When the Indian government started talking about the 100-gigawatts-by-2022 solar target, it seemed intriguing that a 600-megawatts (Mw) solar auction in Turkey last year had generated more excitement in international investor circles than this astonishing number. One of the reasons is that the 100 gigawatts (Gw) is seen as an aspiration rather than a target. If indeed it is a serious target, where is the action plan for implementation? Who are the investors? What are the incentives on offer?
It is true that countries have gone from almost nil installation to 1 Gw in as little as one year - for instance, Romania - or even built many gigawatts in a single year. China installed 12 Gw of solar last year - but it has been on the back of generous incentives. India's power minister Piyush Goyal has been saying that incentives would in fact be rolled back. Renewables need to be a "self-sustained industry and not dependent on government subsidies," he said at an industry meet last month.
India currently adds roughly 1 Gw of solar photovoltaic capacity every year. At this rate, it would take a 100-odd years to reach the targeted installations unless the annual rollout is enhanced to 12 Gw. Is that doable? Can India's grid support that?
It is true that countries have gone from almost nil installation to 1 Gw in as little as one year - for instance, Romania - or even built many gigawatts in a single year. China installed 12 Gw of solar last year - but it has been on the back of generous incentives. India's power minister Piyush Goyal has been saying that incentives would in fact be rolled back. Renewables need to be a "self-sustained industry and not dependent on government subsidies," he said at an industry meet last month.
India currently adds roughly 1 Gw of solar photovoltaic capacity every year. At this rate, it would take a 100-odd years to reach the targeted installations unless the annual rollout is enhanced to 12 Gw. Is that doable? Can India's grid support that?
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King China
China boasts the world's largest market by installations currently, and has a stretch target of building 14 Gw of solar this year. Given that it has added a little over a quarter of that in the first nine months of the year, there is speculation that it could slip, yielding the number one position to Japan, which is set to add anywhere from 10-12 Gw, according to our data.
India may be considering a similar distribution-grid-connected solution since high commercial tariffs in some states already make solar power competitive with grid power. As much as 40 Gw of the 100 Gw are expected to come from rooftop solar projects, according to government officials.
Make-in -Brazil please
India also wants to see a competitive domestic manufacturing industry in all sectors, including solar. It is interesting to look at what Brazil is trying to do in the domestic manufacturing space.
The country managed to seed a domestic wind manufacturing industry by using as a tool, subsidised loans from the state-owned development bank, BNDES. Project developers are only able to secure loans if they use locally made equipment in the case of wind, and that model is now sought to be replicated in the solar sector.
Some of the world's largest solar panel suppliers, Yingli, Canadian Solar and SunEdison, are in dialogue with the bank, which provides credit lines for the supply chain also.
China managed to set up its solar industry on the back of generous credit lines from state-owned bodies like the China Development Bank.
Options for India
The Indian government does not have the deep pockets, or even the inclination, to fund a massive expansion in renewables. The 100 Gw plan relies on state-owned companies and large private sector entities pumping in equity into projects. Is there a question mark on the debt? Can the sector be made enticing enough for bankers by making a compelling business case?
The challenges that the Indian power sector faces are well known and well-documented. There are massive losses along the generation-to-customer chain, the financial position of state distribution companies is precarious and the free flow of power across states (open access) is still an elusive goal. Looking at these, 100 Gw of solar by 2022 does seem like an impossibility.
Yet, there is a very real and growing demand for power, and solar power is becoming even more competitive than it was. With tariffs steadily creeping upwards, there is an economic case for solar. The first comprehensive assessment of India's solar resource potential yielded an impressive number - 749 Gw - which is almost three times the total power generation capacity of 255 Gw from all sources. Rajasthan emerged at the top, as expected, with solar potential of 142 Gw. The surprise was in the state with the second highest resource - Jammu and Kashmir - which showed a potential of 111 Gw. All India needs to do is to tap 15 per cent of this potential.
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