Solar PV in India - About to Explode?

India formally launched its National Solar Mission in Janwhether solar PV or solar thermal.
2010. This ambitious programme is expected toThe Mission also has an emphasis on providing solar
provide significant incentives to encourage large-scalelighting systems under the ongoing remote village
investments for the production of solar energy. Theelectrification programme of MNRE to cover about
goal of the mission is to increase the installed capacity10,000 villages and hamlets. The use of solar lights for
of solar energy for electricity generation from a paltrylighting purposes would be promoted in settlements
2 MW currently to 20,000 MW (20 GW) by 2022.without access to grid electricity and since most of
Highlights of the National Solar Missionthese settlements are remote tribal settlements, 90%
20 GW by 2022subsidy is provided. The subsidy and the demand so
The target set by the Mission is to achieve 20,000generated would be leveraged to achieve
MW of solar power by 2022. That's an awesomeindigenization as well as lowering of prices through the
amount, when you consider thatscale effect. For other villages which are connected to
Target to be Reached in Phased Mannergrid, solar lights would be promoted through market
To ramp up capacity of grid-connected solar powermode by enabling banks to offer low cost credit.
generation to 1000 MW within three years - by 2013;The government has mentioned incentives for both
an additional 3000 MW by 2017 through the mandatorysolar PV and solar thermal. For instance, in the case of
use of the renewable purchase obligation by utilitiesSolar Thermal, the Mission statement says: "The
backed with a preferential tariff. This capacity can beMission in its first two phases will promote solar heating
more than doubled - reaching 10,000MW installedsystems, which are already using proven technology
power by 2017 or more, based on the enhanced andand are commercially viable. The Mission is setting an
enabled international finance and technology transfer.ambitious target for ensuring that applications, domestic
The ambitious target for 2022 of 20,000 MW or more,and industrial, below 80 °C are solarised"
will be dependent on the 'learning' of the first twoHowever, it is expected that the major thrust for solar
phases, which if successful, could lead to conditions ofthermal will be in the context of heating applications.
grid-competitive solar power. The transition could beThis implies that for electricity generation, which will be
appropriately up scaled, based on availability ofthe highest priority for the plan, the Mission will provide
international finance and technology.a significant boost to solar PV.
Focus on Equipment Manufacturing for Solar PV andHow will the Indian industry and businesses react to
Thermalthis ambitious plan? Will this result in massive
To create favourable conditions for solarinvestments from the private sector into solar PV?
manufacturing capability, particularly solar thermal forWhile there are few actual investment commitments
indigenous production and market leadership. Currently,so far from the Indian private sector, the number of
the bulk of India's Solar PV industry is dependent oncompanies that have come up with plans and MoUs
imports of critical raw materials and components -with various state governments indicate that the
including silicon wafers. Transforming India into a solarresponse to this plan from the Indian private sector will
energy hub would include a leadership role in low-cost,indeed be very significant. Given the fact that the cost
high quality solar manufacturing, including balance of(capital cost) of solar PV is expected to decrease
system components. Proactive implementation ofconsiderably over the next five years, while the cost
Special Incentive Package (SIPs) policy, to promote PVof electricity generation from coal is expected to
manufacturing plants, including domestic manufactureincrease, solar PV based electricity generation will
of silicon material, would be necessary. One of thebecome more and more attractive as a business
Mission objectives is to take a global leadership role inopportunity.
solar manufacturing (across the value chain) of leadingIn addition, the capital cost of solar PV plant has come
edge solar technologies and target a 4-5 GWdown from about $5 million per MW about three years
equivalent of installed capacity by 2020, includingback to about $3 million per MW currently. That's a
setting up of dedicated manufacturing capacities for60% reduction in just about three years. Further
poly silicon material(s) to annually make about 2 GWsignificant cost reductions are projected for the next
capacity of solar cells. India already has PV modulefew years as well. If the cost reduction predictions
manufacturing capacity of about 700 MW, which isindeed turn out to be accurate, cost of solar PV based
expected to increase in the next few years. Thepower generation could achieve parity with that from
present indigenous capacity to manufacture siliconcoal.
material is very low, however, some plants are likely toIt has been often repeated that India has one of the
be set up soon in public and private sector(s). Currently,highest amounts of solar radiation in the world and
there is no indigenous capacity/capability for solarhence is an ideal region for solar based energy
thermal power projects; therefore new facilities will begeneration. But it is countries such as Germany and
required to manufacture concentrator collectors,Japan, much smaller in terms of total solar energy
receivers and other components to meet the demandpotential, that had taken the lead on benefiting from
for solar thermal power plants.solar energy. The key reason for these countries
To achieve the installed capacity target forbecoming leaders was the proactive stance taken by
manufacturing of solar PV and CSP components, thethe governments of these countries. The governments
Mission recommends local demand creation, financingprovided significant incentives (through the mechanism
& special incentives for the manufacture of solarof feed-in-tariffs) to the solar industry (especially solar
PV and CSP.PV) thus artificially making the industry attractive to
Demand and Incentives - Key Driversentrepreneurs. This however had the healthy effect of
The government reckons that two key drivers -those countries moving up the solar PV learning curve
governmental incentives and a demand boost couldquite quickly, and today, about a decade after the
effectively promote solar power.policies were introduced, both these countries have a
The Mission reckons one of the key drivers would bethriving solar energy industry. It is hoped such a
through a Renewable Purchase Obligation (RPO)phenomenon would repeat in India as well, as a result
mandated for power utilities, with a specific solarof the National Solar Mission.
component. This will drive utility scale power generation,