Roadblocks to distributed generation
Despite the fact that the solar PV industry is in its infancy in India and that it has had its teething problems, solar PV has done well in India. However a few things seem to be weighing it down.
Although the solar PV costs have been successfully and stably brought down to a level, there is still scope for improvement in solar PV economics. Solar has definite cost advantages over grid power in most parts of India, better financing will help early adopters jump the fence and take the technology lead over competitors. Mainstream consumers however still lack awareness of the costs advantages and other benefits of adopting a distributed or captive solar PV solution. Combine the two and you have a situation where a problem is made to wait for the ready solution.
Power T&D in India is the sector’s weakest link. Large solar plants depend on the grid to supply generated power. The solar mission that offered preferential tariffs still had to work with the unusually high technical and other losses. This meant further cost escalation of 30 percent to 60 percent for the already over-burdened state utilities buying premium solar power, when accounting for these poor grid conditions. Although the beginning of the Indian solar story had its heart in the right place, it dragged due to the infrastructure support needed to create a noticeable impact on the state of the countries power situation. Additionally. it created a sort of niche tag around solar that it was prohibitively expensive and can only be forcefully mandated by government action. The mainstream consumers weren’t that excited.
Government and politics
India’s per capita power needs are growing exponentially while its power sector is crumbling. With total accumulated losses of its quasi state utilities, at more than Rs1.14 trillion ($25 billion) and increasing, the power sector’s debt is as much as 5 percent of India’s GDP. The government has bailed out the sector twice with packages larger than GDP’s of some of its neighbors. This tilts the level playing field in which a new solar PV industry finds it hard to compete. When these utilities are being made to foot the bill for power price politics, it’s hard to highlight the true cost of grid power against which the cost of power from solar PV will be compared. Additionally, solar PV subsidies which were announced found it difficult to trickle down as expected.
India hasn’t had solar mega-failure companies the scale of US, Europe or even China, but there have been poor solutions and solar scams. Word of them has spread. Some bad apples have set a bad precedence. The whole industry needs to fight to earn and regain customer confidence. When a technology asks for substantial capital investment, trust and confidence is huge.
It’s not rocket surgery
India’s new government is keen to deliver on its promise of total power availability to support its growth targets. They basically need to lead by example. Masses keenly watch government actions, ready for a balanced assessment. Some immediate steps that can help generate traction are:
- Successful implementation of solar on state buildings
- Cautious introduction of feed in tariffs where the grid permits
- Strengthening a REC/RPO implementation framework and
- Making it easier to set up international solar financing avenues
Placing priority on these four fronts will do the trick for the short to mid-term, which is all the push the industry needs. This will prompt corporate India, eager to claim tax benefits to adopt distributed solar power solutions. Adoption by the corporate world will automatically trigger a larger pro-solar trend.
On the regulatory side, many attempts were made to close the country from global market realities. These cannot be good for the long term health of the solar industry. Protectionism is never better than building a globally competitive industry that conquers adversities. Claiming that the Indian solar PV industry needs protection is to acknowledge weakness, which simply isn’t true. Protectionism increases costs, dramatically impacting adoption in the short to medium term and making critical new investment impossible to justify.
A people-centric public policy implemented with tactical discipline will ensure that India fosters its achievements to build a robust industry and a thriving solar PV market. Some steps that India can take to achieve full potential of distributed generation in the long run are:
- Increase the burden of responsibility on solution providers by raising quality standards and weeding out poorly implemented solutions
- Provide bigger tax benefits, boosting local manufacturers in all parts of the supply chain
- Reward and incentivize real engineering innovation in the solar industry to build a sustainable competitive advantage
- Encourage distributed generation to increase energy security and neutralize T&D losses, while turning the traditional utility model on its head into the futuristic microgrid styled eco-friendly framework
India leapfrogged a tech cycle in telecom, where instead of spending billions to make land line telephone access for everyone, we skipped straight to cell phones. It can do the same for power. Instead of redundant re-investment in centralized generation capacity and upgrading T&D, skip straight to localized microgrids and distributed generation.
India can do this, and it should, because its utilities are quasi state owned and the country is not overly invested in the oil-based infrastructure and economy. In fact, India is a huge net importer of oil.
Other developing countries must also take this opportunity, for a sustainable revamping using solar power generation for localized consumption. Centralized solar is a secondary alternative to the best possible solution. We need to shift focus to distributed captive solar now, so that democratic electricity is not just a pipe-dream, but a development fostering reality.
Abhishek Gupta, is a Solar Energy Patriot at Sunipod, leading communication and awareness programs to help institutional adoption of solar power as a cost appropriate means to achieve business excellence and demonstrate social cognizance in India. Sunipod India manufactures key components used in solar power generation and provides turnkey project deployment solutions.Follow Sunipod on Linkedin