Daily Editorial – India’s Quest for becoming a Solar Superpower

India’s Quest for becoming a Solar Superpower

Click here to Download Daily Editorial PDF (13th Feb. 2017)

Context

The bids for solar power projects in the country have been decreasing to new lows,providing a clear pointer to the future course of renewable energy. Recently the auctioned price of solar photovoltaic (SPV) power per kilowatt hour has dropped below Rs. 3 to Rs. 2.97 in Madhya Pradesh.

This presents a clear path for us to becoming a solar superpower and to reduce the dependency on coal towards meeting the ambitious targets set in the INDCs for Paris Agreement.

India’s Solar Capacity

India’s solar power generation capacity stood at over 9 GW as on December 31, 2016 with Tamil Nadu having the largest output capability followed by Rajasthan and Gujarat, having missed the targets under the Jawaharlal Nehru National Solar Mission in 2010 which set the target of installing 12 GW solar capacity in 2016-17.

Now a national goal of installing 100 gigawatts by 2022 has been set, a target that is being internationally monitored as part of the country’s pledges under the Paris Agreement on climate change as against the world’s total installed solar power capacity was 181 GW when the goal was announced, with even Germany – the biggest proponent of solar energy – having capacity is 38 GW has not announced such an ambitious target.

A rapid scaling-up of solar capacity is vital also to meet this target, we need to add the capacity of 15GW every year for the next 6 years, to meet the target.

Figure 1<<Source: Businesstoday.in>>

Challenges in Achieving the target

LAND:
- Of the 100GW target, 60GW are ground-mounted medium to large scale solar power plants that need land.
- Since solar plants require as much land as conventional power plants, that will amount to around 1% of the total culturable wasteland and 1.2% of the total fallow land of the country. Although solar plants do not transform, degrade or submerge lands as in case of mining or damming, acquisition of large amounts of land from farmers can be difficult.
- However, more studies and on field experiments are needed to establish the impact on crops, the engineering of the frames carrying the panels and their cost, and the safety of farmers working below the panels.

Challenges faced in meeting rooftop solar power

The grid-connected rooftop forms the second component of the 100GW target and has a 40GW share. With regulations that include compulsory utilisation of rooftop space and incentives like net metering and feed-in tariff, rooftops can have good prospects for generating solar power.
However, the progress in rooftop solar has been relatively slow and this is attributed to the lack of clear policies.
Hotels and industries that have been violating the solar norms are claiming installation of rooftop solar powersystems is next to impossible in already-built buildings.

Limited manufacturing capacity

Solar manufacturing is extremely fragmented lacking vertical integration and is sparse in the upstream of module assembly.
India has only 0.9GW and 2.1GW of cell and module manufacturing, which is low given the yearly installation requirement of 13-14GW for the next seven years in order to reach 100GW by 2022.
The solar manufacturing policy in India is ineffective and due to this, almost 40% of solar cell manufacturers have closed down and industry capacity utilisation is as low as 21%.
India has mandated use of locally manufactured solar cells for 3,000 MW installations (where developers have sought subsidies). The US has challenged these norms at the World Trade Organization which we lost.

Cost woes

Most state-run distribution companies – which will eventually have to buy the more expensive solar power – are in no financial condition to absorb the higher costs.
So far, lack of political will has prevented state governments from charging higher rates from consumers.
In India, 21 out of 29 state distribution companies are incurring losses. Rajasthan, the state most aggressive in solar power capacities, has a debt burden of a whopping Rs77,453 crore with accumulated losses of almost Rs 6,000 crore. Madhya Pradesh is about Rs 10,000 crore and Rs 5,246 crore, respectively.

Potential Solutions

To lease land from farmers instead of buying it so that the ownership remains with the farmers and they can benefit from the growing valuation of land over time.
To encourage “solar double cropping” or “solar sharing,” that includes producing food and electricity simultaneously from the same piece of land.
The policy towards rooftop solar needs to have an urban focus as urban areas have concrete buildings, higher security, and greater availability of material and skilled human power.
100 GW target will require active participation and investment by the buildings sector, both residential and commercial. This process can be kick-started using mass participation by citizens, with State electricity utilities being given mandatory time frames to introduce net-metering systems with a feed-in tariff that is designed to encourage the average consumer to invest in PV modules, taking grid electricity prices into account.

Steps being taken

The government is promoting solar energy through fiscal and promotional incentives such as capital and/or interest subsidy, tax holiday on the earnings for 10 years, generation- based incentive, accelerated depreciation, viability gap funding (VGF), financing solar rooftop systems as part of home loan, concessional excise and custom duties, preferential tariff for power generation from renewables, and foreign investment up to 100 per cent under the automatic route, etc.
This apart, the government has been supporting solar manufacturing by way of various mechanisms such as Modified Special Incentive Package Scheme (M-SIPS) of the Ministry of Electronics & Information Technology (MeitY)
India has taken a lead and has invited the nations to form an International Solar Alliance.
Industries can now take on lease inexpensive land anywhere in the state and install ground-mountedsolar power systems. And the power generated will be supplied to the power gridof the discom.
India is also taking steps to address issues of financially unviable state electricity retailers and an inadequate grid. For example, the Green Energy Corridor (GEC)—an initiative conceptualized and executed by the POWERGRID Corporation of India Limited and other state transmission utilities—will commission new transmission infrastructure to allow more renewables to be put on the grid, while at the same time tackling problems with power intermittency.
UDAY scheme will provide a lifeline to state power distribution companies by improving their operational efficiencies (through measures such as smart metering) while at the same time reducing their debt interest rate. This will provide much-needed relief to these companies, who are ailing financially due to large-scale power theft, high costs of coal, inefficient operations and poor billing practices.

International Solar Alliance (ISA)

The ISA is a common platform for cooperation among the sun-rich countries lying fully or partially between the tropics of cancer and Capricorn who are seeking to massively ramp up solar energy HQ at Gurugram.

· It was formally announced by PM Modi at the UN Paris Climate change conference but it is separate from the UN-mandated climate change talks that are held every year.

· It became a reality at the Marrakesh Climate Change conference.

· ISA’s vision and mission is to take solar from the lab to the streets.

ISA seeks to do three things

· Bring down costs of technology as well as the costs of finance needed for a solar project.

· Promote standardisation in equipment and processes for generating electricity

· Boost research and development in efficient storage systems.

Key focus areas to achieve these objectives

Promote solar technologies, new business models and investment in the solar sector.

· Formulate projects and programmes to promote solar applications

· Develop innovative financial mechanisms to reduce cost of capital.

· Build a common knowledge e-portal.

· Facilitate capacity building for promotion and absorption of solar technologies and R&D among member countries

Conclusion

India is moving in the right direction in terms of initiating certain policy. However, there are a number of other challenges to overcome such as financing, offtake of power, storage, and grid-management; the government will need to do more in subsequent years to ensure that its targets are met.

This is important not only for its solar commitment, but also for its national energy and climate change commitments–installing 175 GW of total renewable power capacity by 2022, and increasing the share of non-fossil-based power capacity from 30 percent today to about 40 percent by 2030 (with the help of international support).

If done well, we are surely destined to be a Solar Super power.