24×7 Power for All: Post Rural Electrification Roadmap

In March 2019, India achieved nearly 99% rural electrification status. The electrification scheme also known as Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya electrified more than 45,000 households every day for last 18 months. This showcased India’s commitment towards progress, understanding electricity as one of the basic requirements of life. Considering that more than 68% of people in India live in rural parts of the country, this was a decisive action and the journey from the drawing board to success has given India a very realistic idea of how to lead the country towards wholesome growth.

However, electrification of households do not necessarily mean uninterrupted power supply 24×7, which was targeted to succeed by March 2019. Unfortunately, there is still a major gap between electrification and receiving reliable power supply in major states like- Odisha, Bihar, Jharkhand, Madhya Pradesh, Uttar Pradesh and West Bengal. Therefore, in order to consider 24×7 power for all a reality in the near future, we need to identify hurdles and find solutions.

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Global PV Solar Growth Analysis and Scenario in India

China’s policy shift, mega tender cancellations and policies levying taxes and duties on solar industry in India, feed-in-tariff cut in Japan have made 2018 the year of uncertainty for solar. However, surveys suggest that global PV solar installations will see nearly 18% rise in 2019, finally reaching and may be surpassing 100 GW capacity addition. Although, at the end of 2019, we would still be far from ‘0’ emission future, rising PV installation growth and emergence of new markets within developing countries will get us closer to that goal.

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Sustainability and Climate Improvement needs Long Term Policies

A blanket of CO2 has enveloped the world. And continues to deteriorate our climate. Frequency of heatwaves has increased, habitats have started to shift, spread of disease, raising sea levels and other not so subtle and often violent changes in the climate are now reality due to growing CO2 emission levels. Daily Global CO2 emission levels now stand at 406.47 parts per million. It is important to note that CO2 emission levels have never risen this high in last 400,000 years. Our fossil fuel usage is the primary reason behind this rise (80% of CO2 emissions come from fossil fuel combustion) that is presenting devastating changes within the environment. Fortunately, now the world is taking initiatives towards reducing the CO2 emission. However, the damage to the climate that we have done through decades of fossil fuel usage cannot be undone instantly; therefore, what the world needs is long term strategies to reduce carbon emission by adopting green energy and reducing fossil fuel usage.

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Countries need Domestic Solar Manufacturing, Not a Global Supplier!

Fossil fuel reserves are limited and are very close to depletion. The continuously shrinking reserves have given rise to energy cost, which stand to deprive more people (already 1 bn people live without electricity) of energy and spewed toxic fumes that have led to environmental degradation. Facing such a scenario, the world is on its way to adopt sustainable energy that can offer release from economic and environmental binds forged by fossil fuel usage. Solar continues to win the favour of the world as the best replacement of fossil fuels. However, what it can bring is more than sustainable energy for all; it can offer a chance to build a better economy and social structure within a country, which developing countries desperately need.

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The Chinese Solar Story: Some Learnings

India’s decision to adopt green energy through solar has opened up new opportunities for energy and economic growth through industrial development. And although, India’s initiatives to support and ramp up solar should be commended, the country is nowhere close to giants like China who have become the global supplier and have dwarfed other countries in solar installations (~145 GW). China announced a new energy policy in June 2018, which terminated approvals for new, subsidized utility-scale PV power stations, halting in-country solar growth within China. The country’s new announcement of revising renewable energy consumption targets to 35% by 2030 puts China back in its mantle of industry leader.

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The Re-Alignment

China’s previous decision to shrink its renewable energy target would have dealt a terrible blow to aspiring solar manufacturing industries in developing countries like- India with influx of cheaper solar modules. However, this new policy revision re-iterates how China continues to re-align its industries and priorities to support solar growth. The new policy shows China proposing higher green power consumption targets while mandating penal action against those who fail to meet goals to help fund government subsidies to producers. China became the leading force in global solar industry (in 2017, China accounted for 54% of global PV installations) by focusing on expanding manufacturing capacities and offered subsidies to projects development. Growing subsidy cost ($15.6 billion in 2016) which are suspected to reach $39 billion by 2020 pushed China to stop its renewable energy expansion.

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However, what is exceptional is how rapidly China has solved its internal issues and are back with solar energy growth. The reason behind China’s prompt action is its obvious understanding of the solar opportunity and the promise it holds. By focusing on solar manufacturing capacity growth, China has been able to support industrial growth. Leading to job creation and economic progress. As testimony, we can take example of India and China’s influence over its solar market. ~80% of Indian solar market has been claimed by China and in In FY 17-18 the India’s solar module import expenditure stood at $3.8 billion (mostly from China). This proves that China’s decision on gaining manufacturing prowess has served the country well. And to protect what the country had built, to create and maintain demand of its domestically manufactured solar products, and to keep encouraging solar entrepreneurs; in a nutshell we can say that China sprung to action to press on its advantage in the growing global solar industry.

India Must Re-Prioritize Solar

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India has taken initiatives and created policy environment to support solar manufacturing. However, recent policy developments such as imposing 25% safeguard duties that target SEZ based solar manufacturers, differential GST rates (5% for modules and 12-18% for other inputs), and continued solar importing (FY 17-18 spent $3.8 bn) have come forward as a great challenge for domestic solar manufacturing in India.

Like China and other dominating solar countries, India must understand that strengthening domestic manufacturing eco-system is not just the best but the only choice for India to gain energy security and self reliance. And as statistics show, India can become the third largest economy in the world by focusing on domestic manufacturing, which promises to improve social, industrial, and economic infrastructure. Domestic solar manufacturing can create jobs, reduce import expenses, build industrial infrastructure within a country. This is clearly in alignment of ‘Make in India’ initiative, which also need to be re-prioritized for India’s growth.

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India has an exceptional opportunity to become energy super power and facilitate industrial and economic growth through choosing solar. But, manufacturing has to be focused to see this transition into reality. India has the perfect example in front of it, and it is China. China’s growth and tenacity towards supporting solar growth should inspire India to go all in solar.