Understanding Stability in Power Supply in 2024

Source: Business Standard

Synopsis:

India’s solar energy price reduction needs other reforms from the government to enhance India’s solar capacity.

About Japanese Investment in Solar Energy:

In 2015, Japan’s SoftBank Group announced the intention to invest $20 billion in India in solar projects through SB Energy (SBE). It seemed ideal for India. With abundant sunshine and a big potential market, the logic for large solar projects was always compelling.

Further, India had about 4 GW of rural and rooftop projects. But this rooftop electricity is priced 50 per cent higher than power from coal.

Solar Power Cost Trajectory in India:

The Indian government has raised the solar target for 2022 from 20 GW to 100 GW. Prices fell since 2015. This is due to cheap solar modules from China, and increasing competition. All this led to the cost of Solar power became half that of coal. This means solar energy is a slower-payback infrastructure.

Challenges in Solar Energy:

• The preponderance of coal will continue because the current annual tendering capacity is 6-8 GW. This means higher costs and carbon footprint until the government is able to accommodate larger-scale investor interest.
• India’s markets in electricity are roiled by low and unstable prices and uneven service quality. To bring out order and stability to electricity markets, India needs investors with significant capital willing to invest.

How to Improve India’s Solar Energy?

• India needs investors like SoftBank, with the capacity and willingness to invest in slower-payback infrastructure. So, India needs to nurture serious investors willing to invest in electricity and other infrastructure.
• India has to develop integrated, stable services at reasonable prices. That might not necessarily be the least cost in the interests of efficacy. This is what India need to drive the economy in a sustained manner, to provide its foundation and fuel with its growth.
• Government policies and regulations need to be configured towards overarching objectives that are aligned or at least not contradictory.
  • Various streams within and across sectors must be integrated to converge towards objectives. Such as fuel sources and electricity generation
  • But, this will require Central and state governments to evolve integrated plans and develop interdepartmental coordination processes to steer the energy sector.
• A prerequisite to energy security is resolving the financial problems of state distribution companies, including payment discipline.