Is India’s solar policy topsy turvy?

Is India’s solar policy topsy turvy?

Prime Minister Narendra Modi government’s overzealous approach towards solar power generation and solar module manufacturing appear to be unsustainable.

As it is more than 25,000 Mw of thermal power generation capacity is on sale and buyers are hard to find. This idle capacity is one of the major contributors to the huge Rs 10 lakh crore bad debts of commercial banks, analysts said adding creation of excess capacity in solar power will add to the economic woes.

The government has set a high target of generating 175 Gw of solar and wind power by 2022, of which 100 Gw would be that of solar power. Now the plan is to step it up to 225 Gw by 2022.

Till March 2018, India has an installed capacity of a little over 20 Gw of solar power. 25,000 Mw or 25 Gw of thermal power is equivalent to generating 100 Gw of solar power as solar power is not available 24 into 7 unlike thermal power.

India’s total power generation capacity is around 300 Gw, which is around one third of the power generation capacity of United States and China, which ranges between 900 to 1000 Gw. While US population is one third of India, its power generation capacity is three times more.

As India’s development strategy is not that energy intensive, it would not need that high per capita consumption. Still India would need to double its capacity by 2030.

But this has to be done incrementally. Also the mix of thermal and solar needed to be balanced, analysts said adding huge investments would have to be made in grid connectivity and distribution.

A recent power ministry study on optimal energy mix has virtually concluded that the present solar and wind power target is more than adequate to achieve the optimal mix of renewable and non-renewable sources of energy. It has suggested renewable energy should not be more than 40 per cent of energy requirement.

Though price parity between solar and thermal power has been achieved, a breakthrough in solar power storage seems to be elusive to make it a viable alternative to thermal power

So the rationale of power minister R K Singh proposing to bring a single solar tender of 100 Gw becomes questionable. So far the biggest single solar tender floated is for 10Gw in Spain.

CEO of Sun Source Energy, Adarsh Das said it  is possible to achieve 225 Gw of solar power with falling prices and excess global production, but it is certainly not desirable.

Government’s new solar policy is to set up new solar cell manufacturing capacity of 5 Gw annually. The plan is to set up large integrated solar cell manufacturing units of at least one Gw capacity each. The bids have already been invited. India now has annual solar cell manufacturing capacity of about 3 Gw.

There are already indications that this first ever auction scheduled for September, could be delayed following a Chinese decision to withdraw some state subsidies to power projects resulting in glut in solar power equipment and sharp fall in prices of solar modules.

J N Swain, managing director of Solar Energy Corporation of India, which is to conduct the auction, was quoted as saying that the auction could be delayed depending on global cues. He also acknowledged that there is oversupply of solar equipment.

The US-China trade war could make matters worse as there is a possibility of China dumping solar equipment in India. NITI Aayog CEO  Amitabh kant has hinted that India should manufacture those items which are its strength.

The World’s largest Solar photovoltaic manufacturer, Trina Solar of China, has a manufacturing capacity of 8 Gw annually. There are at least dozen solar PV manufacturing companies with at least one Gw manufacturing capacity. It has a 90-acre land near Visakhapatnam to set up manufacturing facility. But so far it has kept its plan on hold in view of the market situation.

Trina Solar India Director Gaurav Mathur said 225 Gw is certainly doable but India needed to upgrade its infrastructure, which is not going to happen overnight. The production scalability too has to be there like that of China.

Huge investment of over $50 billion in manufacturing and grid connectivity is needed to scale up solar power.Will banks fund them in the present situation with huge NPAs in power sector already. Certainly banks are unlikely to stick their neck out, power analysts said.

Chief managing director of solar developer SBD Energy said 225 Gw is doable but it is still a long road.

Sharing his perspective on India’s energy situation, Amitabh Kant summed up nicely that market forces will determine if India’s power generation will be driven by renewable energy in future.

(K R Sudhaman)