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Solar Subsidy in India Bias of Large Solar Farms unwisely goes against the Global Trend of Rooftop Solar System Support

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Solar Power in India is set to see spectacular growth fueled by Indian government subsidy policy JNNSM among a host of other factors like massive energy deficiency,lack of national power grid connecting large parts of the country,rising carbon emissions,sharp increase in fossil fuel prices in coal .Solar Energy’s biggest advantage is that its costs are constantly falling compared to other energy forms where it is rising.Countries around the world have supported solar energy through various subsidies like Feed in Tariffs,Renewable Energy Certificates,Mandatory Renewable Energy production etc.Europe has been the biggest market and largest provider of subsidies for solar energy.Countries with massive solar markets like Germany,Italy,Spain have boosted solar through Feed in Tariffs which are higher electricity rates paid to electricity generated from solar energy.These countries have changed their policy to support rooftop solar and reduced the incentives for solar farms.These help in distributing the power generation,get common citizens involved and help in winning large-scale support.

India’s JNNSM on the other hand has seen the first phase marked by a number of teething problems like debt financing,absurdly low bidding by noname companies,poor electricity infrastructure.The Second Phase is supposed to ally these problems but the first plans do not seem to be too great.The support for large solar farms will be increased from the current 5 MW cap to 20-25 MW cap.This will lead to only large investors,utilities and companies being left in the fray and lead to lesser competition.Also there is no support for rooftop solar which will help to broad base the reach of solar energy.A Policy which helps distributed solar like Germany will do much more to boost solar in the country than supporting massive solar plants that will only help large companies making the most of the taxpayer subsidies.Note Delhi is the only state in India which is giving primacy to rooftop solar systems and is in the process of announcing a capital subsidy soon.The reason may be that Delhi mostly consists of urban homes and they have little option.

Why India needs to Focus on Distributed Rooftop Solar Energy

India is a massively energy deficient country with official figures citing around 15% of peak electricity demand deficit due to lack of power generation and distribution.The figures would be much higher if you add the thousands of villages which don’t have grid connectivity and access to power.Solar Energy in India is perfectly suited to fill a number of holes and the government has made a start by fixing an ambitious 22 GW solar capacity target by 2022 which rivals that of China.However the first phase of the JNNSM has mainly given subsidies and incentives to large megawatt solar installations which are to be ground mounted.This has seen huge competition leading to irrational bidding and many of these solar power plants in India might not see  the light of the day.Solar Power in India has huge potential given that the cost of solar have been declining rapidly with increasing scale and entry of the low cost Chinese solar panel producers.However for the potential of Solar Energy in India to be realized,policy making needs to be focused and clear on the objectives.Blindly following the Western models of solar subsidy like feed in tariffs and auction bidding might not help.

Solar Energy incentives in most of the developed solar markets in Europe have clearly shifted their preference to distributed small rooftop solar installations on residences.This is because it reduces the need for expensive power generation infrastructure,improves reliability and puts money in the hands of the common citizens.Spain,Germany and Italy which are the 3 biggest markets in the world have done this.India however has not paid any focus to rooftop solar installations except for Delhi.Electricity in India is not only expensive but also highly unreliable and of low quality.Low voltages and blackouts of 10 hours are not uncommon.Having a reliable home based source of power would be attractive to most people in India even at higher costs (note electricity tariffs have been outgrowing inflation).It would also lead to reduced losses in the power transmission which is the highest in the world at around 30%.The advantages of promoting residential solar is much more however the policymakers have not given enough thought with half of the subsidies going to Solar Thermal Technology which is fast losing out to Solar PV technology.India’s solar policy makes it clear that the decision makers do not have enough knowledge about the developments in this fast paced solar energy sector to make the optimum decisions.

Solar Panels in India are also being promoted through domestic content requirements however this policy also might not make a lot of sense.Solar Panel Manufacturing is fast becoming a commodity industry with low margins with the biggest Solar Panel Manufacturers expected to survive a global shakeout.Though some places like Ontario have managed to get investments in the solar energy manufacturing space,it remains to be seen it develops as a global hub or remains a subsidy driven industry catering only to local needs without any competitive advanage.

Advantages and Disadvantages of Rooftop Solar vs Large Ground Mounted Solar Plants


1) Long Delays in Permitting,Environment Clearance,Land Siting – Large Solar Farms have to go through a myriad of regulations and clearances.There have also been instances of lawsuits against solar thermal and solar pv plants in California by wildlife and environmental groups as well as local Indian tribes

2) Electricity Transmission Costs – Grid Connection leads to additional costs for solar farms while rooftop solar can use existing transmission infrastructure

3) Less Grid Stability – A Large Part of Distributed Solar is consumed locally while Farms supply 100% to the grid.That makes managing the grid difficult when solar penetration increases


1) Lower Cost and  Scale – The greater scale of these plants allows lower installations compared to smaller installations.The costs  are reduced in permitting,maintenance as well

2) Use of Disturbed Land – Solar Farms can be built on disturbed land like in Germany where they have been built on former airbases.

3)Utility Friendly – Large Solar Farms are controlled by utilities or IPPs while rooftop solar is generally in the ownership of residential owners or commercial owners.This results in less pushback from utilities which generally control tranmission and allow easier acceptance of solar energy.

India to raise solar cap as high as 25MW for next tender round

The cumbersome 5MW cap imposed on developers in the first tender round of India’s National Solar Mission (NSM) will be raised to as high as 25MW in the next bidding round, Recharge can reveal.The government hopes that by dishing out larger projects, and allowing developers to build more than one solar farm, it will attract more blue-chip technology and construction companies to the PV sector, says Deepak Gupta, secretary of the Ministry of New and Renewable Energy.


Abhishek Shah

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