly dependent on subsidies, because the conventional electricity from coal is much cheaper. Thus, the government introduced the maximum compensation of 29 eurocents/kWh for photovoltaic electricity, and 21 eurocents/kWh for solar thermal. Thus it is expected that investors such as Q-Cells to build and operate the solar installations, while NTPC, the national electricity purchaser, buys electricity at a guaranteed price for 20 years. The Indian companies such as Tata Power, Reliance Industries and Moser Baer are also planning the construction of solar thermal power plants with foreign partners.
Until the end of June 2010, investors can apply to the Indian government to benefit from a subsidy for the operation of the first tranche of 1,000 MW of solar energy in India. “We are already seeing considerable interest,” says Ajay Mathur, Bureau Chief of Energy Efficiency Ministry of Energy. Applicants must still prove, among other things, they have at least half the land required. Indeed, in India, the acquisition of land is very difficult, and many infrastructure projects fail for this reason. The financing costs are also high. For now, only the pilot plant under Anta has overcome these obstacles with the help of very generous KfW, which provided a grant of 5 million euros and a soft loan of 40 million euros. NTPC is responsible for the acquisition of the land and the connection to the network installation. The temporary building must be constructed in the coming months.