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Abstract<\/span><\/strong><\/span><\/p>\n This Blog Post explores the role of Public-Private Partnerships in developing India\u2019s solar energy sector. Further, it examines the National Solar Mission, a major initiative launched by the Indian government in 2010, and the success of its Phase I through reverse auctions. The Blog Post also discusses the challenges faced by Phase I, including technical and site-related issues and a lack of standardisation and understanding of solar energy among financiers. Additionally, the Blog Post covers the potential for PPPs to establish distributed or centralised solar infrastructure in India and the benefits and challenges of PPPs in the solar sector. The Blog Post concludes by discussing the potential for PPPs to drive the growth of India\u2019s solar energy sector and meet the country\u2019s ambitious renewable energy targets.<\/span><\/p>\n Keywords<\/strong>: National Solar Mission, Public-Private Partnerships, Solar sector, Energy sector, renewable energy targets.<\/em><\/span><\/p>\n \n 1. Introduction<\/strong>\u00a0<\/span><\/span><\/p>\n According to the data estimate,<\/span>300 million Indians<\/a> lack access to the energy grid and those who have experienced frequent power outages. Because of this irregular power supply, the country still heavily relies on<\/span>diesel<\/a> for backup power, which results in higher operational costs and inefficiency for the industries, not to mention pollution and economic turmoil. Given the tropical weather of India, around 300-330 days a year, this amounts to almost<\/span>5000 trillion kilowatt hours (\u201ckWh\u201d)<\/strong><\/a> per year which holds the potential to ensure energy security, reduce reliance on conventional sources of energy and contribute to a more balanced regional development.\u00a0<\/span><\/span><\/p>\n India\u2019s energy sector is undergoing a transition, as now renewable energy sources constitute around<\/span>24.7% of the total capacity<\/a> in the country. While the public sector has the ability to provide incentives, policy frameworks, financing incentives, and other similar benefits, on the other hand, the private sector fills the gap by providing the necessary funds for developing the requisite infrastructure for solar energy generation.<\/span><\/span><\/p>\n \n 2. Public Private Partnerships (PPP) Under JNNSM: Critical Analysis<\/strong>\u00a0<\/span><\/span><\/p>\n One of the eight missions under India\u2019s National Action Plan for Climate Change (\u201cNAAPC\u201d)<\/strong>, the National Solar Mission was a major initiative launched in 2010 to involve the states in active participation for the<\/span>promotion of ecologically sustainable growth<\/a> along with addressing the nation\u2019s energy security concerns. Grid-connected and off-grid solar power has a promising future for replacing the need for importing conventional energy sources like diesel, coal, and other similar energy sources.\u00a0<\/span><\/span><\/p>\n India\u2019s solar sector<\/span>saw<\/a> a tremendous Compound Annual Growth Rate (\u201cCAGR\u201d)<\/strong> of approximately 59% from 2011 to 2021, all owing to the implementation of the<\/span>Jawaharlal Nehru National Solar Mission (\u201cJNNSM\u201d)<\/strong>,<\/span><\/a> better known as National Solar Mission. The Government set a target of 100 Gigawatt (\u201cGW\u201d<\/strong>) for<\/span>2022<\/a> and a relatively high one of 300 GW for<\/span>2030<\/a>. This mission saw enthusiastic participation from Indian and foreign investors, wherein substantial discounts were offered to the benchmark tariffs determined by Central Electricity Regulatory Commission (\u201cCERC\u201d)<\/strong>.<\/span>\u00a0<\/span><\/span><\/p>\n Phase I of JNNSM implemented the reverse auction approach wherein project procurement was done through competitive bidding, thus assigning the tasks of project identification, design development, technology selection, and other similar tasks to the developers, who, in turn, are selected based on the tariffs quoted by them. However, when Phase I was put up for bidding, there was a lack of on-field information and techno-commercial feasibility, which would inevitably lead to either a huge number of bidders bearing the colossal upfront investment costs or bidders participating in the bids, void of any substantial preparation, which paved the way of disruption of the overall project.