NEW DELHI (TIP): Prime Minister Manmohan Singh has instructed advancing the planned commissioning of 100,00 Megawatt (Mw) of solar power generation capacity to 2027, against the originally envisaged target of 2031. The long-term target for the ambitious solar mission will be made public soon.

The government received bids from 68 companies, including Tata Power, Moser Baer, Welspun, Azure Power, Jakson Power and KSK Energy, for setting up 2,170 Mw capacity projects for the second phase of the mission. This is three times the proposed 750 Mw to be supplied at a fixed tariff of Rs 5.5 per unit. The highest bidders included Azure Power (200 Mw), Welspun (160 Mw) and ILF&S Energy (100 Mw). The PM’s Office has asked the largest power equipment manufacturer, Bharat Heavy Electricals Ltd (BHEL) and the Ministry of New and Renewable Energy (MNRE) to give next week presentations on the blueprint of the strategies to implement the plan that could attract investment in excess of Rs 5-6 lakh crore.

“PM’s Principal Secretary Pulok Chatterjee is guiding the entire initiative. MNRE had earlier worked out the 2031 plan and the PM has now asked for an aggressive target of 2027. This is now possible as we believe the grid-parity for solar power is expected to be achieved by 2018,” an executive involved in the discussions told Business Standard. As part of the plan, BHEL is setting up integrated facilities to manufacture equipment across the value chain, from polysilicon wafers to photovoltaic cells and modules that capture sunlight light for conversion into electricity. The first 500-Mw capacity factory is under construction and will start producing in 18 months.

The PSU will also take up the role of a producer by utilising its surplus resources to take up minority equity stakes in the solar power generation projects that will be set up under the initiative. BHEL had a cash balance of Rs 6,221 crore at the end of September quarter. The company is currently building a 4,000-Mw solar power plant 75 km from Jaipur in Rajasthan. Singh had launched the National Solar Mission, as one of the seven schemes under the National Action Plan on Climate Change (NAPCC), in January 2010. The scheme targeted setting up 20,000 Mw of solar power capacity by 2022 in three phases. Since then, over 2,000 Mw of such capacity has been commissioned in the first phase (2010-13).

The success of the first phase was owed to the mechanism of bundling expensive solar power with electricity from the unallocated quota of the centre’s thermal power stations, which is relatively cheaper. Also, a reverse-bidding mechanism was followed that enabled qualified bidders to benefit from declining global prices for solar components, thereby reducing purchase prices of solar PV equipment. In reverse bidding, developers quote the amount of investment needed to construct a project to qualify for viability gap funding (VGF) rather than quoting the electricity tariff. Prices were pulled down due to a slump in demand for solar components in key economies.