In a bid to boost solar power generation, the government has announced it will bear up to 80 per cent of the generation cost of solar power units.

Solar power is expensive. The cost of generating one unit of solar power is Rs 15 while it costs just Rs 1.19 per unit from coal (at Sasan ultra mega power plant).

The Centre, in partnership with state governments, will give incentives worth up to Rs 12 per unit for generating power from solar energy.

The ministry of new and renewable energy is targeting generation of 50 Mw of solar power by the end of the 11th Five-Year Plan (2007- 2012), from the present 2 Mw.

"Some states such as Punjab and West Bengal have already shown interest. Each state can easily generate up to 10 Mw power. Together with state governments, we want to incentivise this source," said Minister of New and Renewable Energy Vilas Muttemwar.

The incentive for generating 50 Mw would cost the government close to Rs 90 crore.

The incentive is being given "in view of the present high initial capital cost of setting up solar power plants and the cost of electricity from such plants," the minister said.

The cost of setting up a solar power generating unit is around Rs 20 crore per megawatt while the cost of setting up a thermal power plant is around Rs 4 crore per megawatt. The cost of setting up a hydro power station is Rs 6 crore per megawatt.

"But the gestation period of a solar power unit is much shorter than for a thermal or a hydro power plant," Muttemwar said.

Muttemwar said the government was focusing on setting up solar power generating units in west and central India, "which receive the maximum sunlight". He added the main states would be Rajasthan, Maharashtra and Madhya Pradesh.

"The 50-Mw capacity could come up as early as in the next year-and-a-half," he said.

Power generated from these unit would be fed into the grid. "The incentives will be given only for the electricity that is fed into the grid," Muttemwar said.