Blinded By The Light

Is the Solar Energy Corporation of India offering too much support to the slowing solar sector?

- Priya Sreenivasan

THERE IS a strong possibility that the Union Ministry of New and Re-newable Energy (MNRE), in its attempt to revive the slowing solar sector and achieve its ambitious targets, could be pushing the sector towards doom. In 2011, when MNRE established the Solar Energy Corporation of India (SECI), its aim was to facilitate the implementation of the National Solar Mission (NSM) that has set an ambitious target of deploying 100 gigawatts (GW) of grid connected solar power by 2022. To make this possible, the government has over the years transformed SECI from a unit that manages distribution of solar subsidies into a major trader of solar power (see ‘Changing roles’, p21). While this has infused new vigour among developers of solar parks, experts say in the process of becoming a power trader, SECI is assuming responsibility for the entire sector, which could be risky for its stability.

A major enhancement in SECI’s role came around 2014, when the government expanded the initial target of NSM from 22 GW to 100 GW. Soon after, a Cabinet order turned the administrative unit into a for-profit body and SECI started signing long-term (25-year) power purchase agreements (PPAS) with solar park developers and selling the power to state-owned discoms (electricity distribution companies) at a nominal premium.

SECI entered the market at a time when several solar projects across the country were getting stalled due to poor financial state of discoms. In 2015-16, a 1.2 GW solar project in Jharkhand was scrapped because the state discom wanted the developer to reduce the bid cost after the PPA was signed because the offer price was higher than the prevalent rates. In 2017, an auction in Tamil Nadu had to be stalled after only a handful of developers turned up.