A Good Year for Solar Energy in India

As 2016 comes to a close, India, striding ahead on the path to clean energy development, has reached an important milestone. The total installed solar power capacity has crossed 10 gigawatt (GW), a thousand-fold increase from 0.01 GW in 2010 when India first launched the signature National Solar Mission. With its total installed renewable energy capacity projected to double in the next two years and quadruple in the next five, India’s clean energy targets are some of the most ambitious in the world. However, given the strong policy support from the Modi government, domestic clean energy markets are developing well and the targets seem to be within reach. Here are five good reasons why India’s bet on solar is a smart move and can illuminate a path for the rest of the world to follow.

1. Saving money for consumers

In the last six years, the average cost of solar power has more than halved to below INR 5/kWh (approximately $0.07/kWh), way below the cost of power generation from imported coal. The rising share of renewables in the generation mix is a key reason India’s Power Minister Mr. Piyush Goyal projects coal exports to be 20% lower in 2016-17 (April-March) than last year. In a farsighted move to eliminate coal imports altogether, India has cancelled plans for four coal power plants with a combined capacity of 16 GW. As the cost of energy from solar photovoltaics declines, generating more power from solar will lower energy bills for everyone, putting more money in the pockets of consumers. Given that peak solar generation coincides with peak cooling demand for a large part of the year, shifting to solar also relieves stress on the grid especially during the hot summer months.

2. Creating jobs

As many as 1 million full time jobs can be created if India achieves its goal of 100 GW of solar energy by 2022 as per analysis by NRDC and CEEW. Recognizing the vast number of jobs that a thriving clean energy market would create, the national government has introduced domestic initiatives that support manufacturing, job creation and skill development. For example, the national Make in India initiative identifies renewable energy as a focus sector, which is giving solar manufacturing capacity in India a needed boost. At the recent India International Skill Development Summit, discussions focused on how solar energy is creating new jobs that did not exist before, and hence underlines the need for filling the skills gap to meet rising demand.

3. Meeting energy deficit quickly and where it is needed

Two main advantages of solar power are its modularity and quick set up times. Today the sun in India powers a 10 W LED home light as well as a 648 MW power plant—the largest solar power plant in the world—that provides electricity to 150,000 homes. This is a capacity range of 100 million times, practically unmatched by any other power generation source. Quick set up times mean solar is rapidly becoming the fastest way to scale up power generation capacity. The 648 MW solar plant in Tamil Nadu was set up in merely 8 months, much quicker than 3 to 4 years it takes to build a similar sized thermal power plant.     

4. Improving air quality and health

Power generation from clean sources is critical for improving air quality in Indian cities—some of which are amongst the most polluted in the world. Studies indicate emissions from coal used in power generation and diesel used in backup generators may be contributing to as much as 20-30% of air pollutants in big cities like Delhi. Far away from the cities, off-grid solar solutions can replace biomass and kerosene traditionally used for cooking and heating, which would go a long way in reducing indoor air pollution and improving maternal and child health.   

5. Bringing in investment

Banking on clean energy is clearly the right decision to fuel the country’s growing economy; it is also a great move to attract private investment. India’s renewable energy opportunity is estimated to reach $600 billion by 2040, according to recent analysis by Bloomberg New Energy Finance. Innovative mechanisms such as green bonds and green banks are emerging as catalysts to attract private investment and will feature in key discussions at the upcoming Global RE-Invest meet in February 2017 in Gujarat. The Indian Renewable Energy Development Authority, a leading clean energy financier, has announced its plan to be India’s first green bank thus putting the country on the global clean energy investment map.

As we look back at six years of solar focus in India, it would be fair to say that the country has cemented its position as one of the clean energy leaders in the world, which is good for India, good for the world, and based on sound economic and environmental policy. We look forward to celebrating more such milestones in the coming year.  

About the Authors

Sameer Kwatra

Climate Change and Energy Policy Analyst, India Initiative

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