M&A and Joint Venture in the Solar Industry picking up pace as Stocks trade at Rock Bottom Valuation
May 30, 2010Warmest Year in Recorded History Inflicts a Massive Human Toll in India
May 30, 2010The 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 SolarEnergy striking the earth is much more than humans will ever need.
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[…] Solar Energy in India represents one of the Biggest Opportunities in the Energy Sector.The Government has recognized India’s massive potential in Solar Energy and has planned a huge subsidy scheme through the Jawaharlal Nehru National Solar Mission (JNNSM).While currently the Support is mainly targeted towards big commercial plants,its only a matter of time before distributed residential systems become widespread.Some states like Gujarat and Rajasthan are also independently supporting solar energy through subsidies and grants. […]
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[…] Solar Energy in India represents one of the best Energy opportunities in the 21st Century.However the growth at least in the initial stages will be geographically unequal.This is due to the fact that Solar Power requires strong government support and subsidy currently.Without a proactive administration which smooths out the process of setting up a solar plant,growth of solar energy is almost impossible.The Indian Federal Government has already given it a strong push targeting 1000 MW by 2013 and 20 GW by 2022 under the JNSSM.While the Subsidy Program is facing some initial hurdles due to debt financing and aggressive project bidding,the long term secular growth story remains good.Some states have also been aggressive in supporting solar energy namely the western states of Gujarat and Rajasthan. […]
[…] Renewable Energy in India is growing at a rapid pace increasing its share of the total capacity from 2% in 2003 to around 10% in 2010.However the share of electricity generation is still quite low at 3% due to the lower capacity load factors of Green Energy Sources compared to Fossil Fuel Sources.The Total Installed Capacity of Renewable Energy in India is around 16 GW with Wind Energy taking the Lion’s share at almost 70% followed by Small Hydro at 15% and Biomass Energy at 12%.Solar Energy in India till now has a capacity of just 6 MW which is estimated to grow to 22 GW by 2022 making Solar Energy one of the Biggest Growth Opportunities in the Field of Indian Energy. […]
[…] Solar Energy in India is one of the biggest growth opportunities of the 21st century,however the recent government auction of solar projects has thrown a spanner in the works.Numerous problems have cropped up with JNNSM including presence of unknown companies as the best bidders with irrational bidding,debt financing problems and lack of scale.However the government seems to be confident of achieving the 1.1 GW 2013 target under the Phase 1 of the Solar Mission. […]
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