India to cash in on its solar energy

Can you imagine a world without fossil fuels? Ninety-five per cent of our energy demands are met by fossil fuels like coal, petroleum and natural gas and with their reserves fast depleting, almost all countries, including India, are rushing to shift to renewable energy sources.

According to the oil and gas journal World Oil, the most optimistic estimates suggest that the world’s oil reserves will be over in 43 years, natural gas in 167 years, and coal in 417 years.

The most promising replacement among renewable energy sources is solar power, which can be used to generate electricity by photovoltaics (PV), or indirectly by concentrated solar power (CSP). Researchers are working to make solar energy-powered gadgets such as iPhones to aircrafts.

Europe has been the pioneer in solar energy. Countries such as Germany have been encouraging its citizens to switch to solar power by promoting reverse supply to the grid where people can supply surplus power to the grid and earn money.

Though India has been traditionally slow in adopting greener technologies, in 2008, it unveiled its ambitious programme to generate 20,000 MW power by 2020 under the National Solar Mission (NSM). The country would be a global leader in solar energy by 2035 producing around eight per cent of its total electricity generated.

Now, the costs of installing solar equipment are prohibitively high. A megawatt of solar power requires a capital of about Rs 14 crore as against about Rs 7 crore for thermal power. Apart from capital investment on equipment, at least an acre of land is needed to set up a solar unit to generate one megawatt of power. India plans to disburse about Rs 90,000 crore in subsidies to set up solar power plants, especially for the electrification of remote villages.

The sheer size of the business is extremely attractive to corporates both in India and abroad; various companies, especially from the US, have evinced interest to supply equipment. But an Indian regulation that goes into effect in April will bar firms from importing foreign-made solar panels for the NSM. And this has led to intense high-level lobbying by the US. India, however, wants to use the NSM to promote solar panel manufacturing technology and create jobs locally. Foreign solar-panel makers can supply for the NSM only if they set up manufacturing plants in India through joint ventures. Few US companies have expressed interest to do so.

Though the US commerce secretary, Mr Gary Locke, had raised the solar-energy issue during his talks with the commerce minister, Mr Anand Sharma, officials are tight-lipped about tweaking the policy.

In India, solar energy would start paying for itself almost immediately, as it would reduce the government’s burden for subsidising imported fossil fuels such as diesel, kerosene, natural gas and in some cases, subsidised conventional electricity.

US firms such as First Solar Inc. and SunPower Corp. are among the world’s largest suppliers of solar panels. Apart from many small and medium solar-panel producers, two majors, Moser Baer India Ltd and Tata BP Solar India Ltd, a joint venture between Tata Power Co. and BP Solar International Inc, are likely to get the lion’s share of orders.

In and around Hyderabad, there are over 35 medium and large solar companies and their cause is being taken up by the Non-Conventional Energy Development Corp. of Andhra Pradesh (NEDCAP) which has provided the basic road map for promoting the companies. Mr N. Uttam Kumar Reddy, chairman of Solar Energy Manufacturers’ Association, wants the government to promote solar power to increase manufacturing that will reduce the cost of production. Now, solar power costs Rs 15 per unit and it is expected to achieve grid parity, i.e. match the grid price of Rs 7-8 a unit, in the next five years.

The solar plant in the Sunderbans has become an example for the country’s solar project. The delta now has 18 to 20 solar photovoltaic (PV) projects, providing electricity to more than one lakh people. Going forward, the Centre seems to be replicating the Bengal model, which could improve the living standards of people in the remote corners of the country and also bring in cheaper power in the long-run.