India’s solar capacity: Milestones and challenges

GOVERNANCE/ ECONOMY

• GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development

India’s solar capacity: Milestones and challenges

Context: India added a record 10 Gigawatt (GW) of solar energy to its cumulative installed capacity in 2021.  

• India has now surpassed 50 GW of cumulative installed solar capacity, as on 28 February 2022. 
• This is a milestone in India’s journey towards generating 500 GW from renewable energy by 2030, of which 300 GW is expected to come from solar power. 

Do You Know?

• Of the 50 GW installed solar capacity:
  • 42 GW comes from ground-mounted solar photovoltaic (PV) systems, 
  • 6.48 GW comes from roof top solar (RTS) (far short on the Union Government’s target of 40 GW of RTS by end 2022)
  • 1.48 GW from off-grid solar PV.
• India’s capacity additions rank the country fifth in solar power deployment, contributing nearly 6.5% to the global cumulative capacity of 709.68 GW.

What are the challenges to India’s solar power capacity addition?

• Slow pace of growth: Despite significant growth in the installed solar capacity, the contribution of solar energy to the country’s power generation has not grown at the same pace. In 2019-20, for instance, solar power contributed only 3.6% (50 billion units) of India’s total power generation of 1390 BU.
• Inefficiencies: The utility-scale solar PV sector continues to face challenges like land costs, high T&D losses and other inefficiencies, and grid integration challenges. 
• Environmental Concerns: There have also been conflicts with local communities and biodiversity protection norms. 
• Neglect of Decentralised Approach: One of the primary benefits of solar PV technology is that it can be installed at the point of consumption, significantly reducing the need for large capital-intensive transmission infrastructure. However, the policy has neglected Roof Top Solar(RTS) segment.
  • There is limited financing for residential consumers and Small and Medium Enterprises (SMEs) who want to install RTS. 
  • There is also lukewarm response from electricity distribution companies (DISCOMS) to supporting net metering for RTS.
• Backward integration in solar value chain is absent: India has no capacity for manufacturing solar wafers and polysilicon. In 2021-22, India imported nearly $76.62 billion worth solar cells and modules from China alone, accounting for 78.6% of India’s total imports that year.
• Consumers Costs Unaltered: Also, while India has achieved record low tariffs for solar power generation in the utility-scale segment, this has not translated into cheaper power for end-consumers.

What’s the state of India’s domestic solar module manufacturing capacity?

• Low manufacturing capacities, coupled with cheaper imports from China have rendered Indian products uncompetitive in the domestic market.
• This situation can, however, be corrected if India embraces a circular economy model for solar systems. 
• This would allow solar PV waste to be recycled and reused in the solar PV supply chain. 
• By the end of 2030, India will likely produce nearly 34,600 metric tonnes of solar PV waste. 
• The International Renewable Energy Agency (IRENA) estimates that the global value of recoverable materials from solar PV waste could exceed $15 billion. Currently, only the European Union has taken decisive steps in managing solar PV waste. 
• India could look at developing appropriate guidelines around Extended Producer Responsibility (EPR), which means holding manufacturers accountable for the entire life cycle of solar PV products and creating standards for waste recycling. 
• This could give domestic manufacturers a competitive edge and go a long way in addressing waste management and supply side constraints.

Way Ahead

• Governments, utilities, and banks will need to explore innovative financial mechanisms that bring down the cost of loans and reduce the risk of investment for lenders. 
• Increased awareness, and affordable finance for RTS projects could potentially ensure the spread of RTS across the scores of SMEs and homes around the country. 
• Aggregating roof spaces could also help reduce overall costs of RTS installations and enable developing economies of scale.
• International Solar Alliance (ISA) can bring countries together to facilitate collaboration on issues such as mobilising investments, capacity building, program support and advocacy and analytics on solar energy. 
• Technology sharing and finance could also become important aspects of ISA in the future, allowing a meaningful cooperation between countries in the solar energy sector.

Connecting the dots:

• Paris Climate Deal
• International Solar Alliance