India could well be the next hotbed for a solar revolution. Plagued by red tape, land acquisition and corruption issues in the past, the new Indian government is all set to tackle these challenges as it sets its sights on increasing investments in the Indian solar sector. What is interesting is the fact that the new government led by Prime Minister Modi has so far been quite successful in attracting foreign investors. So, in spite of its weaknesses, India is slowly and steadily making the right moves in tapping its vast potential in the solar sector.
Increased Domestic Solar Target
In last few years, the cost of solar power has reduced drastically in India. From $0.3 to $0.1 per unit, solar energy has now become a viable, economical choice for the energy hungry nation. The Indian government has recently raised its solar targets to 100 GW. If this happens, India would be among the world’s largest solar energy producers.
Announcement of new solar parks and solar power projects
Located above the equator, India receives abundant sunshine all-year-round. The country ranks fifth in terms of power generation capacity (245 GW) and around 10% of electricity is currently generated through alternate sources such as solar, wind and biomass. Currently, around 53% of the power produced in the country is from coal. With high pollution levels and limited domestic coal reserves, India is desperately seeking a cleaner alternative. Related: 5 Solar Stocks That Should Be On Your Radar
In December 2014, the Indian government announced a major plan to set up more than ten solar parks in different states across the country. The major highlight of this plan is that the proposed solar parks would have suitable land with all necessary clearances, transmission systems, water access, road connectivity and communication networks. Getting land clearance has been one of the major hurdles for India’s solar sector in the past. The government would also grant concessional duty exemptions for setting up solar power plants along with tax breaks.
A list of the proposed solar parks in different states across India
Global Investments pouring in the Indian Solar Space
It is interesting to note that some of the major global wind energy companies such as Suzlon, Gamesa and Mytrah have now decided to invest in the Indian solar sector. London’s Alternative Investment Market (AIM) listed Mytrah as planning to invest around $400 million in the next year in the Indian solar sector. Gamesa India is all set to invest close to $220 million in the next to two years with plans to install 100 to 500 MW of solar energy projects. On the other hand, Suzlon plans to set up a ‘hybrid’ model where solar plants would be set up along with wind turbines. With this strategy, Suzlon plans to overcome the land acquisition issue and remove hurdles related to power evacuation as there is a grid available near the wind farms. Apart from this, US based Sun Edison and First Solar have committed to build close to 20,000 MW of renewable power capacity in India in the next five years. Related: What Is Holding The Green Revolution Back?
‘RE-Invest’ and ‘Make in India’ Campaigns hitting the right notes among global and local investors
Backed by the Indian Renewable Energy Development Authority (IREDA), ‘RE- Invest 2015’ was the first Renewable Energy Global Investors Expo that was organized by India’s Ministry of New and Renewable Energy (MNRE) with an aim to promote investments in renewables and connect global investors with renewable energy stakeholders in India. With almost 3000 delegates from 42 countries, the event was considered a success as several public sector and private companies committed to invest almost $200 billion towards India’s clean energy development. Out of the total investment in clean energy around 70 percent could be directed towards the Indian solar sector. These are big numbers.
To add to this, the ‘Make in India’ campaign is focusing on attracting foreign investors to help improve the manufacturing infrastructure in India. The campaign’s focus on local equipment manufacturing would further reduce the costs of photovoltaic panels and create more jobs in the solar sector. So far, Suzlon, Enercon, Vestas, RRB, NEG, Micon and Applied Materials (USA) have committed to invest under ‘Make in India’ campaign.
Does India have what it takes be the next solar hub?
According to the International Monetary Fund, India’s growth rate is set to surpass China’s by this year, with a jump from 7.2 in 2014 to 7.5 in 2015. Related:Germany’s Nuclear Cutback Is Darkening European Skies
These figures reaffirm that the Indian economy is growing faster than expected and global investors believe in the country’s growth potential. Moreover, the new Indian government’s efforts to improve the country’s business climate and policy reforms are showing results. With the current spate of big investments in renewables, India is well positioned to be the next global solar hub.
By Gaurav Agnihotri of Oilprice.com
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