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Why Solar Power is So Important for India

by Isha Bhasin Asia Mar 1st 20216 mins
Why Solar Power is So Important for India

In 2018, Indian Prime Minister Narendra Modi’s government set a renewable energy target for 2022 at 175 GW, 100 GW of which would be provided by solar power. From 2018 to 2019, the share of RE in India’s total power generation stood at only 10%. Then, at the United Nations’ Climate Action Summit in New York in September 2019, Modi increased the target to 450 GW in a bid to address climate change, acknowledging that existing actions were simply ‘not enough.’ This indicated a greater need to accelerate the transition to low-carbon technologies. However, this was not the sole reason. Given that India’s energy demand is expected to increase drastically, the country faces a formidable challenge, that is, the diversification of its energy sources in a bid to reduce reliance on fossil fuels to meet demand. Investing in solar power is arguably the best way for India to do this. 

India has now undertaken the task of exploring and investing in multiple sources of renewable energy. However, since wind energy is severely limited to coastal regions and hydro-projects require extensive capital investment, investing in solar power has the advantage of creating a new energy source for the interior without huge capital stimulus. This is probably why the Indian government has worked extensively to develop the solar sector since 2019. 

Currently, India’s RE capacity stands at 136GW, with only 30 GW  attributing to solar energy. Solar power is an avenue that India is yet to explore in order to expand its energy sources. Hence, the Indian Government has chosen to emphasize more on solar power. This is probably because hydropower is relatively well developed and well-established in India. Moreover, it requires a large amount of capital expenditure as compared to solar power. On the other hand, wind energy is confined to only coastal areas and cannot be used to provide power to the interior, which is the largest part of the country. Additionally, India has been dependent on Chinese products to construct solar power plants. This government preference to solar power along with protectionist measures against China can be a lucrative opportunity for Indian businesses to gain global competitiveness.

Why Does India Need Solar Power?

India’s share of global energy demand is predicted to double to 11% in 2040, making it imperative to enhance energy security and self-sufficiency in power generation without increasing environmental costs. This increase in power demand is likely to increase India’s reliance on coal, oil and natural gas as a source of energy. However, additional imports of oil and increased domestic production of coal will not only fall short of energy demand but will also entail economic and environmental costs. These are likely to hit harder than anticipated to an economy ravaged by COVID-19. Expansion of solar power units and increased reliance on solar power allows India to enhance energy security in the face of rising demand.

Moreover, India is dealing with an aggressive air pollution problem. In 2020, Delhi’s Air Quality Index (AQI) stood at 328 which indicated severe pollution, with pollution exceeding the emergency level twice in November (air quality below 100 is considered safe under the index). The major contributory factor in extreme levels of pollution is stubble burning, where farmers clear agricultural fields by burning the residue after harvesting.This is done because it is the cheapest and most convenient way of getting rid of residue, allowing farmers to cut costs without undergoing any trouble. Despite severe penalties, stubble burning has continued in the North despite the pandemic. In addition, the lack of regulation on industrial and vehicular air pollution has been on the rise and only fell in 2020 due to the pandemic; vehicular pollution accounts for 41% of the air pollution in Delhi. Solar production does not cause any toxic emissions and can help mitigate the pollution caused by fossil fuel usage.

Lastly, India is likely to face increasing water security issues and thus must shift to energy sources that don’t rely extensively on water. The groundwater levels in India declined by 61% between 2007 and 2017, with the majority of this water being used for irrigation. Additionally, the level of annual rainfall has also been in steady decline since 2012. This is a major red flag for coal production which relies heavily on water for steam production and cooling. Solar power is neither dependent on groundwater supplies nor does it strain them.

What Has India Done Under the Pandemic?

It is clear that solar energy is a useful energy source that will enable India to attain energy security and meet prospective energy demands without substantially straining non-renewable energy sources.

India’s commitment to solar power has amplified despite the damage caused by the pandemic. Even under lock-down and pause on all economic activity, the government managed to sustain solar production to meet energy demands.

While coal production took a major hit and fell by roughly 5%, the government enforced a ‘must-run’ order on all solar and wind energy projects, implying that their power cannot be limited except in situations where grid stability is compromised. This insulated RE sources from the decline in energy demand caused by the lockdown. Thus, while demand and production fell overall, RE sources fared better than non-renewables. This has been an ongoing trend- in 2019, coal-fired plants operated at only 55.5% of their total capacity. On the other hand, renewables accounted for roughly 23% while the rest was diversified across oil, nuclear power, hydropower and diesel (Figure 1). The government also extended commissioning deadlines for ongoing renewable projects, on account of problems such as labour shortages created by the lockdown.

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india solar

Additionally, the government introduced multiple tenders via auctions at a time when solar tariffs fell. In December, 2020 solar power tariffs dropped to Rs. 1.99 per unit in an auction of projects of 500 MW capacity, making solar power the lowest source of power and resulting in an increase in low-price auction bids. When solar tariffs fell, the demand increased and this allowed the government to float multiple contracts for solar projects as they now became more affordable. It also opened the possibility of supplying power generated by renewable sources (solar) to low-income residents. These auctions have been fundamental in propelling India’s energy transition and enabling the introduction of newer technologies, particularly in energy storage that provide a solution to the intermittency problem associated with solar energy. In 2020, India held a peak power tender that required developers to couple renewable energy production with storage to meet energy needs during peak demand. This led to the installation of India’s first utility-scale energy project owned by Tata Power Delhi Distribution Limited with a capacity of 10857 MW.

Lastly, the government has also decided to increase the capacity of solar cells and modules, most of which are imported from China; in the past 5 years, over 80% of India’s solar imports have come from China. In order to protect the local industry under the pandemic, the government extended safeguard duties on Chinese imports of solar cells and models which were cheaper relative to Indian products making it harder for domestic businesses to compete. It has plans to enforce import duties on solar inverters, cells and modules. It has also incentivised domestic companies involved in non-renewable energy production to enter the solar business. This includes production-linked financial incentives usually in the form of huge investments in the solar sector. In 2020, the Indian Government pledged to invest US$603 million in the development of the solar sector following Prime Minister Modi’s announcement that solar modules would form one of the ten sectors in this proposed incentive scheme to help make domestic companies globally competitive.  For instance, the public giant Coal India, incentivised by the government established an ‘integrated solar wafer facility’ in December, 2020.

However, while these measures have been successful in sustaining solar production during the pandemic, boosting solar capacity post-pandemic in a struggling economy will pose a whole new challenge. It will require innovative financing techniques and policies to bolster domestic production in the face of increasing environmental concerns.

Featured image by: Flickr 

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