India Left With No Choice but to Leverage Solar
Nation’s PV Energy Production Could Rise by 99 Percent During the Next Five Years
Although India is touted as having the world’s largest solar kitchen and holds a huge potential for solar energy, this promise still is largely untapped. However, India’s ever-increasing demand for power, coupled with diminishing fossil fuel supplies, has left the country with no choice but to leverage the abundant natural resource of solar energy.
The present installed capacity of solar power in India amounts to 9.84 Megawatts (MW). Given that India produces only 0.2 percent of the 5,000 trillion kilowatt hours per year of solar energy it receives, the harnessing of solar energy is still in a nascent stage. On the other hand, it is interesting to note that among the globe’s nations, India ranks seventh in the production of photovoltaic (PV) systems and ninth in solar thermal systems.
Government aid in the form of monetary benefits and relaxed regulations, coupled with the backing of private investors is invigorating the growth of the Indian solar PV industry. A policy driven by government support schemes and policies could cause India’s Compound Annual Growth Rate (CAGR) for PV energy to rise at about 99 percent during the period from 2006 to 2012. Without major government support mechanisms, the CAGR would be a more conservative 92 percent. The projected solar PV capacity by conservative and policy-driven is 500MW and 630MW, respectively.
The majority of the challenges faced by the PV industry are common to most emerging sectors. The high capital cost is still a major hurdle. Furthermore, the cost of a unit of electricity generated through solar PV ranges from $0.27 to $0.44, which is nearly four to five times more than the cost of a unit of electricity derived through fossil fuels.
Complex technical expertise, a scarcity of approximately 1-square-kilometer land sizes suitable for the installation of solar cells to produce 20MW to 60MW, and proper disposal of hazardous wastes such as cadmium are some of the other challenges.
Initiatives to Harness the Potential
According to European Photovoltaic Industry Association (EPIA), by 2030, PV is likely to contribute nearly 2,600 terawatt hours of energy, serving the energy needs of about 14 percent of the world’s population. With nearly 300 clear sunny days a year amounting to 3,000 hours of sunlight, India has a huge potential to become a major contributor to meet these requirements. As a result, the Indian Government has taken several steps, both on the supply side and the demand side, to offer key incentives to aid the development of solar PV industry.
These steps include:
1.On the supply side, the Indian government announced a Special Incentive Package Scheme (SIPS) in February 2007 to attract foreign investors. Under SIPS, the government offered to bear 20 percent of capital expenditures during the first 10 years if a manufacturing unit is located within Special Economic Zones (SEZs), and 25 percent if the unit is located outside a SEZ.
2.On the demand side, the government introduced a feed-in tariff for solar PV and/or thermal electricity generation or $0.30 per kilowatt hour for up to 75 percent of solar PV output at the national level.
3.Several state governments, such as West Bengal, Gujarat, Haryana, Punjab and Tamil Nadu, have offered feed-in-tariff incentives with caps ranging from 50MW to 500MW.
4.The Indian Renewable Energy Development Agency (IREDA) also provides funds to financing and leasing companies offering affordable credit for the procurement of PV systems in India.
5.Incentives such as 80 percent deprecation (under the IT Act), lower import duties on raw materials, and excise duty exemption on specific devices, also are being offered.
Status of Solar PV Value Chain
The government’s semiconductor policy was followed by proposals for huge investments aggregating to $9 billion over the next 10 years by several companies, including Signet Solar, Lanco Solar, Solar Semiconductor Pvt Ltd. and Reliance Industries. Moser Baer has already started the production of thin-film PV modules at its manufacturing plant in Greater Noida. There now are about 90 companies participating in the Indian PV industry, including nine solar cell manufacturers and 19 PV module manufacturers. Another 60 companies assemble and supply PV systems.
Surge in Applications of Solar Power
India already is witnessing a huge surge in applications for solar power, varying from street lighting to water heating. Decentralized Distributed Generation (DDG) for meeting rural demand, back-up power for telecommunications, roof-based captive systems for individual industries and grid interactive solar power plants are some prominent sectors offering significant market potential for solar PV in India.
As of October 2008, India had 70,474 solar street lighting systems, 434,692 home lightning systems, 697,419 solar lanterns, 8.01MW solar PV power plants, 0.64 million box-type solar cookers, 2.45 million square meters of collector area for solar water heating systems, and 7,148 solar PV pumps registered.
Given the huge untapped potential and support of government, iSuppli believes India could be a promising player in solar power generation. Further easing of regulations, a free flow of raw materials and technology breakthroughs are expected to expedite India’s solar energy production growth. At the current annual growth rate of 20 percent, India in the future is likely to emerge as a fourth largest solar-energy producer after Germany, Japan and China.
