Blog Post

Why solar will thrive in India: coal is a mess

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.

4 Responses to “Why solar will thrive in India: coal is a mess”

  1. There is a possibility for the expansion of solar power module in India and really the other states could take notice of Gujrat and follow its lead. Like it is mentioned in the post – India has all the necessary requirements like the plentiful sunlight and low lands. On the other hand there is also the issue about the full realisation of the project due to the presence of corrupt politicians and officials.

  2. ishekhar

    Having invested in solar panels here in US, I have been looking at the solar options in India for quite sometime. The contrast with a US market are several:

    1. Its not a qs of choice between grid-electricity and solar; it’s a choice between generator (or battery backed inverters) etc. and solar to account for blackouts. So, the kwh rate doesnt’ apply. You compare panel installation cost with the gasoline-generator or invertor-battery based options.

    2. For the same reason, grid-tie back isn’t an option either. You can feed back to the grid, but when u need it (read night), it probably wont’ be available.

    3. On the plus side though, the installation cost is very low. A typical 5KW system costs $15K here in US and $12K installation. In India, you will most likely get installation for free.

  3. Katie, You are ABSOLUTELY wrong. In India development happens only where the politician and officials get the corruption money. I am not being negative only being practical. Solar is a low margin business, so it is very tough to give huge amounts of money. Coal mines are owned by the politicians either directly or indirectly. They do not want to let the solar energy grow significantly by saying it is very expensive to put and establish. Gujarat is an exception and not the norm. Coal and Nuclear power has very powerful lobbyists with a lot of money to give to these corrupt people so it will be the de-facto source for a long time.