Proposed Reductions in Solar Project Commissioning Timelines Not Enough to Reach 100 GW

The Ministry of New and Renewable Energy (MNRE) has recently proposed to reduce the commissioning timelines of solar projects to meet the country’s target of 100 GW of solar capacity well in time by 2022.

According to the proposal, solar PV projects inside a solar park will have 15 months for commissioning while solar projects outside of a solar park or standalone projects will get 18 months.

Currently, the commissioning timeframe for projects of capacity below 250 MW within a solar park is 21 months from the date of PPA execution. For a capacity of 250 MW and above outside a solar park, the given timeframe is 24 months from the date of PPA execution.

The proposal gains significance at a time when India has witnessed its slowest quarterly solar installations since Q1 2017 with 1,599 MW installed, a 52 percent decrease compared to 3,344 MW installations recorded back in Q1 2018. Installations were also down about 21 percent year-over-year (YoY) compared to 2,025 MW installed in Q2 2017.

Solar Industry in India is still recuperating and finding its way back to normalcy after a series of uncertainties in the aftermath of Goods and Services Tax (GST) and 25 percent safeguard duty on solar modules and cells imported from China and Malaysia.

Talking to Mercom on the proposed changes in the commissioning time of projects, a project developer said, “The proposal is going to be for the future projects, so the developers will bid accordingly. I don’t think safeguard duty will have much impact on the commissioning timeline of the project. The bigger question is- Can you do projects in that time period or not? If it is in a solar park, then it is not a big issue but if it is outside a solar park, then whether the time given is enough for completion or 24 months will be required, this would need discussion.”

Another developer told Mercom, “What we have planned to achieve by 2022 is 100 GW of solar power, but it is intermittent power and the only reason distribution companies are buying solar power is because the cost of solar power has come down to the extent of variable cost of thermal power. Now, if the prices increase, DISCOMs will have no incentive to buy solar power.”

He added, “In the last few months, many tenders have been cancelled. The last SECI tender in Karnataka got a price of around ₹2.80 (~$ 0.039) and it has refused to purchase power at that price. So, even after the auction, closing the power sale agreement (PSA) has become a challenge, which eventually results in cancellation of bids and causes further delays. So, government may like to reduce the project commissioning timeline, but it will not help the purpose if the bids are cancelled routinely. We need to consider that delay as well.”

Recently, Mercom had reported that approximately 4 GW of solar auctions have been cancelled by multiple agencies in recent months.

The government’s effort to reduce the commissioning timeline for solar projects will not be enough to achieve the target of 100 GW as it needs to install around 18 GW annually. It must address the issues such as tender and auction cancellations, safeguard duty related uncertainties, pass through, transmission infrastructure availability and other issues which are more pressing.

Image credit: Vector Green