Prime Minister Narendra Modi is making major strides in energising India through solar power. During the UN conference on climate change held in Paris in 2015, PM Modi and the French President Francois Hollande launched the International Solar Alliance, to be headquartered in India. The Modi government also set a target of installing 100 GW of solar power by 2022, which seems ambitious given that the existing solar capacity is only 6.9 GW.
But nothing is impossible, and the best way to do that is to look at other countries’ experiences in this regard, their policies and how they are scaling up. It may also help India to find suitable partners to achieve its targets.
By 2014, Germany had installed 38 GW, China 28 GW, and Japan 23 GW of solar power capacity. But, normalising these numbers with per million population of those countries clearly shows that Germany with 469MW/million population is way ahead of Japan with 181 MW/million and China at 20MW/million population. India figures way below at just 2.32MW/million population. Incidentally, Germany also leads in absolute capacity installed, accounting for 21 per cent of the 178 GW total global solar installations in 2014.
But how did Germany become the leader? A key role was played by Feed-in-Tariffs (FITs) and guaranteed priority grid connections to renewable energy producers, as embedded in Erneuerbare Energien Gesetz (EEG) 2000 (Renewable Energy Sources Act). The renewable energy producers receive FITs, fixed per kWh for 20 years, which covers cost plus return on investment. The difference between FIT and average electricity prices is applied as EEG surcharge to consumers (except industrial consumers) as higher electricity bills, and not paid from public funds. This surcharge acted as a catalyst to unleash a revolution of a sort such that by the end of 2013, 23 per cent of global residential rooftop and 37 per cent of global commercial rooftop installations were installed in Germany.
Can such a FIT policy be a harbinger of solar power in India? Interestingly, India has a sort of FIT policy, but it is not mandated through priority grid access. It is left to the discretion of discoms/regulators. India has followed a policy of outright capital subsidy on solar panels/ plants, which has varied over time from state to state as well as at the Centre. Central financial assistance was initially 30 per cent but reduced to 15 per cent in August 2015, and again reverted upto 30 per cent in November 2015.
With fast reductions in costs of solar power, average bids from the private sector have come down from Rs 6.8/kwh in 2014 to Rs 5.6/kwh in 2015 (ICRA). The lowest bid in 2016 is Rs 4.34/kwh for a solar park in Rajasthan. Even after accounting for 30 per cent subsidy, it amounts to Rs 5.64/kwh. This is lower than the cost of thermal power which was about Rs 5.93/kwh in 2013-14 (Planning Commission).
If India wants to unleash a revolution in solar power, the price at which governments should buy solar power for its grids should be the marginal costs of thermal plus at least 10-15 per cent, which is the negative externality that thermal plants emit in terms of pollution and health costs. Once this is in place, one can quickly scale up to reach the target of 100GW.
Radha Soami Satsang in Beas has already installed the largest rooftop system on a single roof in the world — 11.5 MW. Apart from meeting the campus requirements, it has a 25 year PPA with the Punjab State Power Corporation Limited to feed surplus into the grid. According to the Ministry of New and Renewable Energy (MNRE), 22 ministries alone have rooftop solar capacity of about 7 GW. Isn’t it time to lead by example from here? Haryana has introduced mandatory rooftop solar installations for residential buildings, government and private educational, offices, private hospitals, nursing homes, malls, industrial and commercial establishments, hotels, banquet halls and tourist complexes meeting certain specifications.
Dhundi Saur Urja Utapadak Shahakari Mandali (DSUUM) in Gujarat, which has a PPA with the state discom at Rs 4.63/kwh to sell surplus power from solar pumps after meeting irrigation needs, is another example. In March 2015, India had about 19,500 off grid solar pumps. During 2015-16, India installed 31472 additional solar pumps, which is more than what it had done cumulatively till March 2015.
Gujarat is also looking at agro-policy whereby farmers can lease land to discoms for solar installations along with their crop cultivation and earn some income. Experiments in Japan, China, Garmany, UK, etc have revealed that solar panels can be put along farmers’ fields without adversely impacting photo-synthesis of crops. Such initiatives can help contribute to government’s goal of doubling farmer incomes by 2022 with added income coming from “harvesting of solar fields”. Both political will and public participation would play important roles. Farmer co-operatives to harvest solar fields, especially in areas that have low irrigation and cropping intensity, like Marathawada and Bundelkhand, can be the best places to do pilots in growing solar power in farmers’ fields. But it would need upfront capital costs, which can come from organisations like NABARD/other banks/corporate social responsibility/crowd funding, and international development organisations like GTZ of Germany, if one is tying up with German expertise. Only a coordinated approach between Centre, states, corporate entities and civil society can help achieve large scale grid connected targets of 100GW capacity.
Herein lies a golden opportunity for the PM to kill two birds with one stone: Realise his dream of doubling farmers’ incomes by 2022 where farmers earn income by harvesting solar energy on their own fields and feeding into the grid, as well as achieving a target of 100GW of solar capacity. This would make PM Modi and India leaders in solar power on a global map. This would be more commendable when it is done by including millions of small holders.