India wins Obama backing for $160 billion solar push
New Delhi/Tokyo: Prime Minister Narendra Modi, who pioneered India’s first solar incentives as chief minister of Gujarat, won backing from US President Barack Obama for an expansion of the technology nationwide.
Without giving any detail, Obama said the US will “stand ready to speed this advancement with additional financing.” The remark was made at a press conference on Sunday in New Delhi as Modi reiterated his aim for India to install by 2022 five times as many photovoltaics as the US has now.
“India’s ambition would require $160 billion,” according to Arunabha Ghosh, chief executive officer (CEO) at the New Delhi-based Council on Energy, Environment and Water. It would spread solar panels across an area the equivalent of three times the size of India’s most populous city, Mumbai, and require the government to cut back on thickets of regulation holding up projects.
“The Asian nation will also need to expand the transmission capacity of its electricity networks to absorb all that power from the sun,” said Bharat Bhushan Agrawal, a New Delhi-based analyst from Bloomberg New Energy Finance.
Even with Obama’s backing, though, financing is key to Modi’s goal, analysts say.
“Whether Modi can achieve the target hinges on funding,” Izumi Kaizuka, manager of the research division for RTS Corp., a Tokyo-based consulting firm for the solar energy industry, said by telephone. “The pace of solar expansion has tended to be delayed even under the previous goal which was much lower.”
Modi has moved solar energy up the national agenda since he took office in May, replicating policies he brought from Gujarat. In the industrial province in India’s west, Modi implemented India’s first incentives for photovoltaics in 2009, a year before the national government backed the technology. He also shook up utilities to make Gujarat’s power suppliers unusually reliable for India.
“For President Obama and me, clean and renewable energy is a personal and national priority,” Modi said.
With a growing population increasingly vocal about pollution levels that rival the worst days in Beijing, India is racing to find ways to feed its spiralling energy needs without adding to greenhouse gas emissions.
The solar programme would help answer how India will reduce fossil-fuel pollution as the United Nations (UN) pushes all countries rich and poor alike to adopt targets in time for a climate summit in Paris in December. India’s emissions are the third highest in the world behind the US and China.
In November, China joined the US in pledging to cap emissions under through the Paris process, raising the question of how India will address the issue.
Modi’s remarks and support for his programme from Obama “will also give an impetus to the global process on mitigating global warming at the upcoming COP-21 in Paris,” Tulsi Tanti, chairman of India’s biggest wind turbine maker Suzlon Energy Ltd, said in a statement.
Last year, Modi quintupled the national solar goal, which now envisions 100 gigawatts of the technology by 2022. That’s the same amount as China is targeting for 2020. If the result is similar, India has a much bigger leap to make than its northern neighbour.
China has 33.4 gigawatts of solar capacity installed now and custody of most of the top 10 panel makers worldwide. India has 3.3 gigawatts of capacity and no major PV manufacturers, according to Bloomberg New Energy Finance.
“Though India may struggle to reach its solar goal, the government’s backing increases the prospect of success and, in any event, the target makes the country an attractive market,” said Xie Jian, president of Chinese solar panel supplier JA Solar Holdings Co.
“JA Holdings sees India as a key market,” Xie said. His view is echoed by Shawn Qu, chief executive officer of Guelph, Ontario-based Canadian Solar Inc., who said in November during an interview in Wuxi, China, that he expects India to become one of the fastest-growing solar markets in the world.
Money remains an issue. For now, India is attracting a fraction of the funds heading to China, the US and Japan, which were the largest solar markets last year.
“The important thing is to make financiers more comfortable with solar projects in India by avoiding retroactive changes and ensuring payments for solar power are actually made,” said Jenny Chase, lead solar analyst with BNEF. “India’s solar market is expected to accelerate rapidly as solar gets even cheaper and local companies and governments gain experience.”
India’s solar market will rank fourth in the world this year, up from eighth in 2013, BNEF said. Clean-energy investments of all types in India increased to $7.9 billion last year and are expected to surpass $10 billion in 2015, according to estimates from BNEF. China saw $89.5 billion in clean energy investments in 2014, while the US brought in $51.8 billion.
“India has a big financing problem because its local interest rates are very expensive,” said Xie at JA Solar. At the same time “overseas financiers find themselves under huge pressure because India’s foreign exchange rates fluctuate widely.”
Modi also faces the task of weaning the country off its consumption of coal, the fuel for almost 60 percent of the electricity that the nation produces. Renewables, including solar and wind, account for 12%, according to the latest government figures.
Coal vs solar
Asia’s second-biggest energy user has traditionally depended on coal for its power, setting up large stations to meet peak demand and end blackouts that can last up to 10 hours a day in some parts of the country.
Coal India Ltd, which accounts for more than 80% of the coal that India produces, plans to boost production to 507 million tonnes in the 12 months ending 31 March. The nation’s coal and power minister, Piyush Goyal, has urged a more ambitious target to 1 billion tonne a year in five years.
“A huge roll out of new coal would undo all the good” promised by the solar targets and the agreement by Modi and Obama to push for a phase-out of climate-damaging refrigerants, the environmental group Greenpeace said.
Even if Modi mollifies coal producers and, with Obama’s backing, gets the funding the industry needs, real estate is sure to prove to be another challenge.
All those solar farms need land—and lots of it. A typical 20-megawatt plant takes up about 100 acres of land. Were it to install all its hoped-for capacity in the form of big solar farms, India’s ambitions mean it must carve out 480,000 acres of land—three times the current size of the metropolis area of Mumbai, India’s most-populous city.
Of course not all the capacity will come in sprawling solar plants. While almost all of India’s installations to date are ground-mounted farms, Modi’s ambitions will need to rely heavily on rooftop solar, according to a research report from Bridge to India Energy Pvt., a New Delhi-based solar advisory.
All the same, Modi’s drive hasn’t gone unnoticed by companies eying the nation as one of the next big renewable plays. SunEdison Inc. has announced plans to invest $4 billion to build the biggest solar panel factory in India.
The manufacturer based in Maryland Heights, Missouri, is also developing wind and solar energy projects in the south Indian state of Karnataka.
“What was different yesterday was we have the 100 gigawatt number in the context of a joint statement as opposed to a national statement, which is of some significance,” Navroz Dubash, a senior fellow at the New Delhi-based Centre for Policy Research, said by phone, referring to the 25 January pledge. Bloomberg