Embracing Solar: India's New Clean Energy Frontier
India is all set to emerge as a major solar power generator, third in rank after the United States and China. Experts estimate that solar capacity in the country is set to rise from a mere 50 MW in 2010 to nearly 10 GW in the next five years.
The impact of solar power generation is going to be felt the most in rural and backward belts that remain outside the national power supply grid, thus changing the lives of millions that rely on burning of highly polluting and unhealthy biomass energy, writes Siddharth Srivastava.
India is all set to emerge as a major solar power generator, third in rank after the United States and China. Given the tie-ups and investments, experts estimate that solar capacity in the country is set to rise from a mere 50 MW in 2010 to nearly 10 GW in the next five years.
Crucially, the impact of solar power generation is going to be felt the most in rural and backward belts that remain outside the national power supply grid, thus changing the lives of millions that rely on burning of highly polluting and unhealthy biomass energy.
Solar and other renewable energy sources such as wind and hydro are crucial to plug electricity generation gaps that result from insufficient utilization of thermal capacities, largely due to shortage of coal supplies. This is apart from the much lower emission benefits of renewable energy.
States such as Gujarat, Karnataka, Tamil Nadu and Maharashtra are at the forefront of promoting renewable energy in India via fiscal and rate incentives that are promoted to both domestic and overseas investors. These complement the efforts being made at the federal level to boost renewable energy.
Interest in Solar
A bit of India’s solar progress is due to the inducements being extended to investors under the government-backed National Solar Mission (NSM) that seeks to install 20GW of solar power in the country by 2022.
Currently, New Delhi is in the process of implementing the second round of National Solar Mission, with the response again very good. Nearly 200 firms have offered over 2,500 MW for the second bidding, much higher than the allocated capacity of 350 MW. In the first round, bid applications were about 1,700 MW against allocated 150 MW of solar power.
Overseas solar entities that have tied up with local Indian players include SunEdison, Juwi Solar, AES Solar, Conergy, Gehrlicher Solar, and Enfinity. Foreign solar module suppliers that have opened Indian channels include First Solar, Solar Frontier, Abound Solar, Trina Solar and Suntech.
In an assessment, Gartner has said: “given the growth potential, it is only natural for global solar photovoltaic manufacturers and their suppliers to invest in the fast-growing Indian market.”
In a big move recently, First Solar, the world’s largest solar company by market value, signed an agreement to supply 100 MW Solar Module to major Reliance Power for its upcoming project in Jaisalmer, Rajasthan. Solar power from the plant will be supplied to Mumbai.
In a statement First Solar said “the agreement is the largest PV module supply agreement in India to date,” adding “40 MW of advanced thin film modules will be supplied by end 2011. Delivery of the remaining 60 MW solar module is expected in 2012.”
The company expects India to return about 10% of its 2011 sales in megawatts that can make up for the slide in Europe revenues.
The big problem for solar remains cost, which is about 2.5 times that of coal in India, making it necessary for the state to extend fiscal and rate incentives to make the clean source of power, viable.
However, this too could change. In a significant statement earlier this month, Lanco Solar, backed by the major power and infrastructure firm Lanco Infratech, said it expects solar power costs to fall by more than 40 % by 2015 that would allow the industry take on conventional coal-fired power generators without state subsidies and backing.
Indeed, global players see good prospects in investing in India’s renewable energy sector that especially comprise wind and solar. Reports by reputed consultancies PwC and KPMG this year have highlighted that USA, China and India are the top three favored destinations globally for investments in renewable energy.
India’s wind energy installations are estimated to rise by 3,000 MW, nearly 40% higher than last year. Wind capacity addition for the next three years is projected at 7,500 MW.
One significant interest indicator in Indian renewable energy is private equity investments that have taken a big leap in the first three quarters 2011-12 (ending March) with 14 transactions worth over U.S. $520 million marking a fivefold rise.
Meanwhile, earlier this month, GE, the world’s third-biggest supplier of wind turbines, announced its first investment in Indian renewable energy generation. GE is pooling U.S. $50 million with AIMS-listed Greenko Group’s U.S. $65 million investment in 500 MW wind projects. Greenko is building a diversified renewable energy portfolio in India.
In another recent boost, Hyderabad-based Suryachakra Power has signed joint venture agreements with American Bio Sources Inc (ABS) and Environmental Energy Finance Corporation USA (EEFC) to develop 500 MW renewable energy projects in the country.
The deal has been signed between Suryachakra Global Ventures Ltd., Hong Kong (SGVL), a wholly owned subsidiary of Suryachakra Power with ABS and EEFC to set up 50:50 joint ventures to develop solar, wind, biomass power projects in India. ABS already has U.S. $200 million approved funding from Export-Import (Exim) Bank USA to set-up renewable energy projects in India.
Clearly, renewable energy is one momentum that India cannot afford to miss.