Indian mainstream research companies keep coming out with pages and pages of useless research on Indian solar power. Most of its value is not worth the paper it is written on with mindless reams of useless statistics and projections. This time CARE ratings has come out saying that solar power will reach grid parity by 2017. Don’t know how they have come out with this magical number just as Crisil has come with a magic number as well. The report starts with mostly useless information on pros of solar energy. Note I had written all this almost 2 years ago.
The Indian Government’s launch of the ambitious Jawaharlal Nehru National Solar Mission(JNNSM) promises to catapult India into becoming the Largest Market for Solar Energy in the World. In fact,India’s Solar Energy sector has the potential to be the biggest Energy Opportunity of the 21st century. Solar Energy in India is poised to take off in a exponential manner because of a unique confluence of favorable Supply and Demand factors .India currently has less than 500 MW of Solar Energy capacity which accounts for less than 0.1% of India’s total electricity capacity. This picture is going to radically change over the next decade because of the following factors.
India has very high insolation (solar radiation in layman language) which makes solar energy much cheaper to produce solar power in India compared to countries like Germany, Denmark etc. Germany despite receiving only 50% of India’s Solar radiation has more than 9 GW of solar energy capacity already installed and is going to probably hit 14 GW by 2010.
India has a huge electricity demand supply gap – Large parts of India regularly face blackouts for lack of electricity supply leading to huge monetary losses. It has been estimated that India suffers from more than 15-20% supply shortage in times of peak power. Major cities like Gurgaon regularly face 8-10 hours of power cuts in summer months.
Lack of power grid availability – Solar Energy is ideally suited for providing power to those areas which don’t have power lines connecting it. Large parts of India don’t have electricity grid connectivity and it is cheaper to power them through solar energy rather than extending power lines.
Increasing expensive and unreliable electricity supply - The rates of electricity prices are going up rapidly each year due to a combination of factors like higher costs of fossil fuels, increasing capital expenditure by utilities and privatization of power. Not only is the power expensive, the quality and reliability of the supplied electricity is very poor. A study has found that poor farmers who receive “free electricity” in India are willing to pay for quality electricity supply rather than do with the “unreliable free power”.
Solar Energy approaching Grid Parity – The costs of Solar Energy has been decreasing rapidly over the last 2 years. Despite solar energy prices being higher than other forms of electricity, it is expected that solar energy will equal that of grid prices in the next 5 years in most parts of the globe. Solar Energy is the only form of Energy whose cost trend has been declining over the long term while all other major forms of energy have seen their costs increasing.
Strong Support from the Government – Solar Energy needs a push from the Government in terms of regulation and incentives as it is a costliest form of power currently. The Indian government through the Jawaharlal Nehru National Solar Mission has provided strong support to the growth of this industry. The government has set a target of 20 GW by 2022 with 1000 MW of solar power to be set up through private investment by 2013. CERC guidelines aims at providing 20% + returns to private investors through a higher guaranteed rate to electricity generate from solar power ( FIT).
Solar Energy is a Non-Polluting Green Form of Energy – The biggest advantage for solar energy is that it is a non-Carbon Dioxide emitting form of power. While other fossil fuel forms of Energy place have large unaccounted costs in terms of pollution, health hazards, global warming and environmental destruction (BP Oil Spill), Solar along with other forms of Renewable Energy have none of these harmful effects.
Solar Energy is virtually Unlimited – While Coal, Gas, Oil are eventually going to be depleted over the next 20-100 years, Solar Energy is a virtually unlimited source of energy. The amount of Solar Energy striking the earth is much more than humans will ever need.
CARE after writing what everybody knows that solar power in India will grow because of so many days of sunlight, coal and gas shortages etc. goes on to say that costs will decrease by 10-11% from 2012 onwards after 35-40% decrease in the last few years. Both numbers are way wrong as only solar panel prices have decreased and not the systems costs by that magnitude. Also 10-11% has no basis in fact. Also CARE cites land scarcity, completely forgetting that the solar power demand will jump as house owners start putting solar panels on their roofs rather than big utilities putting up solar projects on ground. It goes back to JNNSM project economics which is not going to be the focus of future solar growth anyway.
The report completely misses the cost drivers of solar energy which is massive cost cuts by big Chinese solar panel companies which are cutting costs at a tremendous rate using economies of scale, R&D and increasing investment. It only cites oversupply which again every Tom, Dick and Harry knows. Note CARE is not the only one to come out with a half assessed report, even others like CRISIL have come out with their genius reports on Indian solar power.