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Solar power’s moment under the Indian sun

According to reports, the Intergovernmental Panel on Climate Change has just said that humans are the largest contributors to climate change. Developing nations have for long been accused of emitting greenhouse gases, and with this, pressure on India to reduce emissions is going to mount further.

But the country is, in a small way, doing its mite. Solar is today what IT was a decade ago. From Punjab, and Gujarat to Karnataka and Andhra Pradesh, state governments are betting their shirts on solar power. Over the last three years, India has installed 1.8 gigawatt (GW) solar power plants, and the government is working on approving projects for 2.3GW more over the next six months

State after state has attracted solar power companies as large as multinationals like SunEdison, Welspun Energy and Azure, and as disconnected from the energy sector as GRT Jewellers or Mohan Breweries.

In 2010, the central government launched Jawaharlal Nehru National Solar Mission targeting 20,000 MW of solar power by 2022 in three phases. The country has just completed the first phase with 890 MW of solar power capacity, and the renewable energy ministry has submitted a note on the second phase to the Cabinet.

Gujarat, which was amongst the first to come out with a solar policy in 2009, has completed about 800 MW of installations. Tamil Nadu, the state with second largest solar capacity, has a policy targeting 3000MW by 2015. The state electricity utility will soon sign power purchase agreements with companies for projects worth 698MW.

Punjab is beginning to see some action with the state setting a target of 1000 MW. The tariffs are Rs 8 a unit, higher than other states but then, Punjab isn’t as sunny as Gujarat or Tamil Nadu. Karnataka is targeting 1000MW by 2018, and has allotted projects for 115 MW at a tariff of Rs 5.50 per unit. Andhra Pradesh has floated an open offer saying any company could put up a solar project if it is ready to sell power to the state for Rs 6.49 a unit. Uttar Pradesh, Madhya Pradesh and Odisha have jumped on the bandwagon.

“Solar power is cheaper than it was two years ago. What now costs Rs 7 a unit was Rs 15 three years ago,” said Santosh Kamath, an energy expert at consultancy firm KMPG.

It is not just setting up plants that has become easier, the ecosystem for the solar sector is in place. From manufacturing lines for solar cells to companies that design plants, every element of the sector has found a place in India.

Costs have come down, companies have come in, and it is time for the government to enable a support system for solar power. “There has to be some stability in policy,” Kamath said. Apart from incentives and subsidies, an environment for financing projects has to be enabled.

“Solar is considered part of the power portfolio for banks and hence financing is an issue. Interest costs of getting funding from international agencies are 4% lower than in India,” said Vineet Mittal, managing director of Welspun Energy. “States should have some means of assuring payments to companies.”

With the depreciating rupee and growth in demand, prices are slated to go up. India remains an interesting market because of the variety in policies driving demand, and the sheer need for solar power considering the power crunch, said Pashupathy Gopalan, managing director of SunEdison India, a developer of power projects. In a country with more than 300 days of sunshine a year, the sun just seems to be rising on India.

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