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India’s Solar Capacity: Milestones and Challenges

Context:

India has surpassed 50 GW of cumulative installed solar capacity. This ranks the country fifth in solar power deployment.

  • This is a milestone in India’s journey towards generating 500 GW from renewable energy by 2030, of which 300 GW is expected to come from solar power.
Relevance:

GS III- Indian Economy (Energy)

Dimensions of the Article:
  1. Why is India falling short in roof-top solar installations?
  2. What are the challenges to India’s solar power capacity addition?
  3. What’s the state of India’s domestic solar module manufacturing capacity?

Why is India falling short in roof-top solar installations?

  • The steep rise in large, ground-mounted solar energy is indicative of the strong push towards increasing the share of utility-scale solar projects across the country.
  • RTS deployment stands at 6.48 GW in 2021, far short on the Union Government’s target of 40 GW of RTS by end 2022.
  • The large-scale solar PV focus fails to exploit the many benefits of decentralised renewable energy (DRE) options, including reduction in transmission and distribution (T&D) losses.
    • One of the primary benefits of solar PV technology is that it can be installed at the point of consumption, significantly reducing the need for large capital-intensive transmission infrastructure.
  • This is not an either/or situation; India needs to deploy both large and smaller-scale solar PV, and particularly needs to expand RTS efforts.
Challenges in roof-top solar installations:
  • Limited financing for residential consumers and Small and Medium Enterprises (SMEs) who want to install RTS.
  • Lukewarm responses from electricity distribution companies (DISCOMS) to supporting net metering, RTS continues to see low uptake across the country.
What can be done to increase roof-top solar installations?
  • Governments, utilities, and banks will need to explore innovative financial mechanisms that bring down the cost of loans and reduce the risk of investment for lenders.
  • Increased awareness, and affordable finance for RTS projects could potentially ensure the spread of RTS across the scores of SMEs and homes around the country.
  • Aggregating roof spaces could also help reduce overall costs of RTS installations and enable developing economies of scale.

What are the challenges to India’s solar power capacity addition?

  • Despite significant growth in the installed solar capacity, the contribution of solar energy to the country’s power generation has not grown at the same pace.
  • In 2019-20, for instance, solar power contributed only 3.6% (50 billion units) of India’s total power generation of 1390 BU.

The utility-scale solar PV sector continues to face challenges like

  • High land costs,
  • High T&D losses and other inefficiencies,
  • Grid integration challenges,
  • Conflicts with local communities and biodiversity protection norms.
  • Also, while India has achieved record low tariffs for solar power generation in the utility-scale segment, this has not translated into cheaper power for end-consumers.

What’s the state of India’s domestic solar module manufacturing capacity?

  • Domestic manufacturing capacities in the solar sector do not match up to the present potential demand for solar power in the country.
  • Crisil’s report on the subject highlights that as on March 31, 2021, India had 3 GW capacity for solar cell production and 8 GW for solar panel production capacity.
  • Moreover, backward integration in the solar value chain is absent as India has no capacity for manufacturing solar wafers and polysilicon.
  • In 2021-22, India imported nearly $76.62 billion worth solar cells and modules from China alone, accounting for 78.6% of India’s total imports that year.
  •  Low manufacturing capacities, coupled with cheaper imports from China have rendered Indian products uncompetitive in the domestic market.
  • This situation can, however, be corrected if India embraces a circular economy model for solar systems.

-Source: The Hindu

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September 2022
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