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Henry Hewitt

Henry Hewitt

Henry Hewitt is an investment strategist and portfolio manager with 36 years of experience in renewable energy. He is also a seasoned writer having published…

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India Will Determine Both Coal And Solar Market

India Will Determine Both Coal And Solar Market

Gandhi would be pushing hard to make this happen. Teaching locals how to produce salt from seawater in 1930 gave millions of Indians a measure of independence. In the process he was arrested for breaking the British Raj salt laws, a euphemism for monopoly.

Making power from the sun at a reasonable price, making solar power available to millions of people living in villages without pumps and fresh water, would have seemed to him a dream. Between electricity shortages and foul water, India has yet to re-take its place among the world’s economic leaders. (Only one of India’s 35 most populous cities has running water 24 hours a day -- the Raj did keep the pipes full – according to Charles Fishman in his fascinating book, The Big Thirst.) PV and solar steam are going to change that.

On June 17 of this year, India’s Prime Minister, Narendra Modi, and his Cabinet approved an increase in the country’s solar target to 100 GW by 2022 (up from a previous target of 20 GW). “India will become one of the largest green energy producers in the world, surpassing several developed countries. . . Solar power can contribute to the long term energy security of India, and reduce dependence on fossil fuels that put a strain on foreign reserves and the ecology as well. . . . The new solar capacity will be nearly split between residential and large-scale solar projects, with some 40 GW expected to be generated from rooftop installations and the remaining 60 GW coming from larger, grid-connected projects, such as solar farms.” Related: OPEC’s Middle Finger To The Oil Markets

As the world’s political shakers and thunderers gathered in Paris to try to sort out what should be done about climate change, Mr. Modi has become one of the most outspoken, and interesting, figures present. “Today, the energy sources of the industrial age have put our planet in peril. The world must turn to the sun to power our future,” Modi said at a press briefing [Nov. 30]. “And [as] the developing world lifts billions of people into prosperity, our hope for a sustainable planet rests on a bold global initiative.”

Frankly, what should be done about climate change is already well understood and well under way (excepting a worldwide carbon tax); a few photo ops with people wired to run in front of a parade, not of their making, will not likely make much difference. However, what happens in India surely will.

Nonetheless, central planning will not solve the problem; rapidly scaling renewables and ubiquitous storage will. So, how’s that going and where is it going on? Mighty Goldman has recently weighed in on this matter.

The total outlay to reach India’s renewable targets, which include 60 GW of wind and another 15 GW from biomass and small hydro, is expected to be on the order of $200 billion. The consultancy, Bridge To India, thinks the plan for solar will fall well short, though. “We expect India to realistically have around 31 GW of installed solar capacity by 2019 -- Of this 31 GW, we expect 27 GW to come from utility scale projects and 4 GW from rooftop projects.” Deutsche Bank thinks that 34 GW by 2020 is a reasonable figure.

(Click to enlarge)

Surprisingly enough though China gets most of the headlines and ink for becoming the world’s new energy superpower, both for coal and renewables, the blur coming from behind ought not to be ignored. For one thing, according to the UN, India is expected to pass China during the next decade to become the world’s most populous nation. (Both countries are projected to have around 1.5 billion souls by 2028, according to the BBC.) Related: Russia And Turkey: Teetering On The Brink

Much of the climate change hand-wringing (rightly) comes from worrying about how much coal China burns and will continue to burn over the next few decades; but India is no slouch when it comes to coal either, adding heartburn to those bracing for higher temperatures and rising seas. Fortunately, it has the resources to become the world’s leading solar superpower and, in effect, leapfrog the legacy system of massive, dirty power plants pushing electrons to far-flung consumers. Their grid is notoriously inefficient, anyway, with outages being the norm throughout the country, which makes distributed PV near the user seem like an attractive proposition.

(Click to enlarge)

However, the best reason to think that India will not follow China’s example of relying on coal comes from the fact that the price of PV has fallen by 90 percent since Deng Xiaoping set China on the path to prosperity. Coal is indeed cheap, but that is because we have yet to put a price on carbon and continue, in effect, to subsidize CO2 output. (A deferred tax is another name for a subsidy. Adam Smith would call this an externality. Posterity will likely call it madness.) PV will get cheaper still and carbon will get a price, so any group planning to invest in a multi-million dollar coal plant should think carefully about what it will be worth 10 or 25 years from now.

