We need another zeroRise Topics | June 24, 2014
Name five global Indian companies that have a uniform presence...
With industrial and urban expansion combined with the electrification of rural areas power requirements are on the rise. The World Bank estimates that India’s demand for power will soar to as much as 315,000 megawatts by 2017. According to a study by McKinsey India’s power deficit could be as high as 25% by the same year.
“In a country like India, with well over 300 average annual sunny days, solar energy has a substantial role to play.”
Why Care About Solar Energy?
Solar energy has the potential to reduce the energy deficit, especially in areas that suffer from energy paucity due to unreliable connections or load shedding, provided it is cost effective.
To address the twin challenges of energy security and economic growth, India must ramp up its efforts to develop and implement large utility-scale solar energy farms, which also have enormous environmental benefits.
Three Solutions to Make Solar Energy a Reality
1. Policies and Investments that help lower costs – In the past few years, while the costs of energy through all other sources like hydro, coal or gas have risen, long-term solar costs are trending downward. But getting solar costs to match the price of conventional energy in the next few years will require improved materials, methods of production, and increased efficiency. One option is to accelerate local demand for renewable energy by providing preferential Feed-in-Tariffs (FIT) that offer cost-based compensation to renewable energy producers. This will provide price certainty and long-term contracts to finance renewable energy investments. Solar projects will also require extra investments and innovation in a number of areas ranging from lower costs of storage to demand response of silver metal used in solar panels.
2. Recruiting the Right Talent - Building a team of talented project managers and experienced troubleshooters will be crucial, given the substantial front-end costs of solar projects. Bringing in national (or global) players will leverage their expertise in design and manufacturing, further driving down systems costs.
3. Inclusive business models – Business models needs a change to allow participation from a wider range of stakeholders, including capital investment coming from state-owned investors, pension funds, and foreign countries. Differentiated models could include collaborating with technology providers from low-cost financing countries—Switzerland, for example—or with consumers seeking sustainability benefits or tax credits. A pool of low-cost project equity developed from retail or other cost sources can add up to a distinct advantage. The government should also provide low-interest loans and innovative means of financing to drive significant upfront value for project developers and consumers, creating win-win situations for all stakeholders.
India has the potential to lead the world in the field of solar energy. By choosing to invest in this field and remove the barriers to its widespread adoption through a) policies and investments that lower costs, 2) talent development, and 3) the adoption of more inclusive business models, India will not only position itself as a leader in the energy space, but will also move towards gaining energy security and promoting economic growth.
If you enjoyed this article, keep up on new stories and conversations about Rise×