Telangana strengthens position as a solar leader in India

Last week, the National Thermal Power Corporation (NTPC) issued two tenders totaling 400 MW (40 projects of 10 MW each) in Telangana under batch two, phase two of National Solar Mission (NSM). 50 MW of this is earmarked for projects using domestically manufactured modules under Domestic Content Requirement (DCR) guidelines. This tender comes on the back of 2,500 MW already allocated by the state government (116 MW commissioned so far) and puts Telangana at the forefront of states in India for solar penetration by 2017.

With this tender, Telangana’s total solar capacity should touch 2,900 MW
As a result, Telangana could meet 8% of its power requirements from solar by 2017, much ahead of India’s average
This will put regional grid stability to the test and offers a good case for learning

Since their establishment as new states in June 2014, Telangana as well as the new Andhra Pradesh have been very aggressively supporting solar. In September 2014, Telangana started by allocating 500 MW of solar projects. This was followed by a recent bidding for 2,000 MW. Now, these new tenders of 400 MW in the state will take the project pipeline in the state to around 2,900 MW. Andhra Pradesh has an almost equally impressive solar pipeline of 2,720 MW.

Solar is an attractive option for Telangana because of its high peak power deficit. The peak power requirement and deficit in FY 2015-16 is expected to be 8,223 MW and 1,650 MW respectively. Solar power could help in meeting a part of the deficit, but it will pose a challenge for grid management. With the current project pipeline, by 2017, solar power could contribute over 8% of the state’s total power requirements and over 40% of its power during peak solar power generation. This would take the state way beyond the newly proposed RPO targets under the draft National Tariff Policy amendments (refer). It would be much ahead of India’s average and even higher than what is currently seen in Europe, US and China. With their limited integration with the northern grid, the southern states, including Telangana and Andhra Pradesh, will become a test bed for grid balancing and management. As a pioneer, the region can provide useful lessons for India’s overall solar ramp-up (the target being 10.5% by 2022).

While the state has wisely opted to distribute projects rather than concentrating them in a few solar parks, we expect to see bottlenecks in acquiring land near suitable evacuation points.