India’s National Action Plan on Climate Change (NAPCC) sets out eight focal points for the government’s sustainable development strategy through 2017. The NAPCC is likely to become a significant driver of new investment opportunities in the country’s renewable energy portfolio, and in solar generation in particular.

As the world’s second most populous country and second largest growing economy, India has unique challenges in developing an energy supply adequate to meet the country’s development needs, including providing electricity to the 44% of its population without grid access.

Solar power constitutes roughly 2 MW of the total approximate 12,400 MW of India’s grid-interactive renewable power, sourced by a total of 33 grid-interactive solar photovoltaic plants installed with financial assistance from the environment ministry. Decentralized solar energy systems compose the larger share of India’s solar power and consist of 120 MW of photovoltaic systems, a collector area of about 2.30 million square meters of solar water heating systems and 620,000 solar cookers, used for diverse applications including lighting, telecommunication, small power requirements, battery charging, water heating, and cooking.

Existing incentives for renewable energy deployment include a system of renewable purchase obligations (RPOs) (similar to renewable portfolio standards (RPS) in the U.S.), and various funding for rural, urban, and industrial uses of renewable electricity.

The NAPCC seeks to consolidate India’s activities on renewable energy and climate, through improved research and development on climate technologies and through prioritizing a substantial increase in solar energy relative to the total energy mix. The NAPCC launches the National Solar Mission (NSM), which must present a comprehensive planning document to the Prime Minister’s Council on Climate Change by December 2008, including strategies for delivering:

• Sufficient solar energy in “urban areas, industries, and commercial establishments” to meet the targets defined in the NAPCC;
• Public-private partnerships for rural solar thermal application development;
• Local solar photovoltaic production of 1000MW/year by 2017; and
• Concentrating solar power production of 1000MW/year by 2017;

The NAPCC additionally proposes a dynamic minimum renewables purchase standard, beginning at 5% of the total grid purchase starting 2009-2010, increasing by 1% each year for 10 years, along with verification mechanisms and tradable certificates for renewable-based power in excess of the national standard, tradable among State Electricity Commissions.

For further information about this topic, please contact Akin Gump.