Rising Sun: India's Solar Power Initiatives Are Shining Brighter: India Knowledge@Wharton

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Rising Sun: India's Solar Power Initiatives Are Shining Brighter

Published : December 17, 2009 in India Knowledge@Wharton

Farooq Abdullah, India's Union minister for new and renewable energy, is a
busy man these days. Over the past few months, as the Copenhagen climate
summit neared, he has been speaking at seminar after seminar on renewable
energy which, most of the time, have been on solar energy. He has also been
inaugurating projects, from the launch of a new solar lantern to the
commissioning of a solar steam system at a temple kitchen to cook food for
20,000 pilgrims each day. All over India, solar power has found its day in the
sun.
On November 23, Abdullah was again in action in Parliament unveiling the
Jawaharlal Nehru National Solar Mission. When Prime Minister Manmohan This is a single/personal use copy of
Singh launched India's National Action Plan on Climate Change on June 30, India Knowledge@Wharton. For multiple
copies, custom reprints, e-prints, posters
2008, he had highlighted the contribution of solar power. "In this strategy, the or plaques, please contact PARS
International: reprints@parsintl.com P.
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energy," he said. The action plan envisaged eight missions -- for Solar Energy,
Enhanced Energy Efficiency, Sustainable Habitat, Water, Sustaining the Himalayan Ecosystem, Green
India, Sustainable Agriculture and Strategic Knowledge for Climate Change. Appropriately, the Solar
Mission has been the first one off the ground.
Abdullah said the mission "has a twin objective -- to contribute to India's long-term energy security as
well as its ecological security. We are living in a world of rapidly depleting fossil fuel resources, and
access to conventional energy resources such as oil, gas and coal is becoming increasingly constrained.
The rapid development and deployment of renewable energy is imperative in this context and, in view of
high solar radiation over the country, solar energy provides a long-term sustainable solution."
The Mission has been launched under the name Solar India. (Ever since the success of the Ministry of
Tourism campaign under the Incredible India banner, branding is de rigueur for government projects.)
"Solar is currently high on absolute costs compared to other sources of power such as coal," says the
Mission document. "The objective of the Solar Mission is to create conditions, through rapid scale-up of
capacity and technological innovation, to drive down costs towards grid parity. The Mission anticipates
achieving grid parity by 2022 and parity with coal-based thermal power by 2030, but recognizes that this
cost trajectory will depend upon the scale of global deployment and technology development and
transfer." (Grid parity is the point at which the cost of one power source becomes equal to or lower than
grid power.)
Global Leadership

The Mission also notes the advantages of solar power. First, India has great potential. "About 5,000
trillion kWh per year of energy is [used] over India's land area." Second, "solar energy is
environmentally friendly as it has zero emissions while generating electricity or heat." Third, from
an energy security perspective, solar is the most secure. "The objective of the National Solar
Mission is to establish India as a global leader in solar energy," says the document. It then goes on
to set ambitious targets -- 1,000 MW by 2013 going up to 20,000 MW by 2022. The policy includes
an array of fiscal incentives, the formation of a National Centre of Excellence, subsidies on the sale
of power, creation of a single-window clearance mechanism, zero import duty on equipment and
components, and the setting up of two to three large solar manufacturing technology parks.
"The Indian solar energy industry can easily rise to the challenge of bringing solar energy to the forefront
to help India address the twin challenges of energy security and combating global warming and climate

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change," said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII) in a
statement welcoming the Mission. "India is particularly well positioned to reap the advantages of solar
power, which is clean, free, forever and everywhere."
Most people agree on the potential, but they are uncertain whether the Mission will meet the projections.
"I hope it will meet its targets," saysVasant Natarajan, a professor in the department of physics at the
Indian Institute of Science (IISc) Bangalore. "It is an imperative in this day of climate change, and the
consequences of not pursuing this goal vigorously would be catastrophic." Sanjeev Ghotge, senior fellow
and head of the Center for Policy and Sustainability Research at the Pune-based World Institute of
Sustainable Energy (WISE), is also optimistic. "It is possible (that we will meet the targets) provided we
work hard at it and if the international climate is conducive to helping us do it. It is conditional on both
these factors."
Harish Hande, managing director of SELCO Solar Light, which is one of the acknowledged
entrepreneurial successes in this area, is skeptical. "I don't think that it (the National Solar Mission) is
wishful thinking but I do feel that it is too ambitious," he says. "The demarcation between the on-grid and
the off-grid should have been clear. A lot of the emphasis of the 20,000 MW is on centralized solar. For
this, a lot of related infrastructure needs to be put in place. Land ownership will also be an issue. In a
country like India where 70% of the population is in rural areas, the centralized model may not work
effectively. Besides, 20,000 MW in 10 years is too ambitious. It is not just about technology. Technology
is only one part of the chain and it does exist already. It's only a matter of improving it. What we need
now is the appropriate supply chain, doorstep service and a variety of financial products."
Success Stories

