Synergy Wave System

December 10, 2019

Factors that are driving the solar revolution in India

Factors that are driving the solar revolution in India

As the world is waking up to the endless benefits of renewable energy over conventional energy sources, there has been a sharp spike in solar projects that have taken shape over the past 8-9 years. India too has seen a dramatic rise in installed solar capacity – from 10Mw in 2010 to 10,000 Mw in 2016! Recent analysis by International Renewable Energy Agency (IRENA) has estimated that overall costs of installing PV projects have dropped by as much as 80 per cent in India.And the prices continue to fall because India has realized that it is cheaper to build and maintain solar plants than it is to run coal-fired power plants. Consequently, this has resulted in mega-sized solar installations such as Pavagada Solar Park in Karnataka (spread over 13,000 acres and with a capacity of 2,000 Mw) and Kamuthi Solar Power Project in Tamil Nadu, which is the largest in India. What has led to such an unprecedented rise in the solar installations in the country? Spiraling installation costs? Government support? Incentivized sector? Let’s decipher the various factors that are responsible in making India the cheapest producer of solar in the world.

Land Acquisition

For any large-scale infrastructure project in India, historically speaking, land acquisition has been the biggest pain area. However, in 2016 Ministry of New and Renewable energy (MNRE) introduced the Solar Park Policy so that large swathes of land could be acquired at the state government level with speediness. Thereafter, appropriate pieces of non-agricultural land were identified for this very purpose. What helped India’s solar energy objectives was that India, on average, gets nearly 300 days of uninterrupted sun. And this initiative gave a chance to utilize dry and arid stretches of land.

Government’s Role

MNRE and other agencies like Solar Energy Corporation of India (SECI) have played a metamorphic role in getting India’s solar energy capacity to where it is at such competitive costs. Aggressive targets and vigorous follow-ups at state and district levels have ensured that initiatives have been adhered to. National Solar Mission had a bid of Rs 17 per solar unit when it launched in 2010. Today it is at Rs 2.44 per solar unit! This is a byproduct of tariff-based bidding for solar tenders. Additionally, state governments have really pushed for incentive-based projects for solar.

Low Labour Cost

India is home to probably the cheapest labour costs in the world. This has been instrumental in keeping operational costs of solar projects at the minimum. While solar projects have not only ensured low-cost electricity in the states but they have also generated additional employment. A solar plant requires about 20-30 per cent skilled workforce and the rest is comprised of semi and unskilled labour. This is also the reason why the government has been pushing for renewable energy for faster economic growth.

Price Sensitivity

India is a well-established price sensitive market and for any industry or brand to establish itself here, competent pricing has to be of primary concern. Indian solar energy landscape benefited from this because the industry could negotiate best-in-class sourcing costs for components that go in making solar plants.

The rise of the solar energy sector in India has been phenomenal. Perhaps what the central government can do more is to reducing lending rates from the current 10-15 per cent, which will bring the cost of capital down even further. We also need a nationalized solar policy to guide and get all projects across the country on the same playing field.