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Policy Watch: What India couldn’t learn from Germany

According to reports, in the last ten years of his life, solar power champion Hermann Scheer, who died on October 14, 2010 at the age of 66, was to revolutionise the very role of non-conventional energy in the world. He was an electrical engineer, but espoused the cause of solar because he was convinced that the clout of the oil and gas industry was more because of politics, not economics or even technology.

He was aware of the hundreds of billions of dollars of subsidy that the oil and gas industry had benefited from for several decades. If even a fraction of this could be given to the solar industry, it would become vibrant and even more relevant that many people thought was possible.

Today, Germany is the world’s top photovoltaic (PV) installer.By December 2012, Germany had an installed capacity of over 32.3 GW of PV installation. And almost every energy specialist is convinced that solar power will achieve grid parity before 2017.

But Scheer engineered this transition by adopting a revolutionary strategy that few could imagine.  He introduced an ingenious policy to encourage rooftop solar.

Aware that common folk would not take the trouble of both installing and maintaining solar panels on their rooftops, Scheer introduced laws that would allow an agent to put up the solar panels on rooftops at highly subsidised prices.The house-owner got the benefit of using the solar power produced from his rooftop free of cost. If there was some power left, the householder could sell the surplus power to the agent and thus make some money himself.

The agent thus played three roles: he was the installer; he maintained and serviced the solar panels; and, most important, he played the role of aggregator – collecting small amounts of power from individual houses, ‘smoothening’ out the inconsistencies in energy flow and then selling the ‘consolidated’ power to the grid.

In turn, the agent got volume-based commission, attractive enough to cover his costs for installation and maintenance and also leave him with reasonable surpluses.

The aggregator thus became the market-maker.In order to make more profits, he encouraged his team to come up with innovations that could generate more and cheaper solar power.That is how plastic reflectors to focus weak sunlight on rooftops became popular and cheap.

The unexpected result was that, in ten years, Germany had more people working in the solar industry than in the automobile sector.

The other (intended) consequence was that Germany generated a huge demand for PV which aided mass production. PV prices tumbled from over $5 per watt of installed capacity to just under $1.More innovation meant better conversion rates, hence juicier profits.

India has more sunlight than Germany.It has more people, hence more houses.So why have India’s policymakers not pushed rooftop solar more aggressively?

One comment

  1. We have flat residential roof (unlike inclined residential roofs in Europe) and we need the roof for many other purposes due to our Indian culture viz, Kite flying, Papad making, night sleeping, Full moon dinner, drying of clothes or vegitables / chillies etc depending upon the region of INDIA.

    The roofs area in many instances are less than 1000 sft, which is not sufficient for 1 kw, but, the demand is more. Thus, comparing Germany for roof top for solar or comparing the FRANCE or JAPAN for Nuclear power (who have learned a very good lesson off late), is not right…..

    Why are we not asking Industries to use the roof, who have been given Almost free land (low price), Free Equity (Capital Subsidy or Viable Gap funding), a wonderful tool to avoid paying tax (Accelerated Depreciation) so that Balance sheet of Corporate company can improve, based on such fictitious / bloated Balance sheets, many Banks including EXIM Bank fund such large corporate (whose share price was rs. 475 and now only Rs.62) even for 75MW or 150MW, but, the eco system of policy making does not allow promotion of new and small entrepreneurs !!

    India Can achieve wonders, provided the Common Man’s Interest and Country First culture exist while making any policy…. it is not even late, we can reframe the policies and ask the Corporate to pay the taxes (i.e abolish Accelerated Depreciation), abolish the Capital subsidy or Viable Gap Funding, instead provide Interest subsidy only against assured energy generation per year…, which INDIA has missed since Independence…..

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