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Why India’s New Solar Energy Targets Are Amply Achievable
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The government’s aggressive thrust on renewable energy has given a much-needed boost to the growth potential of solar IPPs in India. RE’s many unique attributes – rapid deployment, modular nature and eco-friendly status make it an apt energy resource for India, which has a high energy deficit and an inadequate grid infrastructure.
As part of its vision, the new government has raised India’s RE target five-fold to approx 175GW (by end 2022), mandating an investment of about US$200 bn. This includes 100GW – solar, 60GW – wind with the rest incorporating biomass, geothermal and small hydro projects.
The revision of the solar energy generation from the earlier 22GW to 100GW by 2022 has amply demonstrated the government’s intent to proliferate the use of solar power in the country.
Further, the 100 GW solar target is split between 60 GW of utility scale projects and 40 GW of rooftop and other small grid-connected projects. Of the 60 GW, 15 GW is expected to be developed under the National Solar Mission (NSM) by 2019. Not surprisingly, the renewable energy IPP sector is expanding like never before. Already several global majors have announced multi-billion dollar investments in Indian companies set up solar power projects.
The RE summit at New Delhi also witnessed a slew of banks, private firms and FIIs pledging large amounts for investment in India’s wind and solar sectors in particular, with an estimated 30 banks and FIs making a commitment of approx US$57 bn to the RE sector.
The rapid fall in tariffs are also expected to play a major role in boosting the adoption of RE. Tariffs have dropped about 60% over the last four years, from INR 14.90 per kWh (kilowatt-hour) in 2010 to almost INR 5.75 per kWh in 2015 for solar power, rivaling prices of conventional power sources.
However, a lot still needs to be done if the government’s ambitious targets and deadlines are to be met in full, with little margin for error. The transmission grid needs strengthening and financing costs need to be reduced. Most important of all, the policy framework needs to become consistent, stable, predictable and business friendly.
A recent Bridge to India report puts things in perspective by stating that, ´The government has a key role to play in the sector, particularly in the formative years, but its focus needs to gradually shift to enabling private business models. Fundamental reform of open access can unleash market forces by opening up private development and trading of solar power.’
India is clearly one of the most exciting solar energy markets in the world, helped by rapidly improving the commercial viability of solar PV technology, its huge need for power and of course, its social and environmental imperatives, affirms the report.
India is well-placed to achieve its target of 100GW of solar energy by 2022 if it strengthens its transmission grid, lowers financing costs and follows a consistent policy with regard to solar IPP’s in India.
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