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Approach :

  • Brief intro on RE sector.
  • India’s solar policy.
  • Challenges facing the sector.
  • Steps taken by the government.

India has set an ambitious target of 175 GW renewable energy by 2022, which will expand to 500 GW by 2030. This is slated to be the world’s largest expansion plan in renewable energy. Solar energy forms a crucial component, both in meeting India’s growing power needs as well as in achieving net zero carbon emissions by 2070, under the Paris Agreement.

India’s solar policy : It is through the Jawaharlal Nehru National Solar Mission that the government for the first time focussed on developing solar power in India. Under this scheme, the total installed capacity target was set to 20 GW by 2022, which was revised in 2015 to 100 GW and in 2021, the solar target is pegged at 300 GW by 2030.

Since 2011, India’s solar sector has grown at a CAGR of around 59% from 0.5 GW (2011) to 55 GW (2021), which is approx. half the renewable energy capacity. Within the 55 GW, grid connected utility-scale projects contribute 77%, while the rest comes from grid-connected rooftop & off-grid projects. India ranks 5th in terms of installed solar power capacity.

Challenges :

  • India is likely to miss the 2022 target of installing 100 GW solar capacity. Till now, only 50% of the target – 60 GW of Utility-scale & 40 GW of rooftop solar capacity, has been met. India’s target of 300 GW (2030) may remain unmet by 86 GW (or one-third).
  • India’s rooftop solar power is a challenge in its solar-adaptation policy. Out of 4 GW set for residential sector, only 1.1 GW Factors impending rooftop solar installation – pandemic induced supply chain disruption, regulatory roadblocks, limits to net metering, taxes on imported cells & modules, unsigned power supply agreements, unpredictable future open access charges, etc.
  • Besides, there are also macro & structural problems plaguing this sector.
  • Supply side – Very low tariffs : although lower tariffs help consumers, it seems devastating for DISCOMs. Cheap tariffs compromise on quality & innovation. Also banks are reluctant to lend due to unsure profit sustainablities . Negotiation on Power Purchase Agreements become difficult if tariffs fall too low.
  • Unavailability of land, complicated land acquisition process, inadequate transmission infrastructure, lack of skilled man force.
  • Increased tax obligations for energy companies – DISCOMs paid around 8000 cr. ($1.1 billion) of indirect tax between 2017-2019. To uplift domestic manufacturing, 25% duty is imposed on solar cells & 40% on PV modules.

Governmental steps taken :

  • 45 Solar Parks of aggregate capacity 37 GW have been approved (1 solar city per State).
  • Solar Parks in Pavagada (2 GW), Kurnool (1 GW) and Bhadla-II (648 MW) included in top 5 operational solar parks.
  • World’s largest renewable energy park of 30 GW with a solar-wind hybrid project is under installation in Gujarat.
  • Introduction of Sovereign Green Bonds in public sector projects.
  • PLI scheme in Solar-PV manufacturing with an outlay of 24,000 cr. Introduced under Atma Nirbhar Bharat 3.0. Additional allocation of Rs. 19,500 cr. for the solar PLI Scheme announced in Budget 2022.
  • Incentivising grid-connected rooftop solar installations in residential, institutional & social areas through Central Financial Assistance.
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