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Last Updated : Apr 27, 2012 10:41 PM IST | Source: CNBC-TV18

Will solar power rescue India from power crisis?

With thermal power plants engulfed in myriad problems - from coal supplies, to PPAs going sour, can solar power bridge the gap?

With thermal power plants engulfed in myriad problems - from coal supplies, to PPAs going sour, can solar power bridge the gap?

Even though India doesn't generate even a 1,000MW of solar power at present, the government is aiming for a 20 fold increase in production over the next 10 years, but lack of funding for projects could make the prospect cloudy reports CNBC-TV18’s Sumit Jha.

The Indian government has an ambitious target of achieving 20,000MW of installed solar power capacity by 2022 under the National Solar Mission. The biggest hurdle, however, is funding for solar projects in the near term, as commercial banks aren't very sure of the return scenario because of lack of reliable data, high tariffs and sick state utilities, which will eventually purchase power.

S Vishvanathan, managing director and chief executive officer, SBI Capital Markets, said: “The government says we'll buy solar power at variable cost or impel discoms or other users to buy these at variable cost over a period of time through PPA route and over a period of time the cost gets equalized. This method puts an additional amount of risk on banks in case these don't get executed. Given this, the banks are sometimes wary."

The Asian Development Bank, which has invested close to USD 2 billion in the Indian renewable energy including USD 104 million in Reliance Power's latest 100 mw solar power plant in Rajasthan, thinks it's a matter of one or two  years before commercial banks shed their apprehension and invest big in solar.

ADB cites the example of wind power farms where commercial banks took over financing once they got more comfortable with the sector.

Michael Barrow, director - infra division, ADB, said: “Once the commercial banks are comfortable, once they are over their initial concern, once it becomes fairly standard as with wind and also as the price of solar comes down, the banks will become very comfortable. I don't have a crystal ball, but India is on track to meet that target."

The National Solar Mission's target of 20,000 mw by 2022 may not be sufficient for the power hungry country but if India manages to pull this off it will augur well for clean energy initiatives going ahead.

Also watch the accompanying video.

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First Published on Apr 27, 2012 09:48 pm
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