Blog: Is a solar boom around the bend in India?

Sun shines bright throughout the year in most parts of India, making the South Asian giant an ideal destination for capturing a part of the free-of-cost energy that has been emanating from the ever-burning star at the center of the solar system from time immemorial. This, in turn, would help the country achieve its goal of providing electricity to its more than one billion population and bolster its economic growth.

The potential is vast, and India’s government appears to have realized it well in time. Aside from government programs supporting solar energy development across the country, the private sector has been pretty active in providing capital for financing commercial-scale solar power projects. A recent statement from India’s Ministry of New and Renewable Energy shows that an estimated 860 billion Indian rupees [around US$1.29 billion] were invested in renewable energy, notably solar energy projects, in the past three years, with private sector emerging as the top contributor.

Support for solar got a real momentum after the government in December 2015 boosted the target of solar energy capacity to 100 GW by 2022, from the existing 20 GW. The overall target for renewable energy capacity was set at 175 GW by 2022, including 60 GW from wind and 10 GW from bio power sources. The solar energy target will comprise of 40 GW of rooftop projects and 60 GW generated through large and medium-scale grid-connected projects. The government said total investment in setting up 100 GW will be around 6 trillion rupees [around US$90.10 billion].

So, what exactly is the government of India doing to achieve this ambitious target?

While it is a herculean task to have a 100% clear idea on the numerous solar programs currently being run by the central government as well as state governments, a preliminary look at statements from the Ministry of New and Renewable Energy provides a peek into efforts underway to achieve the seemingly impossible goal of having 100 GW of energy from solar. The fact that India’s installed capacity of solar power totaled around 5 GWas recently as January this year makes experts and analysts wonder whether the government will be able to add 12 GW of solar energy per year on average in the next 8 years?

Indian Prime Minister Narendra Modi seems serious about the goal and followed up in January by approving more than 5 GW of grid-connected solar PV power projects on build, own and operate basis, with a total investment of about 300 billion rupees [about US$4.50 billion]. The story does not end here. The government is encouraging use of waste land for installation of solar power plants and has sanctioned 32 solar parks of 19.4 GW capacity in 20 states so far.

Aside from the government’s mantra about support for solar, one really important development, which apparently has gone unnoticed, is the continuing decline in the cost of solar-generated electricity, something that could really drive solar development anywhere in the world. Solar tariffs dropped to an unprecedented low of 4.34 rupees/kWh through reverse auction for one of six projects of 70 MW each to be set up in Rajasthan under the national solar mission. India’s Central Electricity Regulatory Commission data shows that the cost of solar power, which is the levellizd tariff for 25 years, is 7.04 rupees per unit for plants based on solar PV technology and 12.05 rupees per unit for plants based on solar thermal technology.

Looks like money for solar is not a problem in India.

A total of 40 banks and nonbanking financial companies have sanctioned 712.02 billion rupees to finance  renewable energy projects and disbursed 295.30 billion rupees against the sanctioned amount since February 2015. At the same time, the government is injecting a lot of money into research and development of new and renewable energy technology. In March, it announced that a total of 43.50 billion rupees was incurred  during the last three years and the current year out of a total budget of 51.33 billion rupees.

All said, a number of factors will play an important role in deciding the fate of India’s ambitious solar energy goals. The most important one is whether solar panel prices will decline to a level where the technology can compete with coal- and gas-fired electricity in the heavily fossil fuels-reliant country on its own (without government subsidies)? On the other hand, a lot will depend on whether the government is able to attract foreign investors to inject money into commercial-scale solar projects. For attracting foreign investment, the government should take a look on eradicating red tape and repetitive regulations.

One thing that is usually ignored when setting up ambitious goals for electricity generation is whether the needed infrastructure is in place to support such development. Building power plants is costly, but building transmission lines to take the output of these facilities to the end users is more costly and requires a lot of time and effort. So, the government should plan in advance for the necessary transmission infrastructure. Last, but certainly not the least, it is to be seen whether the upcoming governments will maintain the support for solar at the same level as the current government.

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About the Author: Albert Trinstin

A passionate writer with over nine years' of experience in writing and reporting field. Worked for major financial publications as well as freelancer websites. Albert has a degree in English Linguistics and Journalism.

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