Even commercial feasibility is still haunting the country.
In Asian Power's special report on the region's solar power capacities and challenge, it was revealed that China, India and Thailand move to increase the role of solar power into their countries’ energy mix.
As the slow shift to renewable energy gains traction worldwide, Asian countries have taken the opportunity to invest in solar energy with a view to including it in their long-term energy mix. China’s operators are in a hurry to create new solar power plants, but the government is lagging in delivering the incentives it promised.
We now shift the focus to India. With a dedicated agency, India is poised to become a global force in the solar power industry. But what most deem as a solar power paradise could also be every investor's nightmare.
McKinsey and Company says with one of the world's highest solar intensities and low cost manufacturing, India has the potential to become a global force in solar energy.
"An emerging regulatory regime and high peak prices make this opportunity real and attractive," McKinsey says.
Since 2010, with the establishment of the Jawaharlal Nehru National Solar Mission (JNNSM), the solar power sector in India has been making significant strides in recent years.
"What excites and sometimes overwhelms the industry is the ambitious revision of solar targets by the new government," says MadhavanNampoothiri, of RESolve Energy Consultants.
The government is proposing a five-fold increase in the JNNSM targets and is planning to revise it from 20 GW of grid-connected solar to 100 GW by 2022 or even earlier.
"Considering the fact that it took India about five years to add 3 GW, adding another 97 GW in eight years looks extremely challenging," Nampoothiri says.
In a report for the Confederation of Indian Industry, Deloitte notes that installed capacity of solar power in the country has grown from a meagre 14 MW in 2010 to 3,744 MW by March 2015, increasing more than 265 times in a span of five years.
In its Global Trends in Renewable Energy Investment 2015 report, the Frankfurt School-United Nations Environment Programme Collaborating Centre for Climate and Sustainable Energy Finance says solar was the only sector to see investment grow in India in 2014, with financing doubling to $3 billion. Unlike those in 2013, the capacity auctions last year were fully subscribed, suggesting investor confidence has risen. India now has over 3 GW of solar capacity installed, including 204 MW of solar thermal. The government also announced ambitious targets last year: for 100 GW of solar capacity by 2022 and 40GW of new wind installations by 2019.
"Since its launch, the programmehas received encouraging market response. Solar power is one of the fastest growing renewable energy technologies and within a relatively short period of five years there has been steep fall (more than 60 percent) in solar PV capital cost and tariff," Deloitte says.
One of the objectives of JNNSM was to attain global leadership in solar manufacturing across the value chain by developing leading edge solar technologies. To this effect, the Ministry of New and Renewable Energy has raised budgetary support for research and development in the government's five-year plan. The country’s manufacturing capacity for solar goods and equipment has grown over the years, with a base of 52 PV module manufacturers as of June 2014.
The solar engineering procurement and construction segment too has grown in the country with most of the module manufacturers expanding their role across the value. Solar manufacturing is also poised for opportunities with the launch of “Make in India Program” which aims to facilitate investment and build best in manufacturing capabilities in the country, Deloitte notes. The mission, apart from promoting utility scale projects has also provided the impetus for the proliferation of solar power through rooftop solar projects.
"Apart from several state governments initiating separate programmes for rooftop solar development, the segment is also receiving the interest of commercial and industrial players," Deloitte says.
Against the background of increasing costs of conventional power, concerns regarding availability and reliability of power from grid and long term commercial feasibility of solar power, commercial and industrial consumers are installing rooftop solar technology to meet their captive needs. Investing in solar power is also helping companies meet their corporate social responsibility initiative along with long term commercial gains, Deloitte says.
Considering the cost and environmental advantages of large scale solar parks, MNRE has proposed a scheme for development of Solar Parks and Ultra Mega Solar power projects in the country. Inspired by the success of Charanka Solar Park in Gujarat, other states have also initiated development of large scale solar parks in the country.
"Favourable state level policies, feed-in-tariff regimes, viability gap funding mechanisms, capital subsidies, progressive net-metering arrangements and solar specific renewable obligations have created a supportive environment for development of solar power in the country," Deloitte says.
Do you know more about this story? Contact us anonymously through this link.