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A Tall Order?

The roadblocks in India’s path to emerging as the greatest solar power.

Just chew on this fact - a 50% reduction in solar installations in just one financial quarter!

India has been very bullish on solar power, since a very long time now. The 100 GW is the solar power capacity that the country hopes to build by 2022.

But the question that begs to be answered here is - is it even possible to build more than four times the existing capacity, within a span of just four years?

The target looks ambitious unless we remove the many roadblocks along the way of India’s success as the greatest solar power in the world.

India has been making efforts to procure cheap solar equipment in order to live up to the expectations of the power buyers. However, this requires the domestic manufacturing of solar cells and module on a large scale. Right now 90% of the solar cells and modules are being imported from China, Malaysia, and Taiwan. There is too little time to create a robust domestic manufacturing base that can compete with the global market.

The government has been putting in efforts to encourage the domestic manufacturing of solar cells. One such effort is the imposition of safeguard duty that will cut down the imports from China and Malaysia. This move would have worked if the existing domestic manufacturing base of India was strong enough to meet its demands. The only thing this has done is reducing the number of solar installations in the country (Almost a 50% reduction in solar installations in one financial quarter!).

With Beijing phasing out the subsidies for solar installations, there are chances that the safeguard duty can be offset by the falling prices of Chinese solar panels. The demand for solar panels in China has already started evaporating. As per BNEF (Bloomberg New Energy Finance), the price of Chinese solar panels might get reduced by a third, by the end of this year. The global prices have already fallen (84%) and there is going to be a further decline (52%) in the next seven years. Yet it will take many more years for India to realize its dream of reaching 100 GW.

India is expected to become the largest solar power installed capacity by 2050 if things go as they are expected to. Nevertheless, how well the country address issues related to global warming and climatic changes is very crucial for achieving this goal. One of the ways to sort out this issue is to store solar energy when it is produced in excess. However, the solar storage equipment comes expensive.

Lack of finance is another bottleneck the country has to face to achieve its goal. The uncertainty that surrounds the industry has stopped many lenders and investors from funding solar power projects. While banks and financial institutions have agreed to earmark at least 20% of their finances to renewable energy projects, it is important that they reduce the cost of debt.

The lack of capacity of the electricity grid of India to handle intermittent power surges is another challenge that needs to be overcome if India wants to reach its renewable energy goal. Ideally, the grid should be able to transport solar power from regions where it is produced to regions where it is needed. Thankfully Indian government is already building a Rs.38000 crore Green Energy Corridor that will augment the existing transmission infrastructure. The project should get completed by 2019.

With new solar projects and technologies emerging year after year, India shows a great potential to become the world’s largest solar energy power. It depends on what plans the government will come up with, in order to remove the roadblocks that come in the way of India’s success.


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