Prime Minister Narendra Modi has made major strides in energizing India through solar power in recent past.
Modi and, then, the French President Francois Hollande launched the International Solar Alliance to be headquartered in India, during the UN conference on climate change held in Paris in 2015.
The present Indian government has set a target of installing 100 GW of solar power by 2022. It seems an ambitious project because the existing solar capacity is only 6.9 GW.
In India, Andhra Pradesh has emerged on top in terms of cumulative solar project capacity, surpassing the traditional solar leaders Rajasthan and Gujarat.
A sustained surge in incremental capacity addition is at the heart of the Centre’s solar agenda. This agenda is in line with its submission to the United Nations Framework Convention on Climate Change on Intended Nationally Determined Contribution (INDC), whereby India is to achieve 40 per cent cumulative electric power capacity from non-fossil fuel based energy resources by 2030.
Why Solar Power?
There are many reasons which make it important for India to increase its solar energy production.
The most important reason is that India’s solar power prices may be set to fall below those of thermal (coal) energy.
This is estimated on the basis of an expected cost of around Rs2.90 per unit for the solar power projects at Bhadla in Rajasthan that have received 51 bids.
The price of solar energy production is less than the average rate of power generated by the coal-fuelled projects of India’s largest power generation utility, NTPC Ltd, at Rs3.20 per unit.
State-run Solar Energy Corporation of India (SECI), which is running the bid process for 750 megawatt (MW) of solar power capacity at two parks, has received bids totalling 8,750 MW. The bidders include some first-time participants in India, such as Saudi Arabia’s Alfanar.
The solar space has already seen a significant decline in tariffs from Rs10.95-12.76 per kilowatt-hour (kWh) in 2010-11. The previous low was Rs3.15 per kWh, bid by France’s Solairedirect SA in an auction last week to set up 250MW of capacity at Kadapa in Andhra Pradesh.
This low was preceded by Rs3.30 per unit quoted for a 750MW project at Rewa in Madhya Pradesh.
With fast reductions in costs of solar power, average bids from the private sector have come down from Rs 6.8/kwh in 2014 to Rs 5.6/kwh in 2015 (ICRA). The lowest bid in 2016 is Rs 4.34/kwh for a solar park in Rajasthan. Even after accounting for 30 per cent subsidy, it amounts to Rs 5.64/kwh. This is lower than the cost of thermal power which was about Rs 5.93/kwh in 2013-14 (Planning Commission).
India’s Solar Power Potential
Since 2012, India’s solar power capacity has seen a cumulative growth which is nearly double with every progressive year, with a fresh impetus evident since 2015-16.
To start a fresh growth, the government has agreed to enhance the capacity from 20 Giga watt (GW, or 1,000 mega watt) to 40 GW of the Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects that entails the setting up of at least 50 solar parks by 2019-20, with an estimated Central Financial Assistance of Rs 8,100 crore, an official involved in the exercise said.
India is gifted with vast solar energy potential, with about 5,000 trillion kWh per year energy incident over the country’s land area and most parts receiving 4-7 kWh per square metre per day.
Hence, the two technology routes for conversion of solar radiation into heat and electricity — solar thermal and solar photovoltaics — can be tapped to ensure substantial scalability for solar in India.
A slew of incentives, most announced by the present government, has further incentivized developers, including fiscal and promotional incentives such as capital subsidy, tax holiday on the earnings for 10 years, generation-based incentive, concessional customs duty, accelerated depreciation and the financing of solar rooftop systems as part of home loan.
From June 2017 onwards, the State Bank of India started financing of rooftop solar projects worth Rs 400 Cr with private developers by way of a loan of $625 million from the World Bank for on-lending to viable Grid-Connected Rooftop Solar PV projects for installation of rooftop solar systems on the rooftops of institutional, commercial, and industrial buildings.
There have been experiments in the countries such as Japan, China, Garmany, UK, etc. These experiments have revealed that solar panels can be put along farmers’ fields without adversely impacting photo-synthesis of crops.
Such initiative can be helpful to contribute to government’s goal of doubling farmer incomes by 2022 with added income coming from “harvesting of solar fields”.
While executing these initiatives, both public participation and political will would play important roles. Farmer co-operatives to harvest solar fields, especially in areas that have low irrigation and cropping intensity, like Marathawada and Bundelkhand, can be the best places to do pilots in growing solar power in farmers’ fields.
These initiatives would need beforehand capital costs, which can come from organizations like NABARD, other banks, crowd funding, corporate social responsibility, and international development organizations like GTZ of Germany, if one is tying up with German expertise.
Only a coordinated approach between Centre, states, corporate entities and civil society can help achieve large scale grid connected targets of 100GW capacity.
There are challenges that could deter some of the enthusiasm regarding solar energy in India.
One, despite the scale of the capacity addition plan, there is no manufacturing facility for silicon wafers in India. Indian Solar Cell Manufacturers have to import silicon wafers for their PV units from global sources, most of it coming from China.
Second, there is a sharp decline in tariffs and it has managed to create a flutter. Earlier, higher tariffs were quoted by developers and the progressively lower tariffs discovered at newer rounds of bidding poses a question mark over the viability of earlier projects.
Developers in states such as Tamil Nadu and Rajasthan who got projects quoting higher tariffs earlier are learnt to have expressed concerns to authorities, including the CERC, on whether the electricity generated at their units would be requisitioned by the distribution companies.
Third, there is an apparent grid management issue. With increasing solar and wind in the country’s energy mix, an obvious implication is that the massive fleet of over 266 GW thermal plants in the country will have to ramp down to technical minimum and some of them may have to back down also when solar power peaks, and start ramping up in the afternoon from 3 pm onwards as the sun goes down and the net demand rises to its daily evening peak (which may be of the order of 200 GW in 2021).
Fourth, According to CARE Ratings, due to the government’s commitments, of taking over discoms losses, made under the UDAY scheme, discoms finances are already under strain. It can impact the implementation of renewable projects.
India can learn from the countries like Germany who made tremendous development in solar energy production. By 2014, Germany had installed 38 GW, China 28 GW, and Japan 23 GW of solar power capacity.
But, when we count these numbers with per million population of those countries, it is clearly seen that Germany with 469MW/million population is way ahead of Japan with 181 MW/million and China at 20MW/million population. India figures way below at just 2.32MW/million population. Incidentally, Germany also leads in absolute capacity installed, accounting for 21 per cent of the 178 GW total global solar installations in 2014.
If India wants to bring about a revolution in solar power, the price at which governments should buy solar power for its grids should be the marginal costs of thermal which is at least 10-15 per cent. Once this is in place, one can quickly scale up to reach the target of 100GW.
The production of solar energy would also help in realizing the government’s dream of doubling farmers’ incomes by 2022 where farmers earn income by harvesting solar energy on their own fields and feeding into the grid.
So it can be said that, when India achieves its goal in solar energy production, it will be helpful for the country in innumerable ways. So the government is expected to do justice with its desired goals pertaining to solar energy.
DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.
Parliament passes Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018
Assam-NRC Draft can’t be basis of any action by any authority: SC
Government to soon introduce bill proposing death penalty for mob lynching
Ministry of Shipping issues new guidelines for improving treasury investment for Major Ports