Policy Transformations Required to Meet India's Solar Target

India is working to reach its ambitious objective of 280 GW of solar power by 2030, and the industry is still debating how government and state policies might give it the boost it needs to succeed.

With capacity additions exceeding the 10 GW barrier for the first-time last year, India’s solar industry had a landmark year. This gives reason for optimism that India will meet its goal of 500 GW of renewable energy by 2030. 280 GW of the 500 GW renewable energy target is designated for solar power. This indicates that through 2030, an additional 27 GW of solar capacity must be added yearly. The aim is undoubtedly difficult. But despite the difficulties the renewable energy sector faces, both industry and policymakers remain optimistic.

There are various obstacles to overcome; for example, the Basic Customs Duty (BCD) and Approved List of Models and Manufacturers (ALMM) limit the import of solar modules. This means that only solar modules developed in India may be purchased by developers. The ability to produce domestic modules is, however, constrained. Through programmes like the performance-incentive linked (PLI) programme for module manufacturing, the government has put a strong emphasis on fostering self-reliance.

Like this, the recently announced green energy open access policy and rooftop solar subsidies are positive milestones. These regulations are anticipated to influence consumers in the commercial and industrial sectors to choose solar.

According to the National Institute of Solar Energy, assuming that 3% of the country’s wasteland area is covered by solar photovoltaic modules, the country has a solar potential of roughly 748 GW. The gross wind potential at 120 metres is 695 GW, according to the National Institute of Wind Energy. A number of the largest solar parks in the world have been established thanks to the nation’s focus on creating large-scale renewable parks through the “Ultra Mega Power Projects” programme. In addition, legislative assistance in the form of programmes like priority grid access for renewable energy sources has greatly increased utility-scale renewable capacity and attracted a sizable amount of private investment. Through programmes like the “Grid Connected Rooftop Solar Programme” and the “PM KUSUM” scheme for farmers constructing solar pumps and grid-connected solar,” even small-scale renewable energy adoption has been promoted.

The industry has experienced difficulties controlling project costs and preserving profitability as the cost of renewable energy components increases as a result of supply chain and availability challenges. To control price hikes and the scarcity of solar modules, a local solar manufacturing ecosystem is required. “The renewable purchase obligations also need more stricter restrictions to ensure successful implementation. Another crucial component is resolving the conundrum of the state DISCOMs’ cash flow issues, which the government is attempting to do by amending the Central Electricity Act.

Possibilities for longer-term financing, for which the government must develop regulations that adhere to the conditions of the power purchase agreement. “The government must provide interest rates that are globally competitive and increase the amount of financing available, either by creating a separate clean energy fund or by encouraging banks and other financial institutions to allocate more funds to clean energy.” policies pertaining to land acquisition and connection. The list of substations with available injection capacity is now being published by states like Gujarat, Maharashtra, and Rajasthan. The remainder of the nation needs to follow suit. The process for allocating connectivity at a specific substation must be open and transparent, and the list must be updated on a regular basis to reflect connectivity awarded since the last state tender.

Utility-scale, hybrid, peak power, and round-the-clock (RTC) installations should be the main focus. The need for RTC power would rise with higher adoption of renewable energy.  “Economies of scale and the adoption of EVs will cause the price of energy storage to decrease as well. A substantial role will also be played by green hydrogen. It is an ambitious goal, so both the central and state regulatory commissions must collaborate to develop supportive regulations. We need a uniform policy across all states to ensure stability and meet our renewable energy goals, and then state governments must address their specific local issues.

It will be crucial for all the states to work together and contribute to this endeavour, even though the central government has been introducing supportive policies to aid the sector in achieving the set target. The government has taken a number of steps to strengthen the DISCOMs’ financial standing, which will contribute to the energy sector becoming more resilient in terms of capital flow. The government’s aim of installing 280 GW of solar power by 2030 can only be reached with the implementation of strict regulatory measures, such as rewards for achieving objectives and sanctions for failing to do so. A yearly objective with accountability will guarantee that the objective is still attainable. To make this work, all enabling policies must be connected and supported by the states. For instance, if the government applies a fundamental customs duty to create a domestic supply chain, it must also make sure that enforceable procedures are in place up until the signing of the PPA to prevent a delay in procurement. Right now, that is the missing component.

The Union Minister for Power and New and Renewable Energy R. K. Singh has reiterated the need for India to keep adding energy capacity so that the nation can keep growing in the times to come. “What we need to be concerned about is the requirement of energy for our growth. There can be no compromise on this. Our electricity demand is growing rapidly. By 2030, energy consumption is expected to double. We will need to add capacity so that our country can grow. Net Zero is important, but what is more important is that we ensure enough electricity for our growth. The living standards of our people will need to improve – and that will require higher per capita consumption of electricity”. The Power Minister recalled that the country has added 1.84 lakh MW of power from 2014 till now, but that this is not sufficient. Our per capita carbon emissions are one third of global average, and there is going to be no compromise in ensuring 24/7 electricity. The Minister pointed out to the industry that India is a world leader in energy transition. “We had pledged that by 2030, we will have 40% of our capacity from non-fossil fuels, we achieved this by 2021, nine years in advance. We have pledged that 50% of our capacity will come from non-fossil fuels by 2030. This trajectory will be adhered to.” The Minister made it clear that India is at the forefront of the transition, since “we believe in the environment”.

The article is authored by Dr. Yogesh Kumar and all of the views are his personal.

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