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Three years ago, India made global news when the Finance Minister, in his Budget speech, set the country's renewable energy target at 1,75,000 MW, to be achieved by 2022. Out of that the solar component was 1,00,000 MW, including 40,000 MW in the off-grid (mainly rooftop) category. Many suspected this ambitious target as incredulous because at that time the existing solar capacity was less than 4,000 MW or 4 GW. Three years later, the country is looking at an achievement of 20 GW, with nearly 10 GW having been added in past one year; i.e., 2017-18. The progress in last year was nearly double of that achieved in the previous year (5.7 GW).

More than the fast pace of capacity addition, the sharp decline in price of solar energy is jaw-dropping. From a near Rs 8 per kWh in 2012, and even higher earlier, the recent bids received from private solar developers have been as low as Rs 2.47/kWh. At this price, there is no challenge to solar power from any other source. In terms of affordability, it appears that India has found a solution to its energy poverty.

Rational expectations

The ground reality is, however, complex. Recent solar tenders of Karnataka and Maharashtra governments have failed to find bidders. There is some trouble brewing. What are the headwinds and what can be realistically expected in the medium-term?

Solar energy can be harnessed both for electricity and heat solutions. We are all familiar with the latter — solar water heaters, cookers etc. There is a large potential for this. But in India, we decided to give a state push to the power generation application by adopting a huge target for it. So, our discussion focuses on the prospects and challenges of this source within the wider electricity sector.

The positive note

First, look at the brighter side. Our per capita electricity consumption is one-third of the global average. So, a large solar target means that we have 'electricity poverty' solution at hand.

Less than 20 per cent of our energy demand is in the shape of electricity, rest being for transport (petrol/diesel), heating (coal/biomass), cooking (LPG/natural gas/biomass) etc. Now that we have plenty of solar power in the offing, we could electrify these end-uses.

India has nearly 15 lakh hamlets (against 5.7 lakh villages). In order to make electricity available in all of them, we have a local solution in solar rooftop, and hauling it over wires and poles may not be needed. Undeniably, it is clean and helps us to address both the urban air quality and climate change concerns. India has 300 clear, sunny days. So unlike other sources of energy (hydro, coal, oil and gas) that are location-specific, solar is ubiquitous.

Practical issues

There is a long list of pluses that could even be extended - energy security, infinite resource, lesser complexity in technology, etc. But, being essentially a power source, all the woes that afflict the Indian power sector, willy-nilly get attracted to this new player as well. The power sector has well known problems - poor financials, discom losses, slow demand growth, over-capacity in thermal generation - to name some.

Being conscious of the above, the government offered policy help to the solar and the wind sectors that have yielded considerable success. The mandatory share of renewables (separate target for solar) in power supply and government-backed PPAs, have been successful interventions.

Lately, several events have stopped solar in its track. India has a small solar cell manufacturing capacity, but a bigger one for assembly of modules (panels). China has historically had surplus capacity in both cell manufacture and module assembly, and is able to supply the panels at lower prices. In order to encourage 'Make in India' there is an expectation that the government may impose tariffs on imports of solar panels. This has frightened the bidders, and is keeping them away from solar tenders until there is clarity.

The steady decline in price of solar has led to several state governments demanding renegotiation of earlier contracts. This has led to impasse in such states and vitiated the investment climate.

The present strategy has resulted in a spurt in large solar projects (many solar parks of 2 GW size are coming up) and lesser of rooftops. In the present 20 GW installed capacity, off-grid is a mere 1.5 GW. The large projects pose major challenge to the grid as their supply being variable between day and night causes major disruption to transmission, and large stand-by capacity is needed such as hydro, gas etc, which can be ramped-up and down quickly.

On an annual basis, solar projects achieve below 20 per cent capacity utilisation against 70-80 per cent in the case of conventional technologies. This is because at night, the solar panels cannot produce. In the night during peak-demand period, expensive power from other sources is blended as 'balancing' power, and the price of solar no longer remains the cheapest supply.

Policy impetus

The above problems relate to trade policy, technology and power sector policy. The first is easily solved as if the government wants cheap supply of solar power, it may decide to continue with solar panel imports and not put any curbs on imports of panels. Technological solutions are only a matter of time. And, on the last one, oncethe cost of stand-by batteries and other power storage solutions come down, then the issues of grid management and 'balancing' will become history.

Looking to the merits of solar power, undoubtedly, in the future it will become the dominant source of power. What India needs is a brand new electricity policy that will manage the transition from domination of fossil-based power to renewables.

A generational shift is in the works wherein instead of producers and consumers, the power sector is moving to 'prosumers' - self generation as well as obtaining grid-based supply. Even the electricity regulation needs to undergo a change. The present regulators belong to the era when consumers needed to be protected from the monopoly of discoms and generators. In a turn-around, now Regulators will need to protect the large base-load generators, who provide comfort of assured supply and are currently facing existential threat from low-cost renewables. These concerns are already being addressed in parts. But, suffice it to say, that India's solar programme is headed in the right direction.

— The writer is the Additional Secretary in the Union Ministry of Environment, Forest & Climate Change and Former Energy Adviser, NITI Aayog

SOLAR STATISTICS