While solar energy promises to address a host of India’s energy and ecological problems, there is much to be done on the policy front if the country is to benefit from being blessed with abundant, year-round sunlight.
By Nijhum Rudra
Innovative technologies and the increased use of renewable energy resources offer cutting-edge solutions to the energy shortages faced by developing countries such as India. Solar energy is the most efficient option to address not only the increasing demand for energy and the environmental concerns related to the carbon emissions from fossil fuels, but also the issue of energy security—considering India imports most of its oil. Within the solar sector, solar thermal electricity (STE), which is also known as concentrating solar power (CSP), can emerge as the future source of electricity in India and in other parts of the planet.
India’s imbalanced power sector
As we know, power is one of the most important sectors in India and is considered to be the foundation of the nation’s growth and economy. Hence, market researchers feel that the important role of and the policies for this sector must be defined, formulated and implemented properly by the government for the benefit of the country’s citizens. Higher electricity usage and consumption of fossil fuels have led to almost irreparable damage to the environment. India established the Regulatory Commissions in 1998 under the Electricity Regulatory Commissions Act 1998 (Central Law) to promote competition, efficiency and economies within the electricity industry. The Orissa state electricity board was first restructured, followed by changes in many other states.
By mid-2011, India’s grid-connected renewable power generation capacity had amounted to 20.56GW, which was about 11 per cent of the total installed power generating capacity in the country. This included wind power of 14.55GW, small hydropower of 3.11GW, biomass power of around 2.79GW, and around 39.6MW of solar power according to researchers in the Department of Electrical Engineering, National Institute of Technology India’s renewable power generating capacity is expected to reach 87GW by 2022.
India’s solar energy benchmarks
India’s solar energy industry is growing at a rapid pace. At the end of Q3 CY 2018, the capacity of solar power installed in the country was about 26GW, a 53 per cent increase from the 17GW of solar power installed as of Q3 CY 2017, claims research firm IBEF. When the National Solar Mission of the government of India was first set up, it targeted achieving 20GW solar capacity by 2022. But, subsequently, the government undertook several new initiatives and policies, which helped India reach this target much earlier.
As of now, the average price of generating solar electricity is 18 per cent lower than the price of generating electricity from coal. In the beginning of this year, the power ministry claimed that the nation would reach the target of 14GW of new solar installations by the end of this year, which is about 50 per cent more capacity than was targeted the previous year. This achievement was also reported by Gurugram-based renewable energy consultancy, Bridge to India. The new capacity addition will take India’s installed solar capacity to about 38GW by the end of the year. Overall, the country is estimated to add nearly 16GW of clean energy capacity in 2019, driven by large-scale solar projects. And, to address the pressing concerns of climate change, Prime Minister Narendra Modi has announced a target of installing 100GW solar capacity by the end of 2022.
To meet the new requirements, tenders have been floated by the Central and state governments for large solar projects whose main customers, as of now, are likely to be the state-owned power distribution firms. But acquiring land these days has turned out to be a long-drawn-out and costly process and, hence, solar companies are now eyeing water bodies to install new capacity. In January 2015, the Indian government released a new and expanded solar plan that aims to attract US$ 100 billion in investments into the sector. Targets include 40GW of solar energy generated solely from rooftop units, and another 60GW of overall solar capacity by 2022, IBEF reports.
Government incentives to strengthen the solar power ecosystem
On January 11, 2010, the government had announced the nation’s biggest solar energy initiative, known as the Jawaharlal Nehru National Solar Mission, the purpose of which was to deploy and install 20GW of grid connected solar power by 2022 and reduce the cost of solar power generation in the country through (i) long term policy, (ii) large scale deployment goals, (iii) aggressive R&D, and (iv) domestic production of critical raw materials, components and products. It had aimed to achieve grid tariff parity by 2022.
Subsequently, the Modi government announced more incentives and policies, including supporting the manufacture of solar PV panels in India. Some of the important incentives are as follows:
- Subsidies on capital for rooftop solar power plants that generate up to a maximum of 500kW power. The 30 per cent subsidy was reduced to 15 per cent.
- Assured power purchase agreement (PPA): The power-distribution and purchase companies owned by the Central and state governments guarantee the purchase of solar PV power when produced only during daylight hours. The PPAs offer fair market determined tariff for solar power that is used as secondary power, and is an intermittent energy source along with conventional power.
- The Union government offers subsidies ranging from 70 per cent to hill states and 30 per cent to other states for the installation of rooftop solar units. Additional incentives are offered to rooftop solar power plants by various state governments.
