12 March 2019

Strauss Distinguished Scholar Joshua Busby co-authored a Council on Foreign Relations blog post on “Bright Future? Fourth Annual Review of Solar Scale-Up in India,” with Sarang Shidore, which addressed the future of India’s solar sector that is trying to meet the government’s 100GW target by 2022. The authors argue that the utility-scale slowdown implies that the 2022 goals will be a stretch. Despite the growth of installed capacity from 2.5GW in 2014 to 26GW in 2018, estimates suggest India will have at most about 65GW in 2022.

Busby argues that there are both new and old constraints which will make it difficult for India to obtain its goal. Though auctions have driven solar prices down, the returns to solar developers are now low. With tariffs on imported solar panels, it is harder for solar firms to make a profit in the Indian market. There are also land acquisition issues that complicate siting of large solar parks. Finally, the predominately state owned distribution companies continue to face financial difficulties, which makes them reluctant to purchase power from new renewable sources.

There are a few models, however, which indicate the seeds of change. In agriculture, solar agricultural schemes have been created for farmers which are much more convenient and reliable. The new semi-distributed solar model, which is done by building smaller scale parks, ease land challenges, lower grid losses, and reduce financial loss.

The authors argue that, right now, the trends suggest there will be both more solar and more coal. The future of that balance is up to policy and regulatory initiatives. More than 13GW of solar will be added this year, and solar has provided a welcome and cleaner domestic source of electricity. However, Busby and Shidore are still somewhat pessimistic for the future because elections later this year may bring in a weak government with little appetite for ambitious energy sector reform. Many democracies face similar challenges in pushing for cleaner sources of energy.