India’s ambition of becoming the third-largest economy by 2030, addressing climate change challenges and meeting the sustainable development goals (SDGs) demands a robust solar infrastructure supported by a high manufacturing yield and favourable government policies. Renewable energy is the key to sustainability, and solar power is the propeller of renewable energy for India due to its proximity to the equator.
Global view
India has surpassed 50 GW of total installed solar capacity as of February 28, 2022, of which 42 GW comes from ground-mounted solar photovoltaic (PV) systems, 6.48 GW from rooftop solar and 1.48 GW from off-grid solar PV. This milestone could be achieved due to India adding a record 10 GW of solar energy to its cumulative capacity in 2021 – the highest capacity addition in 12 months, translating into a whopping 200 per cent year-on-year growth. These capacity additions are significant for India to meet its ambitious target of generating 450 GW from renewable energy by 2030, of which 280 GW is projected to come from solar power.
According to the Ministry of New and Renewable Energy data, India has surpassed Italy to clinch the fifth global position in solar power deployment, contributing around 6.5 per cent of the total solar capacity of the world, with the top four countries being China, the US, Japan and Germany. Industry experts and research agencies suggest that the steady growth of an economy is possible only through innovation and technological development towards a cleaner and greener ecosystem.
India will have to emerge as a renewable and storage powerhouse, being one of the leading countries attempting to meet the SDGs. The country’s focus on taking the sustainable path and reducing its carbon footprint by replacing fossil fuel-based electricity generation with non-fossil sources will decrease its heavy import expenditures and open up opportunities for increased investment in renewable energy.
While the transition from conventional sources of energy to new renewable sources will be a gradual process, private players have the potential to play a significant role at the core of the “clean and green” sector, as well as for delivery models, by building collaborative partnerships and ensuring inclusive growth through the achievement of sustainable goals. Private investment opportunities in clean energy in India amount to a staggering $700 billion.
Government policies and initiatives
To reduce fuel import bills and focus on indigenous growth, India must become a green power and energy storage leader as it moves towards achieving its SDGs. For this, a circular solar economy is a must, and the role of the government is important.
The government has been taking several initiatives to encourage the growth of renewable energy in the country, with solar energy taking the central place in the National Action Plan on Climate Change. The government introduced the National Solar Mission in 2010 with the aim of establishing India as a global leader in solar power. The policy measures undertaken by the government include the declaration of a trajectory for renewable purchase obligations (RPOs), and the waiver of interstate transmission system charges and losses for interstate sale of solar and wind power.
The government has also launched a grid-connected solar rooftop programme to achieve a cumulative capacity of 40,000 MW from rooftop solar projects by 2022. There has been a significant growth in the rooftop solar market, which witnessed 53 per cent year-on-year growth last year, with the private commercial and industrial sector accounting for 72 per cent of the total market. Rooftop solar is gradually becoming popular among consumers, since these projects are low cost and sustainable compared to conventional sources of power.
For the steady deployment of renewable energy sources such as rooftop solar, India needs to take some immediate measures in the next five years such as consistent regulations for net metering and banking facilities, revocation of restrictions on banking at least until the rooftop targets are achieved, strict state-led enforcement of RPOs and capital subsidies for battery energy storage systems.
There is a set target of generating 450 GW of renewable energy by 2030 – almost five times the current capacity. This will also result in the country generating 60 per cent of its electricity from non-fossil fuel sources, exceeding its commitment of 40 per cent in the Paris pledge. To facilitate a steady deployment of solar energy, the government will have to aggressively address key challenges such as regulatory roadblocks, net metering limits, the imposition of basic customs duty on imported cells and modules, issues with the Approved List of Models and Manufacturers, unsigned power supply agreements, and banking restrictions.
Promoting domestic solar manufacturing
To bolster the drive to make India “Aatmanirbhar”, the government has been encouraging domestic production through several policy changes. It has been taking proactive measures to provide capital subsidies, tax breaks and customs duty exemptions on imported capital goods as well as the machinery needed for manufacturing. It has also been attempting to identify cheaper land parcels near ports, to be developed as manufacturing hubs to facilitate export opportunities. It recently approved the allocation of around Rs 195 billion for manufacturing solar PV modules under the production-linked incentive (PLI) scheme. The PLI scheme is meant to encourage domestic manufacturing, reduce import dependency and increase exports in the long run. The scheme has come as a major relief for Indian solar manufacturers, as it is facilitating the industry to move towards higher value-added products. The scheme will bring in an investment of around Rs 300 billion-Rs 350 billion for solar PV cells and module manufacturing in India. It is specifically beneficial for those companies that are involved in manufacturing from Stage I – starting from polysilicon all the way up to modules.
Need for a circular solar economy
Access to solar power resources has been steadily expanding and is likely to escalate further, with an increasing number of sectors making solar power their sustainable energy source of choice. There has also been increasing support from the government. Further, industry players are working on the inclusion of cutting-edge technologies such as artificial intelligence and blockchain in solar manufacturing.
The prices of solar panel components and hardware have been falling significantly, and floating solar plants have emerged as a viable option for large-scale energy production at comparatively lower costs. It is also expected that India will soon acquire building-integrated PVs – a technology that integrates PV building materials within architecture to increase efficiency.
In order to ensure sustainable development alongside steep economic growth, Indian solar manufacturers will have to enable fast-paced innovation and strong partnerships, and acquire vast amounts of capital. To create sustainable solar energy infrastructure, there should be a circular solar economy through which the waste material from solar cells and modules can be both diverted and reused as valuable sources for new solar modules. There is an immediate need to make clean energy sources such as PV modules fully sustainable, economical and environment friendly.