07/09/2019 - Indian Economy

KEY POINTS

India’s Solar target

The country has set an ambitious target of installing 175 GW of renewable energy capacity by the year 2022, which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power.

Need for manufacturing solar panels

·        India has taken full advantage of the global decline in the price of solar panels, as the Chinese reduced their costs of manufacturing dramatically.

·        However, as the rupee depreciates, or the Chinese raise prices, the tariff, discovered through bidding, would also rise.

·        So the time has also come to target manufacturing of solar panels, with full value addition in India.

Possible ways

·        One viable approach could be to invite bids for the supply of 1,500 MW of solar panels, made fully in India, every year, for four to five years, starting from 2021.

·        Land, with environmental clearance, at a reasonable price, along with commitment of direct, cheap power supply in a dedicated manufacturing Special Economic Zone (SEZ) should be on offer.

·        The SEZ should have the special dispensation of having sales to the Indian market being considered as fulfilling its export obligation.

·        The issue of imposition of safeguard duties can be examined after there is manufacturing in India, with a competitive industry structure.

·        Rooftop solar and decentralised solar power generation in rural areas in the KW range is yet to gather momentum. Having no transmission costs, this is far more economical.

·        The ideal way for achieving a breakthrough would be to go in for an attractive feed-in tariff regime, with the approval of the State Regulatory Commissions.

·        The distribution company should indicate the points at which it would be willing to buy solar power on a first-come, first-served basis, as well as the maximum it can take at the receiving point, along with the power purchase agreement.

·        The receiving points could be the consumer connection point, with a reversible meter, the distribution transformer, or the sub-station. This should cover urban as well as rural areas.

·        A farmer could buy solar panels, investing on his own. Alternatively, an aggregator could put up the solar panels on the land or rooftops provided by the farmer.

·        India has around six lakh villages. Getting up to 1MW capacity installed through a feed-in tariff in a village should not be difficult. Thus, creation of 6 lakh MW capacity of solar power through private investment in the next five to seven years appears feasible.

·        India could take global leadership in solar energy, as well as in moving towards carbon-free electricity.

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India being a tropical country enjoys sun energy in abundance. Being one of the most populous countries of the world India has magnanimous energy demand which is going to increase in future as India grows to become a 5 trillion economy. 

Also, CO2 emissions from conventional power plants is a major contributor to global warming, And to achieve commitment made by India in paris agreement to reduce greenhouse gas emissions by 30-35% from 2005 level, It is imperative to create a sustainable and thriving environment for solar industry. 

India has achieved target of 25GW of electricity through solar power before its timeline in 2022. Now ministry of new and renewable energy has initiated phase II of solar program in which the target is to produce 100GW from solar and out of which 40GW will be generated from grid connected rooftop solar project by 2022. 

India could achieve its previous target by taking advantage of the decline in global price of solar panels. But despite making such a huge progress India still depends on countries like China for solar panels. Depreciation of Rupee or instability in global economic forum are few of the factors that may result in an increase of the price of solar panels.   

India needs to change its focus from solar project installation to solar panel manufacturing. Silicon manufacturing requires technical know-how and intense capital investment. This needs to be done by public private partnership but investment in solar panel industry needs confidence regarding sales and profits. 

Once, the domestic manufacturing industry starts to grow, then focus needs to shift towards safeguard duty. Currently Indian government allows 100% foreign investment in solar industry. Government has to evolve policy instrument so that bids by domestic manufacturer will be accepted in case it falls below market discount price. 

Competitive industry structure can be built up through continuous bidding process by multiple private players.   

Conclusion:

India’s solar targets are huge and they compliment with other govt. Policy such as national smart grid mission, Skill India mission, national solar mission etc. But India’s dependency on imports for solar is only a short term solution. India needs a solar manufacturing strategy that could ensure development of a global competitive solar industry.

Please review . Thank you

Please review.

Kindly review...thank you...