It's nice but not sunny
It will take more than ambitious targets for the government to increase India's solar capacity
Sinception, the present INCE ITS National Democratic Alliance government under Prime Minister Narendra Modi has stated its intention to provide 24x7 electricity to all. “India already has an installed capacity of 250 GW, dominated by fossil fuels; the additional electricity demand creates a massive opportunity for renewable energy resources,”Modi said in a press release.
On November 17, Union renewable energy minister Piyush Goyal made an important announcement, “What we inherited was 20 gigawatt (GW) up to 2022, which we are trying to reset to 100 GW...we see enormous potential on the solar front...”
Even though the government sees potential in it, the solar sector in India is currently not looking that bright. Investments have declined in the past few years. In 2012, only $1.8 billion (`9,676.94 crore) was invested in solar power in India, which declined to $1 billion (`5,895.27 crore) in 2013.
This is despite the fact that the capital cost of solar photovoltaic (PV ) projects has reduced by almost 60 per cent since January 2010, when the Jawaharlal Nehru National Solar Mission (jnnsm) was introduced.
Chandra Bhushan,deputy director of the Delhi-based ngo Centre for Science and Environment (cse), says, “The decline in investments in renewable energy was largely because of policy uncertainty within the Ministry of New and Renewable Energy (mnre). Financing has been an issue in the country, especially for high-cost projects.”
“India needs $30 billion (over 1.91 lakh crore) investment in the renewable sector every year but received only $6 billion (about
35,155.63 crore) in 2013,” Upendra Tripathi,secretary,mnre,said in September. mnre’s policies have not been able to persuade Indian banks to provide loans for solar power projects. Development in the sector has also been deterred by high interest rates.Local banks are reluctant because they fear cash-crunched discoms will not be able to pay for the solar feed-in tariffs.“The power purchase agreements signed between developers and discoms are not bankable because there is no certainty whether the produced power would be bought by the discoms,” says Harish Ahuja, President, Strategy and Corporate Affairs at Hindustan Power Project,one of the developers of solar power projects.
To revive the industry, mnre wants the government to back a loan of €1 billion ( 7,953.78 crore) sought from German bank KfW to promote rooftop solar systems of 1.6 GW capacity across the country.The World Bank is already collaborating with the Solar Energy Corporation of India (seci) for financing an ultra-mega solar project in Madhya Pradesh.Coal India recently signed a memorandum of understanding (mou) with seci to install 1 GW solar power plants in the solar parks in different parts of India. ntpc, the largest power producer in India, has about 4 GW of solar power projects in various stages of development across India.
Is India prepared?
India needs to achieve 100 GW by 2022 as per the plans of the Modi government. By September 2014, the installed capacity of solar power was 2.76 GW. The capacity needs to grow more than 12 GW every year to meet the target in the next eight |years. “Developing at the rate of 12 GW in a year would also mean 12 times the supply of modules, 12 times the amount of capital—both debt and equity,12 times more human power and enormous land management to support such growth,” says Raghunath Mahapatra, vice president, strategy,Welspun Energy.
Such increases have to be planned meticulously. “A 100 GW sounds like a good idea, but implementation of this target is an important aspect. Is the government machinery capable of providing the policy