Dedicating the 750 megawatt (MW) solar project at Rewa in Madhya Pradesh to the nation, Modi said India won’t be able to fully use its solar power potential, unless the country doesn’t develop better solar panel, battery and storage manufacturing capacity.
This assumes importance given that green energy projects now account for more than a fifth of India’s installed power generation capacity. India has 34.6 gigawatt (GW) of solar power, with an aim to have 100 GW of solar capacity by 2022.
The fast-growing domestic market for solar components is dominated by Chinese companies due to their competitive pricing. India imported $2.16 billion worth of solar photovoltaic (PV) cells, panels, and modules in 2018-19.
Modi said that several steps are being taken to increase domestic manufacturing, and it has been decided that government’s departments and institutions will only buy domestically manufactured solar cells and modules.
India is working on a wider power sector decoupling from China, with New Delhi planning to enforce a list of approved manufacturers for government-supported schemes in the clean energy sector, including projects from where electricity distribution companies procure electricity for supply to their consumers and wants states to follow suit.
The surge in imports led the National Democratic Alliance (NDA) government in its previous term to impose a safeguard duty from 30 July 2018 on solar cells and modules imported from China and Malaysia that ended in July. Post that, a basic customs duty (BCD) on all imported solar cells, modules and inverters was imposed, that will make their import from China expensive.
Going forward, India plans to impose more tariff and non-tariff barriers to check imports from China as part of its economic strategy in the backdrop of tensions along the India-China border. A case in point being India’ plan to impose BCD on wafers and ingots that go into the manufacturing of solar cells and modules.
Modi said for an Atma Nirbhar Bharat, self-reliance on electricity is very important.
India is evolving a strategy of not using Chinese equipment and technology in the power sector, and subsidising finance for promoting local power equipment usage and prior-permission requirements for imports from countries with which it has a conflict. The plan also involves procuring equipment and material locally and increase domestic capacity.
India is among the top five countries in the world in terms of solar power generation, Modi said and added that this form of energy power is “sure, pure and secure".
India has become one of the top renewable energy producers globally, with ambitious capacity expansion plans to achieve 175GW by 2022 and 500GW by 2030, as part of its climate commitments. This has bolstered India’s image as a clean energy champion at a time the world is grappling with climate change concerns.
Modi also spoke about India being the most attractive market for clean energy and being viewed as a model for transition towards clean energy.
India’s solar power tariffs hit a record low of ₹2.36 per unit during a bid conducted by state-run Solar Energy Corporation of India Ltd (SECI) last week. The auctions were dominated by foreign firms with the lowest bid placed by Spain’ Solarpack Corporación Tecnológica, S.A., followed by Italy's Enel Group, Canada’ AMP Solar Group, France’ EDEN Renewables and Ib Vogt Singapore Pte ltd placing the second lowest tariff bid of 2.37 per kilowatt-hour (kWh). UK’s CDC Group-backed Ayana Renewable Power and Goldman Sachs backed ReNew Power placed the third lowest bid of Rs2 .37 per unit each. The previously recorded lowest solar bid was of ₹2.44 per unit in May 2017.
“Today Rewa has actually written history," Modi said.
Spread over 1,590 acres, the Rewa solar park settled the debate on competitive tariffs from green energy sources in India by landing a then record low-winning bid of Rs2.97 per unit in the country through intelligent risk distribution.
By breaking the electricity grid parity barrier in February 2017, the project brought home the point that solar energy is no longer a green fad but a game changer in India’s energy mix.
Modi also spoke about India’ global electricity grid plan— ‘One Sun One World One Grid’—- that seeks to transfer solar power generated in one region to feed the electricity demands of others and India’ aim of becoming an electricity exporter.
India’s global grid plans have gained traction in the backdrop of China’s attempt to co-opt countries into its ambitious One Belt One Road initiative that seeks to invest billions of dollars in infrastructure projects including railways, ports and power grids across Asia, Africa and Europe, and the withdrawal of the US from the Paris climate deal.