<\/span>\u00a0<\/span><\/span><\/p>\n The same is seen after the completion of the bids of Phase-I, where several solar power projects are now facing technical and site-related problems, thus causing delays and halts in the project. Furthermore, there is an absence of proper standardisation of solar thermal designs in accordance with the Indian standard, with a limited understanding of this novel energy source among the financiers.<\/span><\/p>\n \n 3. Prominent PPP Projects: Indian Perspective<\/strong><\/span>\u00a0<\/span><\/p>\n Public-Private Partnerships (\u201cPPP\u201d) <\/strong>can be used to set up two types of solar infrastructures, either distributed or centralised, where the former is in the form of Photovoltaic (\u201cPV\u201d)<\/strong> panels scattered in various locations close to load centres, and the latter, the centralised plants that are located where the resource is best utilised and available and can be in the<\/span>forms of photovoltaic or concentrated<\/a> solar power.\u00a0<\/span><\/span><\/p>\n As an industrial hub, India is a low-cost destination, and its solar energy production aligns with international commitments. Thus, domestic production and the scale of production in India have significantly lower solar power costs in parity with other nations. International Finance Corporation (\u201cIFC\u201d), <\/strong>in alliance with the Madhya Pradesh state government and Rewa Ultra Mega Solar Limited (\u201cRUMSL\u201d)<\/strong> in 2016,<\/span>structured and tendered<\/a> a 750 Megawatt (\u201cMW\u201d<\/strong>) solar park. Thus, a project agreement was signed between three winning bidders \u2014 Mahindra Renewables, Acme Solar, and Sprng Energy \u2014 for the Rewa Mega Solar PPP at<\/span>just<\/a> Rs. 2.96\/KWh ($4.4\/KWh). This was the lowest tariff ever<\/span>awarded for a solar project in India<\/a>, bringing prices at par with coal without any Viability Gap Funding (\u201cVGF\u201d)<\/strong>.\u00a0<\/span><\/span><\/p>\n Public-private alliances allow the transfer of knowledge, capital, technology, and expertise from the private to the public sector and allow the Government to collect corporate and other income taxes to help develop new energy infrastructure. PPP can be modified and expanded according to the needs of the Indian market by formulating appropriate frameworks that the Government can implement to bring in more private investments into the sector. Here, Foreign Direct Investment (\u201cFDI\u201d) <\/strong>can be a lucrative option for foreign investors to take advantage of the tax exemptions and lower salaries available in India to encourage competition among domestic and foreign companies.\u00a0<\/span><\/p>\n Moreover, India has established a committee called the Public-Private Partnership Appraisal Committee, which helps standardise the<\/span>auction and bidding of documents<\/a>, streamlining the evaluation and approval of infrastructure projects. Competitive Renewable Energy Auctions for Solar are a great example of the application of PPP in encouraging more domestic business investments. Under this auction,<\/span>various renewable energy purchasers<\/a> compete and bid to buy a quantity of electricity from renewable energy sources.<\/span><\/span><\/p>\n \n 4. Rooftop Solar Projects (RTS)<\/strong><\/span>\u00a0<\/span><\/span><\/p>\n RTS initiative holds the potential to transform India\u2019s energy gameplay completely, but the biggest hurdle faced by the Government is the economic unfeasibility that comes with it. This project is socially desirable from an environmental point of view, but still, there is more scope for its successful implementation. Some of the issues faced in its application are scarcity of finances, substantial upfront costs, and other similar issues.\u00a0<\/span><\/p>\n Gujarat was one of the first states to formulate and establish a solar power plant policy in 2009 and has since then implemented numerous PPP projects and initiatives. One of the prominent projects launched by the Government of Gujarat is the Gandhinagar (Solar) PV Rooftop Program, which involves the installation of<\/span>two solar capacities of 2.5 MW<\/a>, each assigned to two developers. This novel concept is in line with the JLNNSM with the aim to provide access to<\/span>around 25 state government-owned building rooftops<\/a>. One of the incentives offered by the Government is the concept of \u201cgreen incentive,\u201d i.e., the Government will offer<\/span>Rs. 3\/KWh of electricity<\/a> produced by the Solar PV system (\u201cSPV\u201d)<\/strong> to be paid by the procurer, i.e., Torrent Power. International Finance Corporation is the Lead Advisor for designing and implementing the transaction, and SunEdison and Azure Power won the bid as the developers for this project.