India is emerging global leader in solar power: World Bank

A new World Bank report has lauded Jawaharlal Nehru National Solar Mission Phase 1 (JNNSM) for its effort to bring down the cost of solar power production in the country and also for achieving 2000 MW of power capacity from a meager 30 MW with in three years.

“What is significant is that JNNSM has been instrumental in bringing down the cost of solar power to a level that is competitive across the world,” says the report. The cost of solar energy has gone down to $0.15 per kWh, making India amongst the lowest cost destinations for grid-connected solar Photovoltaic (PV) in the world.

Solar power can reduce India’s dependence on imports of diesel and coal for power generation, reduce greenhouse gas emissions and contribute to energy security. It can also be used to power housing colonies, which consumes the major portion of power generated through conventional method.

Growth in this sector will help India increase its share of clean energy and help meet its target of reducing emissions per unit of its GDP by 20-25% by 2020 over 2005 levels.

The report identifies two unique features of the solar program, which has helped reduce tariffs – bundling of solar power with unallocated thermal generation and adoption of reverse auctioning. Such bundling of solar power with cheaper conventional power helped reduce solar power tariffs for distribution utilities. The reverse bidding mechanism enabled qualified bidders to benefit from declining global prices for solar components, thereby reducing the purchase price of both solar PV and Concentrating Solar Power (CSP) for the utilities.

“In a short span of three years, India has made impressive strides in developing its abundant solar power potential. With more than 300 million people without access to energy and industry citing energy shortage as key growth barrier in India, solar power has the potential to help the country address the shortage of power for economic growth,” said Onno Ruhl, World Bank country director in India.

“However, while India is clearly emerging as a global leader in the area of solar power, to achieve its target of adding 20,000 MW of solar capacity by 2022, it needs to address the key barriers and constraints that could come in the way of scaling up the solar program,” he added.

The report highlighted several challenges that could act as a barrier to India achieving its solar targets by 2022. These include lack of access to low cost financing; inadequate solar infrastructure; lack of raw materials for several solar PV manufacturers; and an underdeveloped supply chain leading to high inventory costs.

“Building on the success of Phase 1, the program now needs to focus on promoting financing of solar projects by commercial banks, developing shared infrastructure facilities such as solar parks and identifying comparative advantage of Indian manufacturing across the supply chain,” said Ashish Khanna, lead energy specialist and one of the authors of the report.