India Revamps Permit Rules For Solar Power Plants

India revamped the rules for its second national auction of permits to build solar power plants, which could boost sales for equipment providers and allow banks to lend more easily to the industry.

The government invited companies to register starting today for the auction that will award licenses to build as much as 350 megawatts of solar photovoltaic plants by 2013. New rules include changes that increase the size and amount of projects companies can win.

The government raised the maximum size of each project to 20 megawatts from 5 megawatts and each bidder could win as much as 50 megawatts of the total capacity. That could attract more companies to participate.

Easier Financing

India is positioning itself to become one of the world’s fastest-growing solar markets with plans to build 20,000- megawatt of capacity, equivalent to about 18 nuclear power plants, by 2022. Winning permits through the government auction allows companies to build plants that will get incentives including an assured buyer of their electricity and favorable payments for their power.

The government extended the deadline for the winners to arrange financing for their projects to seven months from the six months offered in the first auction. Companies in that round struggled to obtain loans from banks that were wary about lending to a technology new to India.

50 Percent Ownership

The new rules also require the controlling shareholder of each project to retain at least 50 percent ownership until a year after the plant starts generating power. That is up from 26 percent earlier after Renewable Ministry Secretary Deepak Gupta said the government wanted to discourage “fly-by-night” operators seeking to speculate by selling off licenses too quickly without building projects.

The new batch of permits will be for photovoltaic plants, which can use crystalline or thin-film panels to turn sunlight directly into power. Thin-film panels are made by depositing semiconducting material such as cadmium telluride onto metal or glass. Traditional panels are made by slicing crystalline silicon wafers into cells and assembling them into modules.

Bids are due by 5 p.m. local time on Sept. 23. The shortlisted candidates will be announced on Nov. 8.

SOURCE:  http://www.bloomberg.com/news/2011-08-25/india-revamps-solar-auction-supply-rules-first-solar-may-benefit.html