On the eve of RE-Invest, the largest investor summit for renewable energy in India organised by the Indian government, research from the Council on Energy, Environment and Water (CEEW) says that for India to reach the ambitious target of 100 GW of solar capacity by 2022, the required compounded annual growth rate (CAGR) of
62.2% would result in cumulative installed capacity doubling every 18 months.
Return on investment, land acquisition, evacuation infrastructure, availability of finance, energy storage, and ease of doing business are some of the key challenges to the rapid scaling up of solar power in India.
CEEW's policy brief 'Tapping Every Ray of the Sun: A Roadmap for a Significant Role of Solar in India' proposes three distinct scenarios to reach India's 100 GW solar target. These include a 'Utility heavy' (80 GW of utility scale projects), a 'Rooftop heavy' (45 GW of rooftop projects) and a 'Rural decentralised heavy' (20 GW of solar pumps) scenario.
All three scenarios suggest that* investment to the tune of USD 140-160 billion* would be required. These cost estimates include the costs of energy balancing, with storage equivalent to 50% of utility scale capacity. This cost increases by over 50% when solar capacity is balanced with gas backup.
"The finance ecosystem for utility scale renewable energy needs to be strengthened, with focus on long-term debt, interest rate subsidies, loan guarantees, and risk insurance. In addition, innovations such as green bonds and a green bank could also help reduce the high cost of capital needed to scale solar projects. If India succeeds in ramping up cumulative installed capacity (CIC) of solar power to 100 GW by 2021-22, solar energy could become an integral component of India's energy mix, fulfilling 9% of total power demand," said Dr Arunabha Ghosh, CEO, CEEW.
CEEW's analysis also reveals that at current prices and in the absence of expansion of domestic manufacturing capacity, solar imports worth Rs 214,000 crore would be needed to install 100 GW by 2021-22. Assuming an annual addition of 1 GW to domestic manufacturing capacity, and international panel prices declining at 6% p.a., India's solar imports would fall to Rs 96,000 crore.
While global supply can meet India's demand, reducing the import dependence would require much greater competitiveness of India's domestic cell and module manufacturing. This would require the government to encourage opportunities that create value at home by being part of a global supply chain of renewable energy products and services.
