Delhi creates sparks for a solar revolution

11-Jun-2015 #State Policy Source: India Inc

by Arnab Mitra

Away from the arc lights, but under bright sunlight, a few families in Delhi have kicked off a quiet, nascent revolution that could, over the next 4-5 years, completely change the way Indians produce and consume power. And in the process, this could spawn a new multi-billion dollar business for companies in Europe, the US, China, Japan and Korea.

Heeding the Narendra Modi government’s call to produce solar power by installing photovoltaic panels on their rooftops, three families – the Kapoors, the Shehadris and the Ghais – have started producing their own power. What’s more, they are even selling their surplus power output to the grid and earning money under a system called “net metering” that enables the local power distributor to set off their solar power sales against their power consumption from the grid and bill them for their net consumption (ie, total consumption less the number of units they contributed to the grid).

It’s early days yet for this nascent revolution. The Modi government has set an ambitious target of producing 100,000 MW of solar power in the country by 2024. While big corporations such as the Adani Group have signed multi-billion dollar agreements with mainly Chinese companies for setting up large photovoltaic plants, it is the micro-power plants that the likes of the Kapoors and the Sheshadris have set up that promise citizens a zero-power-cut future.

Though it is expensive, entailing an initial capital expenditure of Rs 5-7 lakh ($8,500-10,500) per kilowatt of installed capacity, the running cost is next to zero. This, along with sales of surplus power to the local grid means the capex will pay for itself within 3-5 years.

Delhi gets about 350 days of sunlight a year. Most other parts of India get between 280 days and 350 days of sunlight annually, making this country an ideal location for a solar power revolution.

During his stint at chief minister of Gujarat, Modi had initiated a programme of having individuals install rooftop solar panels to generate power. Following the success of the pilot project, he expanded the project to other cities such as Surat, Vadodara, Mehsana, Rajkot and Bhavnagar. Not surprisingly, Gujarat is the leading rooftop solar power generator in the country, accounting for about 25 MW of the 41 MW of such power generated across India.

Now, the plan is to roll out on a larger, national scale as Germany has successfully shown the way. About 80 per cent of German solar power is produced by millions of individual households with rooftop solar panels.

Power Minister Piyush Goyal has gone on record in the past to say the government will encourage this revolution by, among other things:

  • Offering excise duty/customs duty-related incentives for setting up rooftop solar power panels
  • Encouraging public sector banks to provide home loans/home improvement loans to individuals to set up such rooftop solar panels
  • Encouraging State Electricity Regulatory Commissions of 17 states to come out with norms for net metering to encourage rooftop solar panels
  • Providing subsidies to make the scheme attractive and
  • Creating awareness among people so that more people come forward to set up rooftop solar panels.

It has been calculated that Delhi can potentially generate about 2,500 MW of power from solar rooftop panels. That’s about 65-70 per cent of its daily power requirement.

The government has already sought funding from the World Bank and German development bank KfW for its ambitious solar power plans.

But it’s early days yet. If the government can provide the right incentives and banks can come out with the right financial model to provide cheap, long-term finance to individuals to set up such mini-solar-power parks on their rooftops, India will be able to harness the abundant year-long sunlight it is blessed with and pave a new path to prosperity for its citizens.

As we said at the beginning of this article, the revolution is still at a nascent stage. But as the experience with telecom and aviation shows, it is possible in India for industries to scale up dramatically in double quick time if the right conditions are created. And solar power, experts have predicted, could be at the cusp of a major revolution.

Arnab Mitra1mbArnab Mitra is a senior journalist based in Delhi. He writes on business and politics.

 

 

 

 

 

Policy India RoundtableThe above article was published in India Inc‘s print edition of the India Investment Journal launched in June 2015 in conjunction with the Policy India Roundtable 2015.

 

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