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In the state’s Rann of Kutch – an 11,000-square-mile area of inhospitable, barren, saline and clay-clad terrain – the only visible gleam is a mirage. But soon, giant solar panels will dot 1,500 hectares of the Banaskantha district, a small part of the sun-baked region where daytime temperatures normally soar to 110 degrees F (43 degrees C), to generate electricity.
The infrastructure is being developed by the Gujarat Industrial Development Corporation, which is pursuing an ambitious plan of building a “solar park.” It has already signed 45 investment proposals to generate about 1,000 megawatts of solar power, along with another 3,000-megawatt solar power project with an estimated investment outlay of US$10 billion, signed with the Clinton Foundation.
As the developed world scrambles for a solution to climate change, India has identified renewable energy as a pillar of its energy security, and is investing billions to become a green energy powerhouse.
Through a combination of attractive policies, India has been pursuing other renewable energy sources like wind and hydropower for the past three decades. As one of the few regions in the world that enjoys sunshine most of the year, it has turned its attention to solar energy in an ambitious attempt to change the country’s energy-generating landscape.
Last month, New Delhi approved a national solar energy policy that aims to generate 20,000 MW of solar power by 2020. The US$20 billion plan is still in draft stage, but is supposed to begin in November. If realized, it will generate 10 percent of the country’s total power by tapping sunlight.
Although fossil fuels like coal and natural gas will remain the country’s biggest energy resources for a long time, India hopes its solar energy pursuits will not only address its growing energy needs but also create some 100,000 new jobs in the next 10 years. It also hopes that solar energy will reduce carbon dioxide emissions by 42 million tons in the same period.
“The significance of the plan is that for the first time solar energy has been identified as a major alternative source of energy to participate in the energy needs of the country,” said Rajiv Arya, chief executive officer of Moserbaer PhotoVoltaic, a solar power equipment company.
The government has already been providing subsidized solar-powered lanterns to rural regions that are either too remote for electric grid power, or too poor to afford portable kerosene-fuelled lanterns.
“Its focus was primarily social; to provide free or highly subsidized solar-powered lights to the rural poor with no access to electricity so that they can increase their productivity by a few more hours each day,” said Nimisha Garg, managing director of Solar India Online, India’s only portal on solar energy. “Now however, solar energy is being looked at as a major power generating source for the future power generation of the country,” she said.
India’s quest for renewable energy started not as a solution to climate change, but as a panacea for an acute energy scarcity that, as in many developing countries, hampers its industrial growth and economic progress.
India's power sector has a total installed capacity of over 146,000 MW, of which 54 percent is coal-based, 25 percent hydropower, 8 percent renewable and the balance gas and nuclear-based energy.
But with its economy growing at an annual average of 6 percent, demand for power is surging, resulting in power shortages estimated at 11 percent of total energy and 15 percent of peak capacity requirements. According to Solar India Online, in the next 10 years India will require at least an additional 10,000 MW of capacity.
“India has to be self-sufficient in energy,” said Shirish Garud, fellow and area head for renewable resources at the Delhi-based Energy and Resources Institute, “but that can’t be reliant solely on fossil fuel. The country has to shift focus to renewable sources of energy, and since India is located in one of the sunniest regions of the world, solar energy must play a key role.”
According to Solar India Online, owing to its geographical advantage, most parts of India enjoy nearly 300 days of sunshine in a year and receive 4 to 7 kilowatt hours (kWH) of solar radiation per square meter per day. If India could harvest all its sunshine it could generate 5 quadrillion kWH of solar power per day.
“Given this advantage, the question is why was India not harnessing its solar resources all these years?” said Rajiv Arya of Moser Baer.
The reason is high costs. “The solar industry was in a nascent stage until recently, and historically has not enjoyed the benefits of economies of scale and scope due to its limited size that are enjoyed by other developed energy sources,” said Ravi Surapaneni, vice president of Solar Semiconductor, a Hyderabad-based solar equipment maker. “The upfront investment in the technology was also very high and that impacted solar power implementations so far.”
But thanks to the global recession and the collapse of the solar power ambitions of a few developed countries like Germany and Spain – the two largest implementers of solar energy – capital costs have reduced substantially over the last year.
“For instance, prices of photo voltaic modules – silicon chips in solar panels that convert solar energy to electricity – have come down from US$4 per module a year back to US$2 now, while the cost of putting up solar thermal plants that convert solar heat to produce steam to generate electricity have halved to about US$3 million per MW in the last 18 months,” Arya said.
According to a Bloomberg report, Germany – the world's biggest market for solar panels – stung by the increased burden of subsidies, decided to slash solar subsidies by 5 percent annually starting this year. The government subsidizes solar power generated by homes and businesses by about US 74 cents for each kWH of solar power.
Similarly, government subsidies that made Spain account for half the world's new solar-power installations in 2008, are also under review, say reports. The country has proposed a subsidy reduction of US 71 cents per kWh, to US 52 cents.
“Solar equipment capacities grew all over the world on the hope that ambitious solar power plans of Germany, Spain and elsewhere in the world would grow, driving the demand for solar equipment,” said Arya. “The economic crisis, however, has led to the collapse of many projects and the consequent excess supply has forced solar equipment prices to crash.”
Moserbaer, which has just implemented a 1-MW plant in the Indian state of Maharashtra, said it had managed to put up the plant at a record US$2.7 million per MW.
Still, India’s solar plans are ambitious. “In fact, it is too ambitious,” said Garg. The National Solar Mission does not stop at 20 GW by 2020, but aims for 100 GW by 2030 and 200 GW by 2050. Besides, among many other high targets, it also mandates deployment of solar rooftop applications for all government-owned buildings and establishments to generate at least 100 MW of solar power by 2012.
“While it is unfair to say that such lofty targets cannot be achieved, the reality is that there are many hurdles in the way,” said Arya.
For one, India still does not have appropriate rules and regulations in place, and two, the plan neither specifies subsidies nor lays out a plan for funding targets. “All power projects in the country are governed by the rules set for the conventional power plants and such rules make renewable energy generation a complicated and tedious process,” said Arya.
“For renewable energy generation to succeed, India must craft simplified rules and a single window clearance system,” added Garud of TERI. “The government should also provide more clarity on its plans of making land available for solar generation.”
The up side, according to Garg is, government approvals and commitment to clear the National Solar Plan in November to kick-start projects are "enough indications that there is a serious effort to make solar energy a success as an alternative source.”
