The Jawaharlal Nehru National Solar Mission (JNNSM) has been launched, but developers are still worried about non-recourse financing. This is because lenders think solar power projects are too risky. This perception will change if the Centre helps commercial banks gain expertise in assessing project viability. Institutions like World Bank and ADB can be roped in to help in this.

JNNSM?s objective is to build 20 GW of grid-connected (and 2 GW of off-grid) solar capacity by 2022 and to create an environment for innovation, efficiency improvement and scale.

In Phase-I, 1 GW of solar power is targeted by 2013. For this, the government, through a tariff-based reverse auction process, selected 37 developers, offering 620 MW (450 MW of solar thermal and 150 MW of solar PV projects), to sign power purchase agreements with the NNNV. Further, about 100 MW of projects were allowed to migrate under the JNNSM at feed-in tariffs specified by the CERC (R17.91/kWh for PV and R15.31/kWh for solar thermal).

The auction settled the debate on the viability of CERC?s feed-in tariffs, as qualified bidders quoted tariffs at substantive discounts to CERC tariffs, up to R5.75/kWh for solar PV and R4.82/kWh for solar thermal.

Phase-I is at best a proof of concepts, the test of which is not just the successful award or even commissioning of projects but its scalability, given the 20 GW target set out under the mission by 2022. It is time therefore to ascertain the progress under Phase-I and prepare for Phase-II of the mission.

Realisation of the solar thermal potential is the key to meeting the JNNSM targets. Solar thermal technologies are still emerging, and only a few operating plants are there around the world. Solar thermal plant designs ideally require accurate local irradiation data and extensive engineering inputs in the calibration and design of solar fields. Relying on satellite-derived data alone can lead to faulty conclusions, as some players are now finding out.

Such uncertainties, combined with the developers? poor experience in solar development and the fact that very few solar thermal bidders have aligned with solar technology providers at the bidding stage, has increased the risk perception amongst lenders. This has made it extremely hard for such projects to get non-recourse financing.

Over three-fourths of projects (PV and thermal) under the JNNSM face challenges in achieving financial closure. This remains an important area to be addressed by the central government and the multilateral financial institutions (MFIs), as this capital-intensive programme cannot be scaled up without non-recourse financing.

With over 4 GW of solar thermal plants likely to be operational globally by 2013, the technical requirements for selecting Phase-II solar thermal developers ought to be made more stringent. While tariff-based bidding worked well in the development of conventional thermal plants in India, it should not be applied blindly to emerging solar thermal technologies and the process must provide for demonstrating technical qualifications.

If required, the Centre should get any proposed technology evaluated by a panel of experts or the National Centre of Excellence (proposed under JNNSM). A much better approach would be to have specific solar thermal projects developed like Case-2 projects, with substantive preparatory activities undertaken upfront by the government and solar resource data provided to bidders.

The government and MFIs have a significant role to play in building capacity amongst the commercial banks for assessing and financing solar projects.

Three other aspects of JNNSM need to be advanced over the next two quarters. First, demonstration projects under Phase-I of JNNSM have to be conceived and awarded quickly, as these are meant to further research and promote local adaptation of newer technologies.

Involving Indian PSUs such as NTPC and BHEL, and identified technology centres like IIT, Rajasthan and the Solar Energy Centre of MNRE in such pilot projects is essential to encourage research, share operational data and ensure local manufacture.

Second, field measurement of irradiation and mapping of solar resources across the country should have been done for at least one year before Phase-II planning commences. Third, the government has to aggressively further the localisation of manufacturing, particularly along the solar thermal value chain.

This is intricately linked to the pilot projects, which will determine the preferred technology choices in India for commercialisation and will require greater coordination amongst the ministries of industries and commerce, the user renewable energy and power.

The writer is senior director, Deloitte Touche Tohmatsu India. Views are personal.