Becoming a Solar Power in India

Gujarat

India’s Prime Minister, Narendra Modi, made headlines last year by announcing his ambition to install 100 gigawatts of solar power capacity (over 30 times more than India has now) by 2022. Skeptics noted the lack of a detailed plan and budget, but some well-capitalized industrial players have apparently caught the Prime Minister’s solar fever: at a renewable energy summit called by Modi last month he collected pledges for 166 gigawatts of solar projects.

At the New Delhi summit, energy renewable giants such as First Solar and SunEdison mixed for the first time with chief ministers from Indian states and top executives of Indian industrial conglomerates such as Adani Enterprises and the National Thermal Power Corporation, India’s largest power generator.

Tobias Engelmeier, founder of Bridge to India, a solar-market consultancy, says Modi’s ambition has “changed the conversation” about India’s solar potential. But what happens next, will depend only in part on what renewable energy strategy Modi can devise from within the central government. The ultimate driver could be India’s unmet demand for electricity. A quarter of India’s population is not connected to the power grid, and electricity supply is chronically short for those who are.

Modi has said that India had to “make a quantum leap in energy production,” and he said solar could deliver with its rapid construction rates and crashing prices—from 20 rupees (32 cents) per kilowatt-hour to less than seven rupees over the last three years.

In some Indian states, renewable energy can compete with fossil fuels even without the benefit of any subsidies, at least for commercial and industrial consumers, who pay the highest rates in India. Industrial firms normally pay 10 rupees or more per kilowatt-hour for grid power, but solar developers there are selling their power at a profit for eight rupees per kilowatt-hour.

Engelmeier’s firm reported in November 2014 that even rooftop installations, which cost more to install, now match or beat the grid rates for commercial and industrial consumers in one out of four Indian states, with rates of about eight rupees per kilowatt-hour. Between 2012 and 2014, solar capacity increased from 461 megawatts to over three gigawatts in India, and Engelmeier projects that developers will add up to two more gigawatts this year. An increasing number of states, including Rajasthan, Gujarat, and Andhra Pradesh, are leasing public lands for solar parks. This eliminates the need for solar developers to work through India’s complex land registries to support their own solar farm.

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