Has India Become the New Solar Energy Frontier?

on Jun 20, 2012
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On 17 June 2012, The Financial Times published an article about the recent developments in India’s solar energy sector, marking the country’s rise as a key solar power market.

One of India’s most important solar energy achievements is the Gujarat Solar Park, which is reportedly Asia’s largest solar energy park by output, surpassing China’s Golmud Park. It is reported to be capable of producing as much as 214 MW. The solar park was developed in less than two years by means of cooperation between 21 international companies. FT quotes Laurence Mulliez, CEO of the UK-based renewable energy company Eoxis, who after a recent visit to Gujarat noted that India was the new frontier for solar energy.

According to the FT, two years ago India decided to increase its solar power capacity from virtually zero, to the impressive 20,000 MW of grid-connected solar power by 2022, as part of a broader effort to boost its total renewable energy capacity to 72,400 MW. This focus on renewable energy may be largely contributed to India’s power shortages and projections on the country’s future energy needs. According to the International Energy Agency (IEA), as quoted by the FT, India’s consumption demands are likely to double by 2035. As noted in an IEA paper from the 7th Asia Gas Partnership Summit 2012, the contribution of renewable energy sources in particular is expected to increase 20-fold over the projection period.

!m[](/uploads/story/92/thumbs/pic1_inline.png)Given India’s power needs which, as already noted, are only expected to keep on growing, the government may not have any other choice but to procede with reforms so as to create a more favourable investment environment for the market. FT quotes Alan Rosling, founder of solar developer Kiran Energy, who identified solar energy as being “the one sector where the government has been forward thinking and progressive”.

It seems that India’s government has indeed managed to attract investment to its solar power sector. As noted by Bloomberg New Energy Finance (BNEF), in 2011, clean energy investments in India increased with approximately 52 percent relative to 2010, reaching $10.3 billion. This large growth, which was the highest of any significant economy in the world, was driven by a seven-fold increase in funding for grid-connected solar power projects. Ashish Sethia, head of India research at BNEF notes that policy measures such as the Jawaharlal Nehru National Solar Mission and the increasing cost competitiveness of renewable energy have made 2011 a record year.

Consumers in India also seem to be aware of the importance of solar power for meeting the country’s growing energy needs. On 18 June 2012, Reuters reported that according to a recent solar energy survey, conducted by the PV manufacturer Applied Materials Inc., more than half (51 percent) of the survey respondents in India voiced concern that the rate of solar energy adoption was too slow.
Despite the generally positive outlook for India’s solar power, the sector still faces certain challenges. As noted in the FT article, the government has introduced barriers to entry of foreign modules and cells, with the purpose of boosting the domestic manufacturing sector. Gujarat, which has its own energy policy, has decided not to impose barriers on equipment origin, thus making the state a preferred destination for foreign developers.

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