The IEA says that India will account for a quarter of the world’s energy demand growth between now and 2040. Therefore, what is not an attractive proposition would be India following the path of China over the last 25 years by providing power and refrigeration to the groups referenced below using coal.

According to Forbes, per capita coal power use in China has risen from 420 kWh in 1990 to 3,200 kWh, i.e. it is up more than seven times. This could well spell disaster if India follows suit; Bangladesh will probably be under water if the road ahead is paved with coal dust rather than silicon.

Source: Forbes

Just how bright is India’s solar future? A Bridge to India spokesperson says, “Overall I think this changes the paradigm not just for the solar sector, but also for the power sector in India. . . . [This] is giving way to a narrative where solar is now one of the competing power sources in terms of price. In terms of economics it is already making a lot of sense, even without any incentives or obligations.” (.)

Jeremy Rifkin, an economist and lecturer at Wharton, agrees and goes even further: “India is the Saudi Arabia of renewable energy sources and, if properly utilized, India can realize its place in the world as a great power — but political will is required for the eventual shift from fossil fuels to renewable energy.” Fortunately, for now, the political winds from India sit fair.

Related: North America’s Best Shale Patch

“[Mr. Modi] has launched an international solar alliance of over 120 countries with the French president, François Hollande, at the Paris COP 21 climate summit. . . .‘Narendra Modi told a press conference that as fossil fuels put the planet in peril, hopes for future prosperity in the developing world now rest on bold initiatives. . . .‘Solar technology is evolving, costs are coming down and grid connectivity is improving,’ he said. ‘The dream of universal access to clean energy is becoming more real. This will be the foundation of the new economy of the new century’. . . . Modi described the solar alliance as ‘the sunrise of new hope, not just for clean energy but for villages and homes still in darkness, for mornings and evening[s] filled with a clear view of the glory of the sun’.”


It is easy to talk about rolling out billions of watts of solar and other renewable capacity in India, but what is the industry doing to bring it about? In November, SunEdison won a 500 MW PV project with a bid of roughly 7 cents per kWh (Rs 4.63/kWh). “For the first time in India, a company secured a winning bid of lower than Rs 5.00/kWh (US¢7.7/kWh). . . . The 500 MW auction was oversubscribed 10.5 times. A total of 30 prospective project developers submitted bids for a total of 5.5 GW capacity. Some of the foreign developers were among the first-time participants in an India solar power auction. These included companies like Trina Solar and SBG Cleantech (a joint venture company between SoftBank, Foxconn, and Bharti Enterprises).”

Furthermore, SunEdison expects to add over 15 GW of renewable capacity in India within seven years. The company has signed an agreement with the state of Tamil Nadu to set up 2 GW of utility scale solar and wind projects. It has also signed up to bring 5 GW of capacity to Rajasthan and another 5 GW (including wind) in Karnataka. The most interesting development involving SunEdison, though, may be the agreement with Adani Enterprises “to set up India’s largest solar PV module manufacturing unit in Gujarat, which is expected to require a total investment of $4 billion.” This is a sign of the times as Adani is one of the world’s largest coal companies. Even they can see the Sanskrit on the wall, unless, of course, the air gets too dirty.

In addition to the deal with SunEdison, Adani has also committed to building a 10 GW ‘solar power park’ in Rajasthan. And speaking of Rajasthan, India’s Azure Power has agreed to build a GW of capacity there. Reliance Power, one of India’s largest private power generators, is in for 6GW more.

India is now perceived as a ‘major draw’ for the world’s leading solar manufacturers and developers. It has a superb solar resource; it has the need; it says it has the will, and the potential for disaster is great if coal rather than solar solves the country’s power woes. So the rush is on; the game’s afoot. Though many will say that China, the USA and even South America are the best places to be, in my view it is hard to think of a better market for solar players of all stripes and sizes to be in right now than India. Maybe that is why so many players are lining up to build modules there.

FIGURE: Global Share of New Module Manufacturing Capacity Announced Year-to-Date


By Henry Hewitt for Oilprice.com

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Leave a comment
  • David Hrivnak on December 08 2015 said:
    Very cool. Over two years ago we made the jump to solar and so glad we did. We now power our house and both plug-in cars cleanly from the sun.
  • Naveen on December 15 2015 said:
    A right-wing politician who supports ecological well-being and personal health? You have a long term central-left winger's Vote!

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