Go off the grid

Policy roadblocks holding back solar power

The solar energy sector is beset with several problems that need to be sorted out to allow it to expand to its potential. The Jawaharlal Nehru National Solar Mission, which was set up in 2010, has largely failed to supercharge the sector. Its first phase aimed at creating 1,100 megawatts of new capacity; only 252 MW has been added. Its second phase - which began recently, a year late - is yet to get going properly. Projects totalling 750 MW have been approved, but most are yet to get off the ground. True, while the Centre's solar mission struggles to gather momentum, schemes launched by some states that offer cost-free land and tempting tax breaks do better. Of over 2,208 MW solar capacity installed so far, 1,540 MW has come up under states' schemes. Gujarat alone accounts for nearly 70 per cent of such solar capacity. Clearly, the solar mission needs to learn some lessons from the states.

Sourcing land has been the most formidable constraint. Solar energy is land-intensive: nearly one square kilometre land is needed to set up a 20 to 60 MW plant, depending on the type of technology used. Such huge chunks of land are not readily available, except in isolated and remote areas. From there, bringing power to a grid is burdensome and costly. Worse, land acquisition is already tough and - thanks to the new land acquisition law - is set to become more difficult. Equipment procurement is another thorny issue, marred by trade disputes between domestic and foreign suppliers and frequent revisions in the mission's guidelines in this respect. Many prospective investors are awaiting resolution of these disputes before committing their resources.

Some policy roadblocks should have been removed long ago. In many places, cumbersome official approvals are required even for micro-units, which the government does not need to be regulating. Grid connections are mandatory, although that makes no sense, either. Moreover, setting tariffs has been a problem. Though production costs are gradually declining, thanks to regular flow of new technologies, most solar power producers still find the rates offered by distribution companies unremunerative. And in some states such as Uttar Pradesh, official permission is mandatory even for solar units that cater only to limited local needs. This rider is counterproductive and should be done away with. In fact, there is a need to incentivise off-grid solar power, since many areas are still un-electrified or face long power interruptions. Unless these issues are addressed, much of the solar energy sector's enormous potential will remain untapped.