Evaluating the future of Indian solar industry

Abstract

In India the demand for energy is rising at a rate faster than the supply of the same, which has resulted in a state of perennial energy poverty. 80% of this limited power supply is from nonrenewable energy sources which are getting depleted at a steady pace. This scenario calls for the development of alternate renewable power sources which can effectively bridge the power supply – demand gap and support the rising energy demands of the country. Solar energy appears to be one of the most attractive alternatives because of its huge potential in India. Located near the equator with 200-300 sunny days in a year and irradiation level of 4kWh – 7kWh per square meter per day, solar energy in India, if properly exploited, has the potential to meet the entire energy demand even in 2030E (1900 Bn units of electricity). Solar Photovoltaics(PV) and solar thermal are the two existing technologies for harnessing solar energy in India of which solar PV is the most wide spread. Solar applications can be classified into on-grid (centralized distribution), off-grid (localized distribution) and distributed applications (standalone units). Almost all of the solar energy players in India are involved in the manufacture of solar cells, modules and balance of systems. Manufacture of silicon and wafer is extremely limited in India because of it high capex requirement and hence 80% of the raw materials needed for solar cell manufacture is currently imported. Rising energy needs, falling cost, persistent energy deficit, heavy subsidies from government, consumer preference for green technology, over dependence on coal and oil and abundant supply of sun rays are the major growth drivers of solar energy sector in India. The main challenges in this sector include lowering the cost of manufacture to attain grid parity, closer industry-government cooperation, focused and goal driven R&D, efficient financing infrastructure and increasing the consumer awareness. Government regulatory bodies such as Ministry of New Renewable Energy, India Renewable Energy Development Agency and Solar Energy Centre have rolled out policies and subsidy schemes such as India’s action plan on climate change, India’s semi conductor policy and Jawaharlal Nehru National Solar Mission to encourage the manufacturers, procurers and customers to invest more in this technology and facilitate widespread adoption. Active steps have to be taken to ensure a bright future for the solar energy industry in India. The Renewable Energy Certificates which will facilitate inter-state renewable energy transactions have to be implemented efficiently. Carbon credits earned through solar energy usage should be encouraged and used as a regular source of revenue. On-grid applications have to be implemented selectively in regions of high irradiation first before moving on to the rest of the country. Localized mini grid model which follows fee-for-use model is an interesting prospect in India because of its practical significance. Off-grid applications such as captive power generation, solar cellular towers, irrigation pumps etc have huge potential in India as they circumvent the issues of high capital requirement and grid connectivity. Judicious feed-in-tariff system and encouraging the manufacture of modules and systems are the other ways forward.