Why is Solar Power an Under Utilised source of Energy?

3 Oct 2019 Read 114 Views

“There is a lot of willful incompetence in solar industry that is in the process of coming to light.”  -Steven Magee 
To help Solar Industry get its share of limelight, Prime Minister Narendra Modiat the United Nations Climate Action Summit in New York, said, “We are committed to increasing India’s renewable energy target to 450 GW as a part of a stronger climate action plan."

Do you think we will be successful in harnessing this energy in such climatic conditions?

Well, globally, renewable energy has become the choice for power generation, and India has acquired its place in this field recently. India has become the most inexpensive producer of solar power, which signals at the transition to renewable sources of energy.
IRENA (International Renewable Energy Agency) found out through an analysis that the costs for setting up solar PV projects have reduced by about 80% in India between 2010 and 2018.
It has been a significant realization for the country to understand how the power plants run by coal are more expensive than solar farms.

As India is growing and so is power utilization along with it, the need for unconventional forms of energy is increasing to bring about a balance in the economic and environmental levels. Being the cheapest producer of solar energy, it has been a big win for the public-private partnership in India. The growth of the solar sector in the country can be attributed to the following:

Government initiative

A crucial role was played by the bodies formed by the Government of India such as the Ministry of New and Renewable Energy (MNRE) and also the Solar Energy Corporation of India (SECI) in accelerating the process of adopting solar energy in India. The state governments also contribute a great deal to the fast growth of the solar industry. Aggressive targets and strongly executed policies have made the country the 5th largest solar installer in the world.

In 2010, the National Solar Mission was launched at Rs. 17 per unit of solar power as compared to the bid during June 2019 of Rs. 2.44 per unit. The reason behind this was the competitive tariff-based bidding that SECI, State and Central Government have made possible through tenders.

Perks and Policies

Various subsidies and incentives by the government have been extremely useful in the fast acceptance of solar energy. Government subsidies up to 30% for all rooftop solar projects have now been limited to just government and non-profit buildings.

Key tax incentives such as the Accelerated Depreciation Benefit and tax holiday announced under 80-1A in the initial years between 2010 and 2015 also contributed to the growth as it provided a sigh of relief to solar developers.

Recently with GST execution, some benefits have been withdrawn and in turn, the cost of PV Modules has gone up as a safeguard duty is being levied. The aim of the government is to shift from the Public-Private Partnership (PPP) to People Public Private Partnership (PPPP) model.

Assurance of Land

Cost of land makes up for almost 7% of a solar project and acquiring property has been the most problematic part of a solar project as it increases the cost for infrastructure projects. 

The reason why a recent bid for a solar power unit was just Rs. 2.44 per unit was because the risk that comes along with the acquisition of land was not taken into the picture. You must be wondering how can that be done. But, land presence for solar projects can be easily found as most drought-prone areas have high radiation and are most suitable for solar parks. Thus, such land is abundant and can be aptly used for solar power generation.

Cost of Labor

India happens to be the country with the lowest of labor. Hence, a lot of people can be employed in solar projects to reach the finish line for project effectively.

The solar industry in India has taken advantage of this trait of the country and have not only increased employability but also provided low cost of power to consumers. The pressing priority for the country has been to create unskilled and semi-skilled employment, and hence, the focus on solar energy has proved to be a catalyst for the former objective. 

Price

Price is an integral factor to make a mark in any industry. India has made use of its price-sensitive market in the following ways:

    1. The availability of components like solar panels, inverters, etc. at competitive prices has benefitted from getting lower solar tariffs in comparison to other countries.

    2. There has been rapid acceptance of solar power as it has led to solar tariffs dropping below grid electricity tariffs. This has led to economies of scale, which has further reduced the prices of critical components.
Conclusion

The Indian solar industry is growing despite limitations like the high cost of solar panels, maintenance of the same and other policy issues. The need of the moment for this industry is awareness for prospective customers regarding solar panels and the benefits of the same. Along with that, a National Solar Policy is needed at the administrative level that will mitigate all issues at all levels and further accelerate the acceptance of solar power.

About the Author: Saloni Parakh | 20 Posts

Saloni is an occasional writer who is usually updated with the current happenings around in the finance and legal domain. Writing is a passion for Saloni. She is a Grammar Nazi and a doodler at heart. 

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