Bright spot

Solar power is emerging as India’s flagship renewables programme. The Modi government has taken the country’s solar strategy to an entirely different level by ramping up the earlier National Solar Mission target of 20,000 MW by 2022 — which, five years ago, seemed more ambitious than realistic — to an eye-popping 100,000 MW. But an astonishing surge in investment interest in the last year makes even this audacious target seem not entirely unrealistic. The Adani group’s plans to set up a 10,000 MW in Rajasthan with State government help are only the latest in a series of impressive proposals. These include the Bharat Heavy Electricals and PowerGrid Corporation’s joint plans to set up a 4,000 MW solar park in Rajasthan, a 6,000 MW solar project by Reliance Power, a 1,000 MW proposed investment by the Hindujas, apart from expressions of interest by US-based Sun Edison and First Solar Inc, and China’s Trina Solar (the world’s largest maker of photovoltaic modules). A dramatic drop in per unit costs of electricity has brightened prospects. The increase in silicon cell capacity worldwide, with China and US being the chief producers, has led to a drop in solar power costs from ₹10-15 a unit about a decade ago to just ₹6-7 a unit now. India’s natural advantage of 300 days of sunlight in a year and vast areas of wasteland in some States (even as 1 MW capacity needs five acres) makes large-scale generation of solar power an exciting option. The fact that a solar installation entails virtually no maintenance cost or logistical hassles associated with handling heavy equipment and materials, adds to the attraction. Policy incentives in the form of land on long-term lease as well as tax breaks and generation incentives, some of which are already in place, can work as a sweetener.

There is no disputing the economies of scale large projects provide. This is because even with falling silicon cell costs, installation and battery costs per unit are defrayed with size. However, the grid-connected solar could end up leaving out the last mile — which in India’s case, could be a huge number of poor, rural households. Hence, the complementary role played by micro-grid initiatives should not be overlooked. The prevailing policy bias in favour of promoting larger projects requires some fine-tuning. To this end, the Budget should consider raising the capacity cap for solar micro-grid and rooftop-based plants to qualify for the 30 per cent capital subsidy.

A generation incentive for such installations, pioneered by Germany where households have turned into power producers, might help. Solar lanterns can substitute kerosene and a higher subsidy offered to promote these can be a net saving. India is well placed to emerge as a big player in solar PV market, in both the grid-based and decentralised segments, given the concerted worldwide shift towards renewables. But in this rush to generate more bijli for all, the need to conserve energy should not be forgotten.

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