India’s solar story through its compelling business case is maximizing the falling renewable technology costs as the key to the future of energy decarbonization. The country has realized that it’s cheaper to build and operate solar farms than to run existing coal-fired power plants. Renewable energy also has significant environmental benefits making it the biggest driver to assist us to meet our carbon emission reduction targets in our fight against climate change. With India being a growing economy and having the second-largest population(1.38 billion), power consumption is only going to rise, so the adoption of alternate sources of energy such as solar, wind, biogas, etc is the most promising way forward to maintain the economic growth of the country without compromising the environment.

 In this past decade, solar energy has gained huge momentum. We have seen the rise of many solar module producers who are tirelessly working towards maximizing the energy generated by solar panels while making the technology cheaper and easily available. The following top 10 states account for approximately 90 percent of all solar installations and pipelines in India; they are Tamil Nadu, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Madhya Pradesh, Punjab, Karnataka, Maharashtra, and Uttar Pradesh.

Having recognized this as early as 2010, the Govt. of India has taken steps to ensure consistent growth in the segment. This successively has helped the solar industry reach economies of a sizable scale in a short period of time, making India the cheapest producer of solar power. In 2010, the total installed solar capacity was 10 MW and in 2016, the installed capacity stood at 6000 MW – a steep climb of 600 times in just 6 years. As of March 2019, the total installed solar capacity stands at 30 GW, accounting for a rise of 5 times in 3 years. Today, solar has reached 30% of the 2022 target of 100 GW contributing 38% to the renewable energy mix. The growth of Indian solar sector can be accredited to the following:

1. Role of State – The specialized bodies formed by the Govt. of India like the Ministry of New and Renewable Energy (MNRE) and subsequently the Solar Energy Corporation of India (SECI) have played a pivotal role in helping India become one among the fastest adopter of solar power. The journey of the country to become the 5th largest solar installer in the world has been made possible by the setting of aggressive targets and implementation of policies through streamlined efforts. The MNRE has also made efforts in promoting solar power through various public awareness campaigns and events. According to the recent Bridge to India report, out of the 9.4 GW utility-scale solar projects commissioned through Central Government tender, about 50% of the offtake came through SECI. Even state governments have contributed to the accelerated growth of the solar industry. Since electricity is a state subject and stable government policies are critical for accelerating adoption.

2. Incentives and Policies– The subsidies and incentives provided by the Govt. and Jawaharlal Nehru National Solar Mission (JNNSM) since 2010 are instrumental in the adoption of solar power. The top segments that have seen a rapid climb are the utility-scale and open access solar farms coupled with a steady growth of rooftop solar plants. Several tax incentives that contributed to the expansion are the Accelerated Depreciation Benefit and tax holiday announced under 80-1A in the initial years between 2010 and 2015 provided a major relief to solar developers by offering necessary tax breaks. But recently with GST imposition, a number of these benefits aren’t available, and levying of safeguard duty has increased import cost on PV modules. Most of these subsidies since 2017 have been reduced or discontinued since the Government has applied the proper mechanism by withdrawing subsidies when the value of solar projects has seen a consistent decline with improved performance and therefore the industry eventually has become self-sustaining.

3. Land Certainty–Historically land acquisition had always been a problem in India and  a major reason for this is the cost escalation in infrastructure projects. Since the value of land constitutes about 7% of a large scale solar project, in 2016, the MNRE Solar Park Policy introduced guidelines that would lead state governments to spot suitable large tracts of land with appropriate insolation levels and prioritize the utilization of government waste/non-agricultural land to speed up acquisition process for setting up solar parks.  Due to the climatic condition of India with 240-300 sunny days during a year, land availability for solar generation is easily found. Most drought-prone zones in rural India are arid with high radiation and are viable for setting up large solar parks. Hence, abundant land is available for non-agricultural activities like solar power generation helps in local employment generation.

4. Low cost of labour –India has a rock bottom cost of labour allowing the solar industry to employ a large number of individuals leading to speedy project completion at the lowest cost. For instance, the cost of labour in the Middle East is 5 times higher than that in India. The solar industry has utilized the supply of affordable labour to not only offer the lowest cost of power to consumers but also creating ample jobs in the process. So today solar projects can be constructed with the scale and speed required to create power generation capacities to support our ambitious 5 trillion economic goal.

5. Price sensitivity– It is no secret that India is a highly price-sensitive market and for any industry to form a significant footprint, price is the key indicator. This price sensitivity has helped the Indian solar market in two ways – The first being availability of key components like solar panels, inverters, junction boxes, etc. at much competitive prices than other countries. This helped India achieve lower solar tariffs as compared to other countries. The second way the price sensitivity has helped is that, when solar tariffs drop below grid electricity tariffs, there has been super quick adoption, which has furthered the economies of scale, diving prices of components even lower. In the coming years, energy storage will play a key role in making Renewable Energy a firm source of power and further reducing the landed cost of renewable electricity. Additionally, with the advent of Electric Vehicles (EVs), using renewable energy within the charging infrastructure will further boost the expansion of the industry. With the Government’s support, developers getting future visibility in terms of the project pipeline, and actual off-takers witnessing value in adopting solar electricity, India is poised to secure its renewable future.

The Next Decade

By 2030, India aims to reach a new goal of 450 GW of renewables. This will require not just a transparent policy direction but also a versatile power system capable of integrating such large volumes of variable generation.

The market is already experiencing new dynamics. New bids like hybrid, round-the-clock, peak power supply, and open trade of power have opened avenues for innovation. Better asset management and demand-side management are going to be key, made possible through data analytics and digitalisation of storage. With digitised systems, it should be possible to understand the thought of prescriptive maintenance over preventive maintenance. Advancements in the design of solar plants and in maintaining grid stability will also cater to changing regulations and standards, as solar continues to increase in capacity and status.

The 2030 target also brings momentum to the goal of capturing more domestic value from the transition, spelt out in the Make in India strategy. 

The immediate challenge is to get the state governments to turn around the finances of their electricity sectors. This can be done by a mixture of improved governance, higher tariffs, and timely provision of subsidies to make sure free/highly subsidised electricity for agriculture. Wherever this is not possible, getting the private sector to manage distribution would be a proven solution. The success of the private sector in managing distribution in Delhi has enabled the government to provide subsidies from the budget for a free supply of 200 units of electricity per month. The proposal to privatise discoms is thus one big step the industry will be awaiting within the coming decade.

There have been innovations in technologies that will impact the unit rate of solar plants. Silicon-based solar cells, for instance, are a well-established technology. They may, however, be taken over by perovskite solar cells – synthetic hybrid organic-inorganic compounds – within the coming decade. The unit rate realised from a solar plant also depends on the cost, rating, and performance of the balance of system items like inverters and cables. These are maturing and evolving according to the solar industry’s demand.

Overall, the opportunities for innovation in the field of renewables are immense. This decade will see the sector embrace a number of the anticipated developments, and it could see some surprising new path-breaking discoveries. 

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