Summary
India unveiled it's grand solar mission to achieve 20 GW of solar power capacity, electrify thousands of villages, create thousands of jobs, help climate change and also achieve grid parity in pricing by 2022.
The plan falls short on a number of fronts to make this mission a success. It is too lopsided towards centralized power, offers few incentives for entreprenuers, relies on international funding and has subsidies instead of more robust incentives that can guarantee success.
Analysis
India unveiled it's ambitious solar power mission in the capital a few days ago. It has pledged to make solar power a significant player in the alleviation of power supply problem, especially in rural India, in the coming 15 years.
A number of key targets have been set for the coming 13 years in three phases to ramp up solar power capacity and thereby improve India's energy security by reducing dependence on imported oil. This mission also called the Jawaharlal Nehru National Solar Mission, plans to achieve the set targets in three phases;
•Phase I - A three year phase from 2009 to 2012
•Phase II - Four years from 2013 to 2017
•Phase III - Five years from 2017 to 2022
The mission's first phase is primarily going to focus on solar heating systems as they use proven technologies and are commercially viable. The capacity additions are mainly going to be off-grid in the rural areas that do not have connections to the grid at present. The target is to add 1 GW of off-grid capacity by the end of phase 1.
The phase-II will use the experience gained to ramp up capacity not only in the off-grid sector but also the on-grid supply. Phase-II target is to achieve 3 GW on on-grid capacity by 2017. To help achieve these targets, the Ministry of New and Renewable Energy (MNRE) is making solar water heaters mandatory through building byelaws and a new building code, effective mechanisms for certification and ratings of the manufacturers, measurement and promotion of these devices, support upgrading of technologies and manufacturing capacities through soft loans.
A key factor indicated in the plan for it's success is the Renewable Purchase Obligation (RPO) mandated for power utilities, with a specific solar component. The obligation under this plan will be gradually increased while the tariff fixed for solar power purchase will decline over time.
The plan will also provide for the solar lighting systems in 10,000 villages under the ongoing remote village electrification program and will also provide for setting up solar power plants in Lakshadweep, Andaman & Nicobar Is & Ladakh regions.
The question - Is this achievable? Keeping in mind the track record of Government of India and the fate of most government sponsored projects, it seems like a distant dream at best!
In India at present nearly 450 million people have no access to electricity and the normal deficit is around 10% with it going up to 17% at peak usage. A major factor in this dismal record of achievement has been that the power sector is mainly controlled by the government i.e. centralized power. This new plan is no different and is too lopsided towards centralized power. It does not provide for enough incentives to excite budding entrepreneurs and most importantly will depend upon funding from the G7 to make it a success, which in itself is a big question mark!
The cost of electricity in India at present is around Rs 15-20/Kwh or usd 0.30-0.40/Kwh and the plan to bring solar produced power to grid parity by 2022 will entail huge amount of commitment and funding from the government, which is again doubtful. In addition, the only way to achieve it or atleast to give it a good shot there needs to be deployment on a global scale, a high pace of advancement, substantial import duty waivers and significant investment in R & D.
Even the remote villages electrification plan to provide electricity to 10,000 villages by 2013 will get 90% subsidy from the government under this plan. Subsidies have never worked in India, plus have huge transaction costs and also kill innovation.
The plan which envisages micro-grids with villagers becoming power producers, provides no clarity on feed-in tariffs. The funding program is also very vague with no specified plan on how much funding will be from domestic funds and how much from international funds?
Therefore, to increase the share of solar produced power from almost nothing today to almost close to 10% of all the produced power in 2022, is a step in the right direction, but the target seem too large to achieve with the government firmly in the driver's seat!
The plan falls short on a number of fronts to make this mission a success. It is too lopsided towards centralized power, offers few incentives for entreprenuers, relies on international funding and has subsidies instead of more robust incentives that can guarantee success.
Analysis
India unveiled it's ambitious solar power mission in the capital a few days ago. It has pledged to make solar power a significant player in the alleviation of power supply problem, especially in rural India, in the coming 15 years.
A number of key targets have been set for the coming 13 years in three phases to ramp up solar power capacity and thereby improve India's energy security by reducing dependence on imported oil. This mission also called the Jawaharlal Nehru National Solar Mission, plans to achieve the set targets in three phases;
•Phase I - A three year phase from 2009 to 2012
•Phase II - Four years from 2013 to 2017
•Phase III - Five years from 2017 to 2022
The mission's first phase is primarily going to focus on solar heating systems as they use proven technologies and are commercially viable. The capacity additions are mainly going to be off-grid in the rural areas that do not have connections to the grid at present. The target is to add 1 GW of off-grid capacity by the end of phase 1.
The phase-II will use the experience gained to ramp up capacity not only in the off-grid sector but also the on-grid supply. Phase-II target is to achieve 3 GW on on-grid capacity by 2017. To help achieve these targets, the Ministry of New and Renewable Energy (MNRE) is making solar water heaters mandatory through building byelaws and a new building code, effective mechanisms for certification and ratings of the manufacturers, measurement and promotion of these devices, support upgrading of technologies and manufacturing capacities through soft loans.
A key factor indicated in the plan for it's success is the Renewable Purchase Obligation (RPO) mandated for power utilities, with a specific solar component. The obligation under this plan will be gradually increased while the tariff fixed for solar power purchase will decline over time.
The plan will also provide for the solar lighting systems in 10,000 villages under the ongoing remote village electrification program and will also provide for setting up solar power plants in Lakshadweep, Andaman & Nicobar Is & Ladakh regions.
The question - Is this achievable? Keeping in mind the track record of Government of India and the fate of most government sponsored projects, it seems like a distant dream at best!
In India at present nearly 450 million people have no access to electricity and the normal deficit is around 10% with it going up to 17% at peak usage. A major factor in this dismal record of achievement has been that the power sector is mainly controlled by the government i.e. centralized power. This new plan is no different and is too lopsided towards centralized power. It does not provide for enough incentives to excite budding entrepreneurs and most importantly will depend upon funding from the G7 to make it a success, which in itself is a big question mark!
The cost of electricity in India at present is around Rs 15-20/Kwh or usd 0.30-0.40/Kwh and the plan to bring solar produced power to grid parity by 2022 will entail huge amount of commitment and funding from the government, which is again doubtful. In addition, the only way to achieve it or atleast to give it a good shot there needs to be deployment on a global scale, a high pace of advancement, substantial import duty waivers and significant investment in R & D.
Even the remote villages electrification plan to provide electricity to 10,000 villages by 2013 will get 90% subsidy from the government under this plan. Subsidies have never worked in India, plus have huge transaction costs and also kill innovation.
The plan which envisages micro-grids with villagers becoming power producers, provides no clarity on feed-in tariffs. The funding program is also very vague with no specified plan on how much funding will be from domestic funds and how much from international funds?
Therefore, to increase the share of solar produced power from almost nothing today to almost close to 10% of all the produced power in 2022, is a step in the right direction, but the target seem too large to achieve with the government firmly in the driver's seat!
