Scheduled to be commissioned this year, the 125 MW Shivajinagar Sakri Solar Power Plant is the result of a deal between Frankfurt-based development bank, KfW Entwicklungsbank and Maharashtra State Power Generation Company (Mahagenco).
The German government-owned bank finalised the €250 million loan agreement on behalf of the German Federal Ministry for Economic Cooperation and Development. The plant will have a capacity of 125 MW and could be expanded to 150 MW.
The total cost of the Sakri Solar Power Plant, including the expansion option, amounts to €370 million. With KfW providing the reduced-interest loan of €250 million, Mahagenco will contribute the balance. Sakri is a small village in Maharashtra’s Dhule district and is known for its proximity to two prominent pilgrim centres of the Jain community.
Currently, Andasol in southern Spain is the world’s largest commercial solar power plant - following the commissioning last September of its third 50 MW unit, bringing the combined installed capacity to 150 MW. The Indian facility, however, is far cheaper. Each of Andasol’s three units is estimated to have cost between €300 million and €350 million.
Getting bigger in solar
India’s largest solar power station to date is a 30 MW complex from Moser Baer Solar Limited that will be commissioned shortly in Patan, in the western state of Gujarat. The project, comprising two units of 15 MW each, has entailed an investment of Rs450 crore.
In addition, Torrent Power Limited, a major electricity distribution company, recently entered the solar sector and is building a 50 MW solar project in Gujarat.
But apart from Azure Power’s 10 MW plant in Sabarkantha, Gujarat, which was commissioned in June, and the 5 MW Sivaganga Photovoltaic Plant completed last December, most of the solar plants established in the country are of 1, 2 and 3 MW capacities.
The Sakri project will comprise five 25 MW generation blocks. Three of the blocks will be built using c-Si panels (Lanco Solar will be the the EPC contractor). The other two 25 MW blocks will use thin film solar panels (EPC by Megha Engineering and Infrastructure).
Lanco Solar is partnering Bangalore-based Juwi India Renewable Energies Private Limited, while Megha Engineering has tied up with Spain’s Aries Ingenieria y Sistemas and the US’s GreenBrilliance Energy Private.
Mahagenco’s EPC tender determines the capital cost of the project to be Rs11.5 crore (€1.78 million) per MW. The feed-in tariff for the project is likely to be Rs12.61 (€0.195) per kWh. At an average 17 per cent plant load factor, experts estimate that the project is likely to generate 186,150 MWh of power.
German financial cooperation is channelled through KfW, which acts as the implementing agency for Berlin. It is one of the largest banks in Germany and is also the largest financier of renewable energy projects under development cooperation worldwide.
The bank began supporting India in financing renewable energies and energy efficiency as far back as 1999. It has financed new power plants and the rehabilitation of old inefficient ones, and has also provided credit lines for private sector investment through Indian development banks.
The bank has been active in the areas of energy, sustainable economic development and environmental protection in India since 1958 and currently has a portfolio of around €2.5 billion. Its activities in the field of renewable energies and energy efficiency amount to roughly €1.1 billion. During 2010, KfW granted €101.50 million funding to India compared to €338.67 million in 2009. It plans to lend €800 million to various Indian agencies for renewable energy infrastructure expansion.
India’s Solar Mission
According to Prabodh Saxena, joint secretary in the Department of Economic Affairs of India’s Ministry of Finance, the Indian subcontinent’s favourable geographical position provides it with natural resources and good conditions (high solar irradiation) that enable optimal use of solar energy.
“Reflecting the government’s policy to promote the use of solar energy through various strategies, the last Union budget allocated Rs1,000 crore (US$223 million) towards the Jawaharlal Nehru National Solar Mission and towards the establishment of a clean energy fund,” he remarks. “This registered an increase of Rs380 crore (US$84.7 million) from the previous budget.”
The budget also encourages private solar companies by reducing customs duty on solar panels by 5 per cent and exempting excise duty on solar photovoltaic panels. This is expected to reduce the cost of a roof-top solar panel installation by 15 to 20 per cent. The budget also proposed a coal tax of US$1 per tonne on domestic and imported coal used for power generation.
Additionally, the government has initiated a Renewable Energy Certificate (REC) scheme designed to drive investment in low-carbon energy projects. The Ministry of New and Renewable Energy (MNRE) provides a 70 per cent subsidy on the installation cost of a solar photovoltaic power plant in North-East states, and a 30 per cent subsidy in other regions.