Some success stories have already emerged. Hande and the Bangalore-based SELCO have several
such projects. Silk farmers are now using solar lamps instead of kerosene lanterns. Apart from
other advantages, this reduces the mortality rate of silkworms. SELCO has also launched
headlamps for midwives. It has worked out several innovative financing models. Hande has support
from the Rockefeller Foundation.
Also in Bangalore is Crown Solar Power Fencing Systems, which makes solar power fencing, solar
lighting systems and security devices. Tata BP Solar, in which BP holds 51% and the Tatas the remaining
equity, has a much wider range on offer. This includes lanterns, home lighting, water pumps, water
heaters, road studs, street lights and solutions for several sectors such as banking (the Sunbank solar
power pack, a cost-effective solution for rural banks) and telecom (the Sanchar solar-powered system).
These sectors' rural forays had hit the wall of perennial power shortage. Solar has been one solution.
TERI (The Energy and Resources Institute) has on offer a milk-churning device that runs on solar energy,
solar-powered television sets, fans and a lot more. TERI also has a project in West Bengal to promote
women as solar power entrepreneurs. Mukesh Ambani's Reliance Industries has a solar group which,
among other products, has a water purifier in its range. Photon Energy Systems has launched solar
desalination systems. There will soon be a solar version of every appliance that runs on power. "The
small-scale appliance market provides us a unique opportunity," says Natarajan of IISc. "Providing a few
hours of lighting after sunset in a village house can make a big difference in the education of the children
in the household. This can be done by a solar-powered battery charger that, in turn, powers an LED
lamp."
Others are considering the grid -- that is, generating power for supply to homes and industry. The public
sector National Thermal Power Corporation is going into solar power in a big way. Bharat Heavy
Electricals has commissioned two grid-interactive solar power plants of 100 KW each in Lakshadweep
islands. The Oil and Natural Gas Corporation is getting into the business as well.
While the public sector is thinking about large scale projects and the private sector about small projects
and appliances, there are some crossovers. On December 1, Azure Solar became the first Indian company
to sell power commercially in India. Its 2 MW plant may seem small, and the 1 MW it is supplying to the
Punjab State Electricity Board isn't going to light up many households. But 1,000 Azures can make a
difference. In West Bengal, Titan Energy has just completed the construction of a 1 MW unit for the
West Bengal Green Energy Development Corporation.

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State governments also are getting into the act. Andhra Pradesh has set aside 6,000 acres in Anantapur
district for allotment to companies setting up solar power projects. Three companies -- the U.S.-based
SunBorne and AES Solar, and the Hyderabad-based Lanco Solar -- have been issued offer letters. The
three companies will together invest around $600 million.
Solar Parks

In Gujarat, the government is talking to the Clinton Foundation, which has launched the Clinton
Climate Initiative (CCI) to create and advance solutions to the core issues driving climate change.
This is a massive project, one of four solar parks planned across the world. "In partnership with
TERI and other technical expert partners, the CCI is assisting the government of Gujarat to
prepare feasibility studies for the creation of one or more solar parks in the state," says Olivia Ross,
PR director of CCI. "A solar park is an area where solar power is produced on a significant scale.
Each solar park will include more than 3,000 MW of solar generation capacity." The 3,000 MW is
for starters. The plan is actually for 5,000 MW at a cost of around $15 billion. The Gujarat project
is likely to be the first to come up and will become the world's largest solar project. "Solar parks
for large-scale generation are needed if we want to wean ourselves away from coal-based power
generation," says Natarajan of IISc.
In Maharashtra, summer capital Nagpur is being developed as a solar city. This is a central government
initiative: 60 cities all over the country are being designated solar cities. Nagpur is the first. The initial
target is to reduce the use of conventional energy by 10%. For Nagpur, the target is by 2012.
Also in Maharashtra, though this is a private effort backed (and partly financed) by the government, is the
solar cooker at the temple complex at Shirdi, set up at a cost of $250,000. This feeds 20,000 devotees who
visit the Sri Sai Baba Sansthan every day. The plant was inaugurated by Minister Abdullah in July this
year. It will save $60,000 a year on LPG costs. Shirdi is not the first, but it is the world's largest. Several
other religious sites in India -- including Mount Abu and Tirupati, among others -- have installed solar
cookers for preparing meals for pilgrims.
Some problems need to be tackled first, however. One issue has to do with land, according to Ghotge of
WISE. Though land acquisition from farmers is a touchy subject, if it is handled correctly, Ghotge
believes it may not pose a major hurdle.
Another challenge is that some solar thermal technologies require water. In a state such as Rajasthan,
water is available from the Rajasthan canal, but according to Ghotge, "you have to ensure that priority is
given to solar thermal projects along the canal areas and not to solar PV generation because PV
generation is not dependent on the availability of water. These kinds of policies need to be understood and
well thought out in order to be successful."
The question of policy support from the government for high-cost technologies in their initial stages also
looms large. Moreover, India will face challenges in absorbing solar power into the nation's power grid
and pay for it. "The cost of any technology comes down the moment you get into mass production,"
Ghotge notes. "It is a chicken-and-egg problem. The companies with cutting-edge technology typically
are not very large and don't have deep pockets. They would not like to part with their technologies. They
would like to earn money from it, plough it back and grow. We need companies that are solid and not
only those that are there to sell out and make money."
Private and Public Efforts