- Depreciation: For profit-making enterprises that install rooftop solar systems, 40 per cent of the total investment can be claimed as depreciation in the first year itself.
- Inter-state transmission system (ISTS) charges and losses are not levied during the period of PPA for projects commissioned before March 31, 2022.
In 2016, Prime Minister Modi and the then French president, François Hollande, founded the International Solar Alliance (ISA) to develop and promote solar products and energy in countries lying partially or wholly between the Tropic of Capricorn and the Tropic of Cancer. The aim behind setting up the ISA was that large scale deployment would decrease development costs and production of solar equipment and products.
Other major government initiatives are discussed below
National Solar Thermal Power Testing, Research and Simulation Facility: The facility envisages a grid-connected solar thermal power plant (STPP) of 1MW capacity. This will also include a test setup that enables companies and research institutions to test the performance of different solar concentrators, coatings, materials, components and systems for a STPP. The project is being implemented by IIT Mumbai and a consortium of partners that include Tata Power, Tata Consulting Engineers, Larsen & Toubro, Clique and KIE Solatherm.
Concentrated solar thermal energy technology based on parabolic dish collectors: The project is a cooperative effort between Megawatt Solutions Pvt Ltd and SEC (Solar Energy Centre) under MNRE’s initiative to promote research, development and demonstration of indigenously developed renewable energy systems and technologies on a cost-sharing basis.
Solar Thermal Stirling Engine: The project has been taken up in collaboration with the ONGC Energy Centre (OEC). Three engines of 3kW capacity each have been installed and commissioned in the OEC campus. The objective of the project is to carry out long-term performance evaluation under Indian conditions.
High efficiency solar thermal air-conditioning systems – a collaborative project between Thermax Limited and the Solar Energy Centre: The project (with 100kW of cooling capacity) is being implemented by Thermax Limited at the Solar Energy Centre (SEC) with the objective of integrating solar collectors, vapour absorption machines (VAM) and appropriate thermal storage systems to achieve a consistent coefficient of performance (COP) of 1:1.7.
Solar-biomass hybrid system: According to the Ministry of New & Renewable Energy, this is an APP (application) project in partnership with TERI (The Energy and Resources Institute), Thermax Limited, SEC and CSIRO Australia, to develop cold storage systems, particularly in rural areas, using the exhaust heat of biomass gasifier engines/solar Scheffler dishes.
| What the experts say |
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“Now prices have hit the bottom, so industries are welcoming us to install projects. My suggestion to the government is that if they provide easy bank financing options, the use of solar energy can be increased manifold. The government should take care of implementation issues linked to their solar policies at the ground level. They should conduct seminars at the city and village levels to educate the farmers and the public about the importance of using solar energy.” |
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“There are three big challenges in installing solar lighting in India. One is the battery – in home lighting systems, the battery is one of the key components as it decides the life of the system. At present, lead acid batteries are not fit for the product line and the cost of lithium batteries is 3X higher. The second issue is that demand is coming only from rural areas that have no access to electricity. The cost for manufacturers increases when reaching out to such remote customers. The third challenge is that, currently, the buyer is largely the government. Residential customers are very few.” |
The impact of the Union Budget 2019
Prior to the Union Budget 2019, experts in the solar sector had eagerly awaited the announcement of much-needed schemes that would encourage solar MNCs to set up their manufacturing plants in India and develop advanced technology in core areas such as semiconductor fabrication, solar photovoltaic cells, lithium storage batteries, solar electric charging infrastructure, etc. This, they felt, could be achieved by means of transparent bidding and offering attractive income tax exemptions under Section 35 AD of the Income Tax Act, apart from other indirect tax benefits.
The finance minister did announce one important policy—the Kusum Yojana—that will boost the solarisation of existing grid-connected agri-pumps and new installations of standalone solar agri-pumps.
Along with this, the minister also announced the ‘One Nation One Grid’ scheme for affordable power, an additional capital infusion of ₹ 700 billion into PSBs (public sector banks) in order to support the financing of new capacity, and the inclusion of firms with a turnover between ₹ 2.5 billion and ₹ 4 billion in the 25 per cent corporate tax slab to make them competitive, the Economic Times reported. Hitesh Doshi, president, All India Solar Industries Association (AISIA) told ET that the PM KUSUM scheme for farmers announced before the Budget would boost the solar industry, but if the solar industry failed to take off, then farmers would stand to lose the additional income of ₹ 100,000 per year they could earn by generating solar power. Doshi added that that there is a need to speed up the setting up and operation of solar energy facilities, considering that the target of 100GW of solar power by 2022 was set by the government itself (with a target of 175GW set for overall renewable energy installations, over the same period).