\u00a0<\/span><\/span><\/p>\n The Dahanu Solar Power Plant, worth $147.5 million, is implemented in Rajasthan, near the village of Dhursar in the Jaisalmer district. Here, the Asian Development Bank (\u201cADB\u201d)<\/strong> provided a<\/span>$ 48 million loan<\/a> developed by Reliance Power Limited. This 40 MW plant is expected to produce approximately 60 million kWh of electricity a year and save almost 60,000 metric tons of harmful carbon dioxide emissions per year. Under this program, the total power generated by this plant will be supplied to Maharashtra.\u00a0<\/span><\/span><\/p>\n Some of the critical challenges faced in the implementation of RTS are irregular and inadequate space available for the installations on the rooftop; in large cities where there are rented apartments and houses, ownership rights become ambiguous; absence of an official industrial<\/span>standard for residential SPV systems<\/a>; low technical know-how; high prices; and other similar issues.<\/span><\/span><\/p>\n \n 5. Policy Recommendations for PPP in Solar Energy<\/strong><\/span>\u00a0<\/span><\/p>\n One of the significant challenges faced by a developing country like India is the lack of finances to establish the requisite infrastructure successfully; the same can be solved with PPP as an instrument to acquire public infrastructure and services. Since the nature of PPP is that of a contractual agreement, there is a need for a comprehensive and institutional framework to regulate the same. Alongside the regulations, there is a need to maintain flexibility, such as the governing bodies implementing laws that can be utilised by different geographical locations and ensuring proper monitoring and evaluation of the PPP project.\u00a0<\/span><\/p>\n Recently<\/span><\/a>, India stood 4th\u00a0in solar PV deployment across the globe as of the end of 2021. Solar power installed capacity has<\/span>reached around 61.97 GW as of 30 November<\/a> 2022. However, the reality is that just PPP is not enough as there is a need for proper training and experience on the part of the government officials and other stakeholders such as local private businesses and others. The Government can also establish<\/span>Public Private Partnerships Committees<\/a> to ensure proper monitoring, measuring, and evaluation of the ongoing PPP and incorporate beneficial guidelines when it comes to training the members involved in the decentralised community.<\/span><\/span><\/p>\n \n 6. Schemes Launched by the Indian Government to Promote Solar Energy in India<\/strong><\/span><\/p>\n The World Bank<\/a>, Solar Energy Corporation of India Limited (“SECI”), and the Government of India recently signed agreements for a $150 million IBRD loan, a $28 million loan from the Clean Technology Fund (“CTF”), and a $22 million grant from the CTF to help India expand its use of cleaner, renewable energy sources. Battery Energy Solar Systems (BESS) is<\/span>constructing<\/a> the first solar subproject in the Rajnandgaon area of Chhattisgarh.<\/span><\/span><\/p>\n VGF is a brand-new kind of clever incentive program that was created to finance financially unviable but economically viable infrastructure projects. To make projects financially viable, the government typically gives a one-time grant. The SECI has promoted solar energy production in the nation using the VGF program. A variety of regulatory tools, including Renewable Portfolio Obligations (“RPO”), Renewable Energy Certificates (“REC”), and Feed-in-Tariff (“FiT”) schemes, are also available to support the nation’s renewable energy industry. RPO requires electric utilities and other required parties to purchase a predetermined amount of electricity from renewable energy sources.<\/span><\/p>\n Green bonds<\/a> are fixed-income financial products that are used to raise money for environmental projects. The risk holdings for green bonds are comparable to those for regular bonds. Additionally, green bonds must have the necessary credit rating for institutional funding. Even though this type of financial instrument is still relatively new in India, its use on the local financial market has recently increased.<\/span><\/span><\/p>\n