The solar photovoltaic (PV) market in India has expanded in recent years. In 2021, 10 GW of solar energy was added to the country’s solar energy capacity, the highest annual addition ever. The cumulative installed capacity of solar energy totaled around 50 GW in February 2022, which is half the capacity installation targeted by the end of 2022. The 50 GW PV installation includes 42 GW of utility-scale solar, 6.5 GW of rooftop solar, and 1.5 GW of off-grid solar installations.
The Indian government stands committed to achieving about 50% of cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. To meet the said target, utility-scale solar PV will have to be harnessed to its maximum potential.
The growth of utility-scale solar PV in India is marred by several challenges such as availability of land, limited local manufacturing capacity, high transmission and distribution losses, grid integration, and other inefficiencies.
Availability of land
Land is a scarce resource in India, with the per capita availability being lower than that in most countries worldwide. It is difficult to acquire large stretches of open land required by utility-scale solar in remote and isolated locations. Furthermore, companies face regulatory hurdles as multiple approvals are needed from state and central government agencies as well as environmental authorities to acquire land. This is a time-consuming and laborious process. Additionally, protests and hindrances from local communities could delay projects.
Funding for solar projects
Companies, especially small and medium enterprises, face another major challenge in the form of sourcing funds for solar projects. Most of them have limited or no awareness about the right funding model and institution to approach. Eventually, they are unable to source the required funds for their project at a low interest rate for a long duration. Although a few government schemes such as the National Clean Energy and Environment Fund and Green Masala Bonds provide some support, a comprehensive resolution is awaited.
Lack of backward integration
Limited manufacturing capacity for solar raw material and equipment is one of the other challenges to utility-scale solar installation in India. According to Mercom India, currently, India has a manufacturing capacity of 4.5 GW for solar cells and 24 GW for solar modules, which is much lower than the annual requirement.
This is coupled with lack of backward integration for raw material such as solar wafers and polysilicon. This has increased the country’s dependency on imports for raw material, solar cells, modules, and panels. The import value of solar cells and modules totaled around $ 97.5 billion in 2021–22, with China being the main source of imports.
Electricity loss during T&D
India’s power transmission and distribution (T&D) networks are dated and obsolete. Most of the distribution in the country takes place through overhead wires, resulting in frequent breakdowns and gross inefficiency. T&D losses in India are high vis-à-vis other countries, accounting for over 18% of the power loss compared with merely 6% in the US and China. The resulting electricity loss increases the overall cost of solar PV electricity.
Solar farms are generally located in remote areas. Connection with the main grid is a big challenge as it is expensive and difficult due to the distance. Furthermore, a major percentage of electricity is lost during long-distance transmission.
The other challenges faced by utility-scale solar PV include low tariff for electricity, limited push for R&D related to the power sector, restricted cooperation between government and corporates, complex subsidy structure, and lack of skilled or trained workforce and proper regulations related to solar waste management.
The central and state governments need to plan and coordinate properly and create a streamlined clearance process for approvals related to solar power such as land, infrastructure support, and environmental clearance. The T&D networks across the country need to be updated and modernized to reduce electricity losses. Moreover, investments are required to advance R&D activities related to the country’s solar and overall power sector.
Furthermore, the government should push for a decentralized energy distribution system to resolve the challenges in grid connection and reduce electricity losses during transmission to the grid.
The implementation of these resolutions will help India achieve the full potential of solar energy.
Dhirender is Senior Manager in Aranca’s Growth Advisory (Energy) department. He has over 15 years of experience in research and consulting focused mostly on energy-related projects.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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