This may be the reason that the private sector has only been nibbling at the edges of this sector and
leaving the hard work to the government and government companies. Solar power needs all hands
on deck. Is the private sector doing enough? "The private sector has not taken enough initiative
and has not put in enough resources and effort for the Indian market," says Hande of SELCO.
"This is because of the long gestation period here. What it has done is put up manufacturing plants
(of panels) to cater to the needs of the West -- for markets like Germany, Italy and California,
which offer subsidies. They (the private players) should have taken the initiative to nurture the
India market also instead of waiting for the government to offer incentives. I doubt if this National

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Solar Mission will make new players take an active stance. They will still wait for everything else to
be done by the government. And that is where they are going wrong. They need to show the
government how things can be done."
Natarajan disagrees. "I don't think the private sector has stayed out of solar," he says. "Almost all the
solar water heater manufacturers, for example, are private companies. Similarly, several photovoltaic
manufacturers are private. The announcement of a Mission can only enthuse them more. If there is
money to be made, the private sector will come. And there will be money to be made if the government
provides the right subsidies. The long-term environmental cost of a coal-based power plant is not factored
into the cost per unit of electricity you pay today. This is where the government can step in: Make solar
power generation cost competitive by providing a suitable subsidy, or introduce a carbon tax on polluting
ways of generating power."
Can India become a solar superpower? It has a lot going for it. On average, the country has 300-320
sunny days a year. The average solar insolation in a city like Mumbai is about twice that in New York,
Berlin or Tokyo. (Insolation is a measure of solar radiation energy received on a given surface area in a
given time.) On the other hand, a huge shortage of power exists. According to the Central Electricity
Authority, there is a 10% to 12% power shortage in the country. Power cuts in urban areas (referred to as
"load-shedding") go on for hours. They are longer in rural areas, where large parts aren't even electrified.
However, targets on capacity addition have often fallen by the wayside.
"India can certainly become a solar superpower," says Natarajan of IISc. "We have the necessary
scientific expertise and talent; we just need the government to mold this talent by taking the right policy
decisions. Announcing a solar mission is easy. Converting that into concrete action in terms of the right
policies and investment is the more difficult part. But I think the mission is the right first step." Adds
Ghotge of WISE: "It is difficult to say if India can become the biggest player. One does know what
Africa will do in this space. They, too, have a lot of potential."
But Hande of SELCO has no worries. "India has the potential to become the biggest player," he says.
"More importantly, India has the potential to be the most sustainable player. Unlike countries like
Germany, Italy, Spain and the U.S. (California), which are heavily dependent on tax incentives and
subsidies, in India we are moving ahead without these. India has the potential to create a much better
sustainable infrastructure."
Before the National Action Plan on Climate Change was announced last year, wind power seemed to be
winning the race for renewable energy. The government had given the industry several incentives.
Companies such as Suzlon were even beefing up their domestic operations with substantial acquisitions
abroad. Today, the picture is different. "Solar energy is most certainly a better bet," says Ghotge. "Our
resources are very, very large. We need to build on our technologies." Adds Natarajan: "It is much safer
and surer in the Indian context than, say, wind because India is blessed with plenty of sunshine the year
round and at all places." In other words, the sun is now rising.

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