Way Forward for Solar Energy Players in India

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Market Analysis
India had an installed solar power capacity of 1700 MW in 2007 which amounted to roughly 1% of its total power generation of 130,000 MW. India is currently ranked 7th in the world in Solar PV cell production. But considering India’s geographic location and climatic conditions, this is a huge market waiting to be tapped. India receives bright sunlight almost throughout the year especially in West and Central parts of the country. Due to global warming and rising CO2 levels, average temperature in India is set to increase by 4 degrees by 2050. Given Government’s recent policy announcement which gives thrust to green and renewable energy, there is a commercial opportunity which can be exploited. Some of the incentives given by the government are: •Subsidy of Rs 12/unit on medium scale operations (1-5 MW capacity) •100% depreciation of equipments used in 1st year itself

Other tax benefits like zero excise duty
These measures though very limited as compared to other countries like USA or Germany, the world leaders in solar energy, but still it is a step in the right direction. So it is no surprise that many big companies have announced sizeable investments in this field. At present the main players are •Tata BP Solar

Moser Baer
Central Electronics Ltd.
Many more are expected to join like DuPont, Dow Chemicals and surprisingly even Google. Improvement in PV technology, which is touching efficiencies of 30%, and development of newer technologies especially STEG (solar thermal electricity generation) are driving the energy costs down. Till now, use of solar energy in India is limited to rural areas for lighting purposes. But innovation can play a major role in expanding the scope of applications. Issues Involved

Cost of setting up a PV solar cell panelRs 16-20 cr. per MW Cost of setting up a coal fired plantRs 4 cr. per MW
Cost of setting up a hydro plantRs 6 cr. per MW
Almost 70% of cost associated with solar cell panel is wafer silicon which is polluting. So though solar power is pollution free during its use, it creates lot of toxic pollution during manufacture of PV cells. This makes cost/unit of solar energy very high at Rs.15-25/unit as compared to Rs.2-6/unit for other sources. This is where government subsidy helps in bringing costs down. Another issue is the requirement of lot of open space to set up the solar cell panel. There should be no shade because efficiency of panel reduces significantly even if one cell is in shade. As of now, the energy produced is not suitable for energy intensive applications thus ruling it out for industrial applications (36% of total consumption). Also agricultural applications are ruled out because of its very high costs (22% of total consumption). This limits use of solar energy for small to medium scale applications (1-5 MW) as of now. As technology is improving and costs are coming down it can be used for large scale applications (>30 MW) viably by 2020.

Demand Analysis
India faces a power shortage of almost 70,000 MW. Energy demand is increasing at 12% p.a. but the supply simply hasn’t kept pace. But to expect solar energy to step in will be too much. Right now, its usage is limited to developing innovative applications for individuals or medium scale operations (1-5 MW). The growth in this area depends upon improvement in technology and economies of scale. But it can’t happen unless someone takes initiative. So it’s a kind of catch 22 situation. Growth, thus, depends upon private player initiative with government playing the role of a facilitator. In rural areas, which are not yet connected by electric grid, the demand for solar energy is immense. Demand is also coming from environmentally conscious people who have the capacity and are willing to pay the premium for green sources of energy. This segment can be expanded by spreading awareness and making it an issue of pride. Some institutions or...
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