FEATURE STORY

Green Revolution 2.0: Sun set to descend on every Indian rooftop

October 20, 2016

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A barefoot solar engineer sharing her knowledge on how to make a solar lamp.

Photo Credit: Abbie Trayler-Smith, DFID-UK

In many ways Gandhi was an early environmentalist. He believed in a self-sustaining rural life, walked long distances to the sea to make salt, and spun his own cotton yarn.  Had he been alive today, he would certainly have made full use of India’s abundant sunshine to generate his own clean and renewable solar power.

Today, India’s climate change mitigation strategy bears the unmistakable stamp of the father of the nation. For, India has set itself the extremely ambitious goal of achieving a five-fold jump in renewable energy - from 35 GW in 2010 to 175 GW by 2022. Of this, a sizeable segment - 100 GW - is expected to be from solar, with 40% of the total coming from just roof-top solar power alone.

Not surprisingly, when this ambitious target was first announced, there were several naysayers. Let alone make the quantum leap to 175 GW in just seven years’ time, India was nowhere close to meeting its original target of 20 GW. Most programs were driven by state-based incentives. And, the slow growth of demand meant that much of the manufacturing capacity lay idle, or operated at exceptionally low capacities.

Paving the way for transformation

Since then, of course, India’s solar power story has taken off dramatically. In 2009, when Gujarat first launched its solar policy and laid the foundation for the country’s first solar park, the cost of solar power was around US 25 cents (Rs 15) per unit. This fell radically to less than US 7 cents (INR 5) per unit when Madhya Pradesh and Andhra Pradesh recently launched their solar bids. Where once solar power was considered untouchable by banks, it has now become a bankable technology. So much so that large conglomerates like Softbank have announced investments to the tune of $10 b in solar power over the coming years.

Along with the fall in costs, India’s solar power capacity has also grown exponentially. In just 6 years, capacity has grown from less than 50 MW in 2010 to around 7GW in 2016 – a quantum 140 fold leap. Moreover, the increasing pace of state and national-level procurement has meant that a further 10 GW of solar projects are in the pipeline. This remarkable growth is being led by the development of some of the largest solar parks in the world such as the Pavgada Solar Park in Karanataka (2,000 MW) and the Rewa solar park in Madhya Pradesh (750 MW).

Catalysing the roof-top solar market

While large-scale ground mounted solar power units have grown rapidly, the roof-top solar segment has been slow to take off. Until now, financing has been a key constraint for these developers. This is because commercial banks have refrained from lending to this segment, preferring to lend to the large-scale grid connected sector instead.

The World Bank is providing a $625 million loan to support the Government of India’s program to generate electricity from widespread installation of rooftop solar photo-voltaic (PV).  The project will finance the installation of at least 400 MW of Grid Connected Rooftop Solar Photovoltaic across India. In fact, the business case for roof-top solar power already exists, especially for industrial and commercial consumers. For them, roof-top solar power works out cheaper, since electricity tariffs for these consumers in metro cities range between US 12-24 cents per units (8-15 INR) – compared to just US 9-10 cents (Rs 6-7) for solar power. And, there is ample evidence globally, especially from the US and Germany, to show that high volumes of solar generation can be integrated efficiently into the power system through a variety of business models.

Given these developments, we believe that India is on the verge of a revolution in roof top solar power. In fact, the day is not far off when roof top solar products will be sold as easily as TVs or cars. Consumers will then be able to go into a shop and buy different brands and capacities, or be approached by an agent who offers them a variety of loans to do so.

Once solar power units become easy to install, Indian households may finally start using their roof tops for generating much-needed solar power, instead of wasting this precious space in merely drying their laundry.


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World Bank

The continuing challenge of off-grid solar

For the nearly 300 million people who live in villages with no access to electricity, or have power for just a few hours a day, the answer is off-grid solar. However, this remains the most difficult segment to implement.

Several private initiatives, including SELCO, Onergy, Boond, Mera Gao Power and Husk Power, have successfully tapped into this market, but scalability continues to be a challenge (incidentally, this phenomenon is not just limited to India). None of these companies have been able to expand their markets to more than a million households, and a business model which can be replicated has not yet emerged.

Again, a major barrier has been financing. As off-grid solar projects are not considered bankable, commercial banks are not yet ready to fund them. Nor do these projects match the traditional requirements of venture capitalists or private equity firms in terms of the returns they generate or their exit timelines.

The government too has demonstrated limited capacity to develop this market, both in terms of financial and human resources. Instead, it often relies on support schemes that are capital subsidy-oriented and which are delivered through difficult-to-access channels.

Applying Gandhigiri to India’s 21 Century energy crisis

So, how would Gandhi have dealt with this situation? No doubt he would have used the unique opportunity provided by both the roof top and off-grid solar segments to generate electricity right in his own backyard, or rooftop, as the case may be. By following his example, Indian households too can not only generate their own power, but also make some money by selling their surplus to their neighbors, or even to an electricity company. 

They would then be following a slightly amended version of Gandhi’s ‘three monkey’ approach: generate your own power, consume your own power, and earn from your own power! That would be their best tribute to the far-sighted father of the nation.