Shyam Saran, the special climate envoy to Prime Minister Manmohan Singh, said at the recent climate meeting in Bonn that India has plans to generate more solar power by the year 2020 than the whole world generates now. Possible? Well, the potential certainly exists but the solar energy sector needs a big push from the government, in policy and implementation to unlock the value of what the sector can do for India.ย It is today accepted worldwide that new and renewable energy will increasingly play a larger role in meeting the economic aspirations of growing economies. The renewable energy sector is the one, which is most likely to kickstart the global economy from its current downturn. The European Union has identified that by 2050 solar will by far be the biggest among the sources of renewable energy.
I believe the forthcoming union budget offers a golden opportunity for the government to put in place a definitive agenda for accelerating clean energy growth in India. The government needs to provide incentives for solar farms and solar energy production on commercial rooftops. This can only be done by offering attractive feed-in tariff rates,ย simplifying the installation and commissioning of SPV plants, and by combining stateย PPA with subsidy from the central government.
Given the government support programmes providing investor security in the long-term and warranties from module manufacturers, solar PV represents a low-risk investment.ย PV is a proven technology with a module lifetime of 25 to 30 years, whereas the economic payback time of the investment is generally between eight to 12 years. The country needs a solar PV incentive programme along the lines of Germany. In the German market there was initially a strong push from the government until the market reached 2-3 GW/annum and then gradually the subsidy was reduced. Entrepreneurs and engineers in India are more than ready to respond to the clean energy challenge with the kind of innovation and thrust that the IT industry witnessed at its peak. But this thrust needs to be backed by governmentโs commitment and support to clean energy. The upside of governmentโs market enablement programmes is obvious from the manner in which renewable energy sector has performed in many European economies.ย ย These days wherever I go the talk is about recession. Not surprising considering the severity of the recession. About the solar energy sector it is said that it has been hit very hard by the global downturn. Our view is that while it has certainly been hit hard and the near term looks tough, the long-term outlook remains extremely positive:ย โข Countries are continuing to implement solar-friendly incentive and feed-in tariffย programmes โข Global financial institutions view solar financing as a lower-risk asset class โข As prices are rapidly declining, the outlook to grid parity is improving โข The drop in prices for solar power gear could make solar energy more competitive than burning fossil fuels to generate electricity in the very near future.