The Indian government has set an ambitious target to expand the country’s renewable energy installed capacity to 500 GW by 2030. Besides this, India seeks to reduce its projected carbon emissions by 1 billion tonnes by 2030, decrease its carbon intensity by less than 45% by the end of the decade, and reach net-zero carbon emissions by 2070.
Present State of Renewable Energy in India
India’s total installed capacity for renewable energy currently stands at 151.4 GW. This is broken down into wind power (40.08 GW), solar power (50 GW), biopower (10.61 GW), small hydro power (4.83 GW), and large hydro power (46.51 GW).
Under the solar power segment, India has approved 45 solar parks with an aggregate capacity of 37 GW. Major solar parks include Pavagada (2 GW), Kurnool (1 GW), and Bhadla-II (648 MW), making them part of the country’s top 5 operational solar parks totalling 7 GW. The world’s largest renewable energy park of 30 GW capacity solar-wind hybrid project is currently being installed in Gujarat.
Challenges for Solar Power in India
Despite the progress, India’s solar industry faces challenges. Primarily, it heavily relies on imports due to insufficient module and PV cell manufacturing capacity. The country’s current solar module manufacturing capacity is restricted to 15 GW annually, but domestic production merely reaches 3.5 GW. From the 15 GW of module manufacturing capacity, only 3-4 GW is technologically competitive and suitable for deployment in grid-based projects.
Another challenge is raw material supply. India does not manufacture silicon wafers, the priciest raw material in solar panel production. Instead, it imports 100% silicon wafers and approximately 80% cells. Other crucial raw materials such as silver and aluminium metal pastes for electrical contacts are almost entirely imported.
Government Initiatives to Support Renewable Energy
The Indian government has implemented several initiatives to help boost the local solar industry. The Production Linked Incentive (PLI) scheme supports the establishment of integrated manufacturing units of high-efficiency solar PV modules by offering incentives on sales of such modules.
The Domestic Content Requirement (DCR) policy mandates that solar PV cells and modules must be sourced from domestic suppliers under certain Ministry of New & Renewable Energy (MNRE) schemes. Furthermore, it’s mandatory to procure modules from an Approved List of Manufacturers (ALMM) for projects connected to state/central government grids.
To protect domestic industry, the government has also imposed Basic Customs Duty (BCD) on imported solar PV cells & modules. This includes a 40% duty on module imports and a 25% duty on cell imports.
Under the Modified Special Incentive Package Scheme (M-SIPS), the government provides a subsidy for capital expenditure on PV cells and modules in both Special Economic Zones (SEZs) and non-SEZ areas.
Towards a Bright Future for Solar Power in India
While India is making substantial strides in developing solar PV modules, becoming a manufacturing hub requires more policy interventions. This includes investing in home-grown technologies and offering industry support through training, process learning, and root cause analysis. Over time, India can develop its own renewable energy technologies, which would require significant investments in industry-like working conditions, suitable remunerations, and clear deliverables.
To illustrate, the term ‚Domestic Content Requirement‘ was introduced under the National Solar Mission started in 2010. This provision mandated the solar energy producers to use locally manufactured cells and offered subsidies to developers using domestic equipment. However, India lost the case against the US at the WTO as the body ruled that India’s Domestic Content Requirement provisions were inconsistent with international norms.
With these challenges and opportunities in mind, India continues its journey towards achieving a sustainable energy future.
Last Modified: February 18, 2024