Opportunities galore in the solar energy field as the government aims high

February 16, 2015: With the Indian government all set to tap the country’s solar energy potential, plenty of opportunities are emerging. These range from creating a solar energy army of 50,000 skilled people to promote Indian photovoltaic (PV) cell and module manufacturers

By Gunjan Piplani

India is aiming high when it comes to tapping its renewable energy resources. According to a recent announcement made by Piyush Goyal, minister of state with independent charge for power, coal as well as new and renewable energy, Government of India, the target is for solar power generation to grow at 500 per cent in order to touch a capacity of 100GW by 2022.

India’s current renewable power generation capacity stands at 35GW, of which only 3GW comes from renewable energy. To achieve the set target of 100GW, the government has announced plans to set up 25 solar parks across the country and also create a workforce of 50,000 people, specialising in the diverse aspects of solar power generation.

“The Indian solar sector is reaching a stage where demand is being created, stable policy regime is established and animal spirit of market is unleashed. While we were dwelling on pushing up demand, with the target set and people becoming more aware about solar power, demand is being created,” shares Krishnappa Subramanya, solar consultant, expert and ex-CEO of Tata BP Solar.

According to a recommendation made by India’s National Action Plan on Climate Change, the country should generate 10 per cent of its power from solar, wind, hydropower and other renewable sources by 2015. And it should generate 15 per cent from these sources by 2020.

Setting the stage

As many as 25 solar parks are proposed to be set up across the country in phases to achieve these ambitious targets. Each park will have a capacity to generate atleast 500MW of solar power. The government has also planned to set up some parks in the untapped regions of the country. These will be set up in phases over a span of five years, beginning from 2014-15 going on to 2018-19. Apart from this, under various central and state schemes, the government will set up more than 1000MW of grid-connected solar PV power projects in the next three years.

These parks are to be set up across various states and union territories, especially in remote areas where there is a lot of wasteland available at a low cost. Under the scheme, a transmission system will also be developed for the park, ensuring that the developers do not have to set up their own. The aim is to ensure minimal damage to the environment and follow ‘zero defect, zero effect’.

Creating the solar power army

With 25 solar parks in the pipeline, the government aims to create opportunities at various levels.

First, in sync with the ‘Skilling India’ mission, which aims to train 500 million people by 2022 and make them job-ready, the government will train 50,000 people to be a part of the solar initiative. The training will be imparted to these people across various fields within the solar energy domain. This way, the government plans to build up a workforce dedicated to solar energy generation and also create job opportunities.

The workforce will reportedly be trained by organisations like industrial training institutes (ITIs). Since the solar projects will be set up across desert land, border areas, wasteland and national highways—areas that are known to have a high percentage of the unskilled and unemployed—this presents an opportunity to provide jobs to people.

“Training people, especially in the solar sector, is critical for the growth of the sector. A trained workforce will ensure the smooth setting up and operation of the projects, while on the other hand, for the workforce, it will improve their quality of life, reduce the disparities between the urban and rural populace and even cut down on migration to far off areas,” says Krishnappa Subramanya.

Second, the part of the plan proposed will give priority to PV cells and modules manufacturers in India.

According to Krishnappa Subramanya, “The exclusive involvement of Indian PV cell and module manufacturers will ensure that they grow both in terms of technology and skilled manpower. Currently, the manufacturers are not investing in scale, working like traders, producing traditional technology without any in-house innovations. There are many manufacturers that do not employ a single scientist, which means there is no R&D on products. It’s time that manufacturers work towards creating a brand name for themselves by investing in scale, R&D, skilled manpower and technology.”

The Central government also plans to involve the state governments to set up the projects, depending on the wasteland available. This will create healthy competition among states, as bagging a solar power park will be beneficial to the people of the state.

Investments are pouring in

The whole project will require an investment of Rs 6.5 trillion, including the transmission infrastructure. To meet the investment requirements over a period of time the government is depending on external financial institutions along with funds from the Central government’s annual budget.

Reports suggest that the government has already set aside Rs 5 billion in the Budget 2014-15 for Ultra Mega Solar Power Projects (UMSPP) in Rajasthan, Gujarat, Tamil Nadu and Jammu & Kashmir (at Ladakh).

Additionally, many international financial institutions are sensing an opportunity with India announcing large projects in the renewable energy sector. Morgan Stanley, the American multinational financial services firm, along with IFC and Standard Chartered Bank, plans to invest in a 100MW solar project while Goldman Sachs, which has already invested about US$ 375 million in the Sumant Sinha-promoted ReNew Power, is now planning further investments in the clean energy space.

During PM Narendra Modi’s recent visit to the US, the US Exim Bank had extended funding of US$ 1 billion for solar power programmes in India. Asian Development Bank (ADB) and KfW, a German government owned development bank are also on the list of funding institutions.

A recent update has indicated that the World Bank will invest 50 per cent of the cost (by way of a soft loan) for setting up the UMSPP coming up in the Gudh region of Madhya Pradesh, with the rest of the funds coming from the Central and state governments.

Aiming to reach new heights

The Indian government has created the ‘recipe’ to build the best solar energy generating network, and it is now time to bring together the key ingredients.

The government should focus on areas including funding, by encouraging Indian and international financial institutions to invest. This can be done by streamlining processes and systems, by strengthening the Renewable Electricity Certificate (REC) mandate, and creating the basic infrastructure around the areas used for projects and parks.

According to Krishnappa Subramanya, the government should also come out of the subsidy mode for the solar sector and let the industry stand on its own feet, forcing it to create products, services and utilities that are bankable and offer value for money not just domestically but also globally.

Raghunandan S, vice president, engineering, Kotak Urja Pvt Ltd, suggests, “The government has set itself a gigantic target for solar power generation, which can only be achieved with a comprehensive approach covering both backward and forward integration. There is a need for trade practices and the tax structure to be simplified. Moreover, the government should do away with subsidies, which are actually negative in nature. Rather, the government should provide incentives to performers, ensuring a healthy competition among players.”

Manufacturers should now move towards investing in scale, along with focusing on more technological advancement, R&D and a dedicated workforce. Technology, along with trade, should be the guiding force followed by a strong business monitoring mechanism.

Finally, synergy between the government and the industry will ensure that the set target is achieved, for which the two will have to bring together the best resources, finances and technology.

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Key facts at a glance

• Fifty thousand people to be trained across various fields in the solar energy domain

• Twenty five solar parks proposed, which will exclusively use India-manufactured PV cells and modules

• Government entities such as NTPC, NHPC, CIL, IREDA and Indian Railways keen to set up solar projects

• The scheme requires investments adding up to Rs 6.5 trillion

• The budget also earmarks Rs 5 billion for Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Ladakh in Jammu & Kashmir

• International bodies including the World Bank, US Exim Bank, Asian Development Bank (ADB), ‘KfW (the German government-owned development bank) and Morgan Stanley extend funding proposals