Lead Story

Sunshine or Sunstroke?

With aggressively low tariffs and the spectre of looming curtailment, the long-term viability of utility-scale solar projects seems uncertain

Image: Azure Power

Bold, audacious, gutsy. Doomed? Call it what you may but India’s plan to ramp up solar energy capacity more than 14-fold in six years – from 6.8 GW as of June 2016 to 100 GW in 2022 - is one of the world’s most ambitious solar programs yet. The target was announced at the G20 summit in November 2015, a few days before the climate summit in Paris. A year before this, the world’s biggest polluters, the US and China, signed a historic pact to cut back emissions. India declined to cut emissions, saying the developed world has had much longer to raise its standard of living by exploiting fossil fuels. However, it agreed to reduce the intensity of its emissions, that is emissions per GDP unit, by increasing its dependence on renewable energy (RE), particularly solar, considering India enjoys about 300 sunny days every year. 

The government, thus, is an overdrive to meet its international commitment. Various state governments, particularly the power-deficient southern states, have embarked on a tender-issuing spree for utility-scale solar projects. Public sector banks, following the government’s cue, have committed Rs.1.71 lakh crore to finance RE projects. As of now though private banks have surpassed PSBs in the amount sanctioned at Rs.20,355 crore compared with the latter’s Rs.17,237 crore.  

To its credit, India has been a pioneer in using auctions as a means to grow a commercially viable renewable sector with minimal subsidies. Countries such as Germany, the US and China have grown their solar capacity mainly using tax incentives, surcharges, subsidies and generous feed-in tariffs, which have distorted the electricity market significantly, especially in Germany. Both Germany and US are now emulating India in adopting the tariff route for allocating projects. 

According to Bridge to India, a RE consultancy, 35 tenders with an installation capacity of 15.5 GW were announced by India in 2015, a quantum leap from an annual capacity addition of 1GW for three consecutive years until 2014. Despite the leap, all tenders have seen a lot of tr


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