RAY OF HOPE

SOLAR POWER AND THE DEVELOPMENT OF INDIA

With a change in the country’s leadership in 2014, India has formulated many progressive strategies. One such strategy for change is an ambitious clean energy expansion plan with a focus on the solar energy segment in the country. The world is looking upon the capacities of solar and wind power with the hope of mitigating dependence on fossil fuels. With 8.8GW of capacity addition projected for the year ahead, India prepares to stand as the third-biggest solar market globally in 2017.

The Government of India intends awarding 100GW of solar and wind contracts by March 2020, this stems out of the state’s clean energy target of 175GW by 2022. Of the 100GW of contracts that the ministry of new and renewable energy will award, 77GW will be solar power projects and the remaining 23GW wind power contracts. The plan includes inviting bids for setting up 20GW solar power capacities with the motive of improving domestic manufacturing. This would amount to be the world’s largest tender in solar. India also plans to conduct auctions for 5–10GW of floating solar power projects and 10GW of hybrid solar-wind power systems.

China, the world market leader in solar power had to be an incluctable participant in the bid for the largest solar tender. Its solar panel manufacturing industry holds an annual capacity of almost 70GW. India is inevitably dominated by Chinese firms and has low domestic participation in manufacturing (10.6% market share). LONGi, a leading Chinese solar manufacturer, plans to set up a manufacturing facility in India as per the terms of the Indian government. Concurrently, a progressive initiative by the Narendra Modi government, ‘Make in India’, completed three years in September 2017. With changes in the energy arena, the government can be observed maintaining its promises to create employment and skill development opportunities by making manufacturing setups a necessary clause in the solar tender dealings. Global trends too focus on the energy segment for job opportunities as the total global investment in renewables reaches $6 trillion as an expected figure by 2030.

India had taken a lead role in the formation of the International Solar Alliance (ISA), an alliance of 121 sunshine countries situated between the Tropics of Cancer and Capricorn. ISA is marked as an Indian initiative jointly launched by the Prime Minister of India and the President of France in November 2015 on the sidelines of COP-21, the UN Climate Conference. ISA is the first treaty-based international government organisation to be based in India and signals to be playing as a foreign policy tool to cement India’s leadership among developing countries. ISA aims at addressing obstacles to deployment of solar energy through better harmonization and aggregation of demand from solar rich countries. One of the ways that the ISA is using its approach is by bringing down the cost of solar powered agricultural pumps. India is primarily an agrarian economy with 60–70% of its population dependent on agriculture. The contribution of this sector to GDP is however only about 17%, therefore utilisation of solar power to enhance this infrastructure can be marked as judicial.

The world’s biggest solar panel maker, Trina Solar Ltd. from China, reconsidered its deal with India after reaching a substantial stage, due to low pricing. Market based incentives for renewable investors led to the solar auction system, which has brought the prices for developers to tumble across Asia. Prices in India are said to be going “too low” with tariffs reaching Rs. 2.65 per kWh as per an auction held in the Indian state of Gujarat. The inadequate risk pricing is said to pose a severe viability challenge for the sector. But considering India as a developing country taking up big initiatives, the brighter side to the issue lies is the remedial action ushered by the country’s active players in the arena. One such instance is the State-run Solar Energy Corp. of India (SECI) attributing the bidders’ interest to tripartite agreements (TPAs) between the Reserve Bank of India, the Union, and State governments, which provides comfort to power producers against payment defaults by state electricity boards (SEBs).

Renewable Purchase Obligation (RPO) hold the key to India achieving its ambitious clean energy target of 175GW by 2022. The country seems to dig into its loopholes and analyse solutions. The execution appears to be a tall order given that most states are yet to align their RPO trajectory with that of the Union government’s. As projected by the Centre, states shall procure 11.50% of their electricity demand from clean energy sources (solar and non-solar) in 2016–17 and go up to 17% in 2018–19. Firming up of commitment plans by the states seems to be a big issue.

The Indian firms’ Corporate Social Responsibility heads seem to be configured with a low percentage of clean energy investments. Out of the top 100 companies listed on the Bombay Stock Exchange as per CSR spend, only 39 had clean energy programs and the investments were a mere 6% in 2015–16 which dipped further in the following year. The total spending on clean energy projects reported was about Rs. 183 crores. There is increased spending towards environmental sustainability but not specifically towards clean energy. Reasons for this can be the perception of clean energy projects to be highly technical and expensive with companies lacking the capacities and capabilities for implementation. There is also difficulty faced by firms in finding support in preferred geographic areas of interest. The government is urged to facilitate this by adding a theme devoted solely to clean energy in Schedule VII (Companies Act) — that relates to CSR works(Companies Act) — that relates to CSR works(Companies Act- relating to CSR). There also exists inter-state disparity in relation to CSR projects where certain states have abundance of investments while the remaining barely meet up with their energy demands.

Increasing awareness in the field can be observed in the corporate world. Majority of companies investing in clean energy are often inclined towards solar power. This is due to geographic feasibility, low costs, cheaper input prices and domestic policy push. Companies such as Schneider Electric can be seen diversifying into solar energy, which is perceived to be the most potent way to electrify the non-electrified and off-grid areas of the country and for alleviating fuel poverty. Companies also focused on product based solutions such as solar lanterns and lamps for household use. Tata Steel too has set up a 3 MW solar plant at Jharkhand to address issues of climate change and increasing demand for natural resources. The company can be seen diversifying into solar energy with the motive of increased competitive advantage, operational efficiency, and long run profits.

India receives solar radiation almost throughout the year amounting to 3,000 hours of sunshine which is equal to more than 5,000 trillion kWh. Almost all parts of India receive 4–7 kWh of solar radiation per sq meters. This is equivalent to 2,300–3,200 sunshine hours per year. 72% of the Indian population lives in villages and half of the villages are without electricity. Solar energy has huge scope for being promoted in these areas. This can reduce the use of firewood and dung cakes by rural household. India ranks amongst the worst five nations in terms of air quality in the world, in such a scenario an inexhaustible energy source which does not emit carbon dioxide is beneficial for the country. With power generation being costly, solar energy demands no power or gas grids for usage, they can be installed anywhere. The Thar Desert in Rajasthan has some of India’s best solar power projects, estimated to generate 700 to 2,100GW. In addition to the government targets, the Jawaharlal Nehru National Solar Mission (JNNSM) is also targeting 20,000 MW of solar energy power by 2022. In 2009, a $19 billion solar power plan was unveiled which projected to produce 20 GW of solar power by 2020. The World Bank Group (WBG) is also helping India deliver on its plans with more than $1 billion in lending in 2017. This is the Bank’s largest-ever support for solar power in any country. India also plans to develop one of the largest solar parks in the world. The 2GW park in the state of Karnataka is expected to generate enough electricity to power nearly one million households. The park’s supply of clean, renewable solar energy will help reduce CO2 emissions by 20 million tons a year, and save 3.6 million tons of natural gas which is used to generate electricity.

India is moving towards development by tapping on its resources on an efficient pace. Solar power is definite to channelize its rays towards generating a powerful India.

Maanya Charu Kalra