Under the new NDA government, the National Solar Mission was sharply upgraded, so that now India has the grand target of achieving 100 GW of solar power by 2022. However, given that the previous target was merely 20 GW by 2020, can India really achieve the objective?
In line with the new target, the government has more than tripled the Renewable Purchase Obligation (RPO) for utilities (from 3% to 10.5%). That is sound, but challenging. Most Indian utilities have been running losses for several years (if not decades). They might find it tough to purchasing more renewable generated electricity, while at the same time balancing their finances. Luckily, renewables – especially wind and solar – are falling rapidly in cost and are already competitive with or even cheaper than other options. So utilities might increasingly want to go renewable, irrespective of RPOs.
And that is important, since enforcing these RPOs may not be simple, as electricity is a concurrent subject (i.e. its legislation lies both with the center and the states). In the past, when solar was still more expensive, states would effectively ignore RPOs. So RPOs will likely not be the main driver – competitive costs of solar will.
As for rooftop project development, the government has announced initiatives such as priority sector lending, availability of low cost financing and net metering policies. It now remains to be seen if these will be enough to push the sector towards its 40 GW target. Given that today the rooftop solar market is 400 MW, this would require an incredible, “boom”-like growth. However, even if India falls short of that target, the market will likely still be very dynamic and exciting.
This is because the overall outlook for solar power development in India is very positive. The country is facing rising costs of conventional power, environmental concerns over the same and huge power deficits. Solar power on the other hand is ideally suited to Indian conditions, given the country’s high solar irradiation, the fact that solar power can quickly bring power capacity online and the rapidly falling costs of system components. Therefore, targets notwithstanding, expect solar to make significant inroads into the Indian power sector.
In line with the new target, the government has more than tripled the Renewable Purchase Obligation (RPO) for utilities (from 3% to 10.5%). That is sound, but challenging. Most Indian utilities have been running losses for several years (if not decades). They might find it tough to purchasing more renewable generated electricity, while at the same time balancing their finances. Luckily, renewables – especially wind and solar – are falling rapidly in cost and are already competitive with or even cheaper than other options. So utilities might increasingly want to go renewable, irrespective of RPOs.
And that is important, since enforcing these RPOs may not be simple, as electricity is a concurrent subject (i.e. its legislation lies both with the center and the states). In the past, when solar was still more expensive, states would effectively ignore RPOs. So RPOs will likely not be the main driver – competitive costs of solar will.
Rooftop and utility-scale solar in India
Furthermore, the 100 GW solar target is split into 60 GW of utility scale solar power and 40 GW from rooftop and other small scale grid connected projects. Acquiring large swathes of land for utility scale solar development is a challenge, as land ownership in India is often not clearly defined, and usually comes with conflicting claims of ownership. Compounding the challenge will be the issue of deciding adequate rates of compensation for existing land owners.As for rooftop project development, the government has announced initiatives such as priority sector lending, availability of low cost financing and net metering policies. It now remains to be seen if these will be enough to push the sector towards its 40 GW target. Given that today the rooftop solar market is 400 MW, this would require an incredible, “boom”-like growth. However, even if India falls short of that target, the market will likely still be very dynamic and exciting.
This is because the overall outlook for solar power development in India is very positive. The country is facing rising costs of conventional power, environmental concerns over the same and huge power deficits. Solar power on the other hand is ideally suited to Indian conditions, given the country’s high solar irradiation, the fact that solar power can quickly bring power capacity online and the rapidly falling costs of system components. Therefore, targets notwithstanding, expect solar to make significant inroads into the Indian power sector.