Although India is touted as having the world’s largest solar kitchen and holds a huge potential for solar energy, this promise still is largely untapped. However, India’s ever-increasing demand for power, coupled with diminishing fossil fuel supplies, has left the country with no choice but to leverage the abundant natural resource of solar energy.
The present installed capacity of solar power in India amounts to 9.84 Megawatts (MW). Given that India produces only 0.2 percent of the 5,000 trillion kilowatt hours per year of solar energy it receives, the harnessing of solar energy is still in a nascent stage. On the other hand, it is interesting to note that among the globe’s nations, India ranks seventh in the production of photovoltaic (PV) systems and ninth in solar thermal systems.
Government aid in the form of monetary benefits and relaxed regulations, coupled with the backing of private investors is invigorating the growth of the Indian solar PV industry. A policy driven by government support schemes and policies could cause India’s Compound Annual Growth Rate (CAGR) for PV energy to rise at about 99 percent during the period from 2006 to 2012. Without major government support mechanisms, the CAGR would be a more conservative 92 percent. The projected solar PV capacity by conservative and policy-driven is 500MW and 630MW, respectively.
The majority of the challenges faced by the PV industry are common to most emerging sectors. The high capital cost is still a major hurdle. Furthermore, the cost of a unit of electricity generated through solar PV ranges from $0.27 to $0.44, which is nearly four to five times more than the cost of a unit of electricity derived through fossil fuels.
Complex technical expertise, a scarcity of approximately 1-square-kilometer land sizes suitable for the installation of solar cells to produce 20MW to 60MW, and proper disposal of hazardous wastes such as cadmium are some of the other challenges.
Initiatives to Harness the Potential
According to European Photovoltaic Industry Association (EPIA), by 2030, PV is likely to contribute nearly 2,600 terawatt hours of energy, serving the energy needs of about 14 percent of the world’s population. With nearly 300 clear sunny days a year amounting to 3,000 hours of sunlight, India has a huge potential to become a major contributor to meet these requirements. As a result, the Indian Government has taken several steps, both on the supply side and the demand side, to offer key incentives to aid the development of solar PV industry.
These steps include:
1.On the supply side, the Indian government announced a Special Incentive Package Scheme (SIPS) in February 2007 to attract foreign investors. Under SIPS, the government offered to bear 20 percent of capital expenditures during the first 10 years if a manufacturing unit is located within Special Economic Zones (SEZs), and 25 percent if the unit is located outside a SEZ.
2.On the demand side, the government introduced a feed-in tariff for solar PV and/or thermal electricity generation or $0.30 per kilowatt hour for up to 75 percent of solar PV output at the national level.
3.Several state governments, such as West Bengal, Gujarat, Haryana, Punjab and Tamil Nadu, have offered feed-in-tariff incentives with caps ranging from 50MW to 500MW.
4.The Indian Renewable Energy Development Agency (IREDA) also provides funds to financing and leasing companies offering affordable credit for the procurement of PV systems in India.
5.Incentives such as 80 percent deprecation (under the IT Act), lower import duties on raw materials, and excise duty exemption on specific devices, also are being offered.
Status of Solar PV Value Chain
The government’s semiconductor policy was followed by proposals for huge investments aggregating to $9 billion over the next 10 years by several companies, including Signet Solar, Lanco Solar, Solar Semiconductor Pvt Ltd. and Reliance Industries. Moser Baer has already started the production of thin-film PV modules at its manufacturing plant in Greater Noida. There now are about 90 companies participating in the Indian PV industry, including nine solar cell manufacturers and 19 PV module manufacturers. Another 60 companies assemble and supply PV systems.
Surge in Applications of Solar Power
India already is witnessing a huge surge in applications for solar power, varying from street lighting to water heating. Decentralized Distributed Generation (DDG) for meeting rural demand, back-up power for telecommunications, roof-based captive systems for individual industries and grid interactive solar power plants are some prominent sectors offering significant market potential for solar PV in India.
As of October 2008, India had 70,474 solar street lighting systems, 434,692 home lightning systems, 697,419 solar lanterns, 8.01MW solar PV power plants, 0.64 million box-type solar cookers, 2.45 million square meters of collector area for solar water heating systems, and 7,148 solar PV pumps registered.
Given the huge untapped potential and support of government, iSuppli believes India could be a promising player in solar power generation. Further easing of regulations, a free flow of raw materials and technology breakthroughs are expected to expedite India’s solar energy production growth. At the current annual growth rate of 20 percent, India in the future is likely to emerge as a fourth largest solar-energy producer after Germany, Japan and China.
Posts
No comments: