Solar Energy Sector in India
What is the solar industry’s current situation in India?
About:
- As of 30 November 2021, the nation’s installed renewable energy (RE) capacity was 150.54 GW (solar: 48.55 GW, wind: 40.03 GW, small hydropower: 4.83, bio-power: 10.62, large hydro: 46.51 GW), while its installed nuclear energy-based electricity capacity was 6.78 GW.
- The fourth-largest wind power capacity in the world is in India.
- This takes the overall installed capacity for non-fossil energy to 157.32 GW, or 40.1 percent of the total installed capacity for electricity, which is 392.01 GW.
Budgetary Push for RE in 2022–2023:
About:
- An additional 19,500 crore has been allocated for the Production Linked Incentive for the production of high efficiency modules in order to support local manufacturing in order to meet the ambitious target of 280 GW of installed solar power by 2030.
- Issues:
- The investment in Solar Energy Corporation of India (SECI) has been practically reduced, from over Rs 1,800 crore to less than Rs 1,000 crore, according to the budget projection for the Union Ministry of New and Renewable Energy (MNRE) for 2022–2023.
- Currently in charge of the growth of the entire renewable energy sector is SECI, the only Public Sector Undertaking of the Union government engaged in solar energy.
- Lack of quality has been a major problem with the production of solar PhotoVoltaic (PV) modules in India throughout the years.
- This may have been resolved by advancing technological research and development for fully integrated manufacturing facilities, ranging from polysilicon to solar PV modules.
- However, no specific funding has been made available for such R&D.
What’s the problem?
- In December 2020, solar rates will reach a low of under Rs 2 per unit (1 unit = 1 kWh) as a result of dropping solar panel costs and cheaper financing costs. This decline has been steady over the previous ten years.
- Many participants have chosen to wait for solar costs to drop even further rather than sign long-term power purchase agreements as a result of the downward trend in solar tariffs.
What is the benefit of this step?
- In order to allay discoms’ worries about missing out on future lower solar rates, a move to pool tariffs could hasten the purchase of solar energy.
- The government intends to pool all solar power purchases made over a specific time period and require all purchasers to pay the average of all tariffs agreed upon throughout the pooling period.
- The government’s decision to combine roughly 10,000 MW of renewable energy-based power with fossil fuel-based power over the next four to five years may also assist some discoms cut their overall cost of power purchase.
- Due to regulations in place PPAs, discoms are required to pay fixed costs for a number of old thermal power projects that are unprofitable due to high variable costs and don’t get dispatched in merit order.
- The centre had published regulations in November 2021 that allowed thermal generation companies to supply power to customers from their renewable energy projects under the existing Power Purchase Agreements (PPAs) for coal-based electricity, with profits from the bundling of renewable energy being split 50:50 between generators and (discoms).
