Why solar will thrive in India: coal is a mess

Gujarat solar 1

India is struggling to add more electricity capacity for the country’s rapidly growing economy, but the domestic coal industry is an absolute mess, points out articles in the New York Times and the Economist this month. That situation means that India could possibly be one of the most high-growth solar markets in the world.

The New York Times’ article chalks the Indian coal problem up to: “clumsy policies, poor management and environmental concerns,” as well as “a complex system of subsidies and price controls,” and “retail electricity prices that are lower than the cost of producing power.” Essentially 80 percent of domestic coal production is managed by the government-controlled Coal India, which is hampered by the typical Indian industry problems of weak policies and corruption.

The problem has gotten so bad that the lack of growth in the power sector is starting to contribute to slowing economic growth in India. And the gap between electricity demand and supply is 10.2 percent, up from 7.7 percent a year ago. When I was in India in December 2011, even wealthy locations we visited like the Hard Rock Cafe in Mumbai, and the Indian Institute of Technology in Delhi, faced rolling black outs.

Of course, solar could (and will, no doubt) face the same infrastructure and political problems that coal is facing. But the situation at least puts solar on somewhat equal footing with coal.  For example, the Indian state of Gujarat — a hot bed of solar power development over the past year — recently celebrated the commissioning of 600 MW of solar energy projects over a year.

The Indian state has attracted many U.S. solar manufacturers and project developers and over 50 companies have built solar power projects in the state. SunEdison, part of Missouri-based MEMC Electronic Materials, completed a 25 MW solar plant in the solar park in Patan recently and overall SunEdison has brought online 45 MW of solar projects in Gujarat. First Solar has aggressively courted installers in the country and first announced its first sales in India in late 2010.

The Indian government announced the National Solar Mission in January 2010 to set a goal of installing 20 GW of grid-connected solar and 2 GW of off-grid solar by 2022. It has since held auctions to get the lowest price possible from project developers.

The Economist article points out some other reasons that solar could be a natural fit for India, beyond coal being a disaster, including that “the country has plenty of sun,” has “flat, idle land,” is “energy-hungry,” and appreciates that solar plants are easier and faster to build than conventional power plants. Then there’s the fact that the price of solar has dropped dramatically in recent years, and industry watchers predict that Indian solar will hit grid parity (or the price of fossil fuel power grid power) by 2016.

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