Solar Energy- A viable energy source for the future | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

• The solar power industry in India is rapidly growing, marked by the lowest capital cost per MW worldwide for setting up solar power plants. Initially aiming for a 20 GW capacity by 2022, India achieved this milestone four years ahead of schedule.
• Rooftop solar power contributes 2.1 GW, predominantly used by industrial or commercial sectors. Besides large-scale grid-connected solar PV projects, India is also focusing on off-grid solar power for local energy requirements. Solar products have notably addressed rural needs, with nearly one million solar lanterns sold by the end of 2015, reducing reliance on kerosene.
• India's proposal of the International Solar Alliance (ISA), with its headquarters in the country, and the concept of "One Sun One World One Grid" aims to harness global solar power resources.

For India: Installing of solar power achieved target

• However, India acknowledges the necessity of building a robust domestic solar manufacturing industry to produce high-quality photovoltaic cells, modules, and related equipment. Despite a domestic cell manufacturing capacity of only 3.1 GW and heavy reliance on China, achieving ambitious solar targets requires aggressive official policies.
• Comparatively, China's ascent in solar manufacturing—from insignificant capability in the 1990s to dominant global presence—resulted from active government support. This included identifying top technologies globally, importing critical raw materials like polysilicon, acquiring foreign solar manufacturers, and prioritizing both the domestic market and exports.

India does not hold a prominent position in solar panel manufacturing:

• Similar to the absence of an overarching industrial policy since the onset of economic reforms, India lacks a concrete strategy to ensure the manufacture of solar panels. India should have spearheaded solar panel production to leverage solar energy much earlier. In 1991, the manufacturing sector accounted for 16% of the GDP.
• Despite the recent policy emphasis on installing solar plants, India still falls short in solar panel manufacturing. The potential of solar power presents a substantial manufacturing opportunity, especially considering the government's significant role as a major buyer.

Government initiatives include

• Encouraging wider adoption of rooftop solar power generation.
• The Ministry of New and Renewable Energy (MNRE) extending its 30% subsidy scheme to various solar-powered items such as lamps and heating systems. Additionally, this scheme has expanded to include solar-powered cold storages.
• The Ministry of Shipping's plan to implement solar-based power systems in all major ports by 2017.
• Implementation of various steps and initiatives by the Government of India, such as a 10-year tax exemption for solar energy projects.
• The National Solar Mission's objective to foster the development and utilization of solar energy for power generation.
• The issuance of Renewable Energy Certificates (RECs) to incentivize green power generation by providing financial benefits for every unit of power produced.

Learnings from China

• Expertise in Core Technology: The six largest Chinese manufacturers possessed essential technical expertise in manufacturing solar cells. When China's solar industry began flourishing, these companies already had a solid foundation of knowledge.
• Government Policy: The Chinese government subsidized land acquisition, raw materials, labor, and exports. There was a sustained commitment by the government for long-term procurement support.
• Capital Costs: India experiences the highest cost of debt (11%) in the Asia-Pacific region, while China maintains approximately 5%. This divergence impacts the overall cost of capital in the solar industry.

Challenges Faced

• Insufficient and Expensive Funding: A lack of easily accessible and affordable funding, along with rising cheap imports from China and Taiwan, significantly affects India's domestic solar industry.
• Infrastructure Restructuring: The fundamental restructuring of India's power and energy infrastructure stands as a major challenge in advancing solar power generation.
• Cost Comparison: Solar power generation incurs higher costs compared to coal, posing a hurdle to its widespread adoption.
• Transmission & Distribution Losses: High transmission and distribution losses (approximately 40%) make solar energy generation economically unviable.
• Scarce Resources: India faces constraints due to low per capita land availability, making land a scarce resource for solar installations.
• Competition from Coal Plants: The competition from more economical, less emission-intensive Ultra Super Critical Coal Power Generation Plants adds to the challenges.

Way Forward

• Integrated Policies: Developing integrated policies strongly supported by individual states is crucial. Facilitating industry setup and enabling access to low-cost financing, similar to China's approach, is pivotal for India's progress.
• Investment in Intellectual Property: Investment in intellectual property and a strategic shift towards competitive domestic manufacturing are imperative for India's advancement in the solar equipment manufacturing sector.
• Encouraging Rooftop Installations: Flexible financing options to encourage rooftop solar installations can accelerate the adoption of clean energy.
• Last Mile Connectivity: Focusing on last-mile connectivity in remote areas, where establishing transmission infrastructure is challenging, through small-scale solar installations or community grids using domestically manufactured products can ensure widespread access to power, especially in countries like India.