India has been reeling from power shortages for a long time. We have never been power surplus since our independence. With the power sector in disarray and the domestic energy sector facing a threat of becoming slave to global fluctuations in prices of energy commodities, pushing renewable energy sector was the most logical things to do. This step is a crucial piece of the “Make in India” maze. India is faced with a challenge of satisfying its quick economic growth while dealing with the global threat of climate change. It is difficult for India to rely heavily on thermal power resources. And both solar and wind sector will play a very important role for India’s energy security strategy in the long run. With the earlier target being revised to 100,000MW by 2022, the Indian government has planned to take its solar investment to $100 billion. Besides massive solar plans, the government has also thought of generating 60,000 MW through wind which will require an overall investment of Rs 10 trillion in the renewable sector. The new Indian government has delivered on its promise to enhance the solar power capacity addition targets under the ambitious National Solar Mission announcing revised guidelines for capacity allocation.
There are three key points that may help in lowering the cost of achieving India’s solar power target.
1. Imported coal is the likely fossil fuel because domestic coal and natural gas are both limited in supply, and because imported coal currently accounts for 18 per cent of India’s total power generation, higher than India’s target of 15 per cent of generation from renewable energy by 2020.
2. Solar power will be competing with imported coal by 2019. The installation cost of solar power will continue to decrease, as developers will become more efficient with experience. Simultaneously, fossil fuels will become more expensive, mainly, due to inflation and increased transportation costs.
3. Government needs to support developers with efficient policies that could significantly reduce the cost. The government can provide direct loans to project developers below the commercial rate of interest for longer than the usual commercial time.
Likewise, wind power is (already) cheaper than power from imported coal, and will remain competitive beyond 2022. The government should encourage rapid deployment of wind power through policy measures which ultimately addresses noncost related barriers to wind power like challenges in land acquisition and delays in environmental clearances.
Currently, growth in the solar power sector can be associated with various promotional policies both at the national and state levels. The government is also looking to push for ultra-mega solar power profitable projects with capacities of up to 4 GW.
While policies and regulations are in place and the industry is also responding positively to the increased installation targets, whether the 100 GW target will be achieved or not would also depend on the removal of bureaucratic hurdles, availability of low-cost and sustained finance, and attractive tariffs. If the above points are addressed in a structured and phased manner, then India’s solar ambition (100 GW for 2021-22) is certainly desirable and achievable