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: In barely two generations from now, going by the survey of energy resources of the World Energy Council, we may see a radically different power industry. Fossil fuels, which dominate today, are forecast to supply less than half our energy needs, whilst solar energy, an infinitesimal contributor so far, could contribute as much as 30%.

The tightening supply conditions, and the higher costs, volatility, and concerns of energy security that accompany it, give credence to such forecasts. Today domestic coal is 3.3 times costlier than in 1991 and imported coal 4.7 times, whilst in this period solar power costs have fallen by half. There is, of course, a long way to grid parity, but the paths are doubtless set to cross.

The evolution of the solar industry presents a classic opportunity to make progress on several fronts: save on our energy imports (Rs 2,72,000 crores per year and rising), protect the environment, foster new technologies, and generate employment.

Many others are taking similar steps to create a market and an industry at home. Europe witnessed a 45% annual growth in solar generation capacity in the last five years. Many states in the US compete to attract solar manufacturing with incentives of up to 50%. In India, the capital subsidy and generation based incentives make a bold start, but pale in comparison. The feed-in-tariffs, for example, for grid connected solar power in relation to other renewable sources is 6 times in Germany, 4.5 times in California, but less than 3.5 times in India. The preferential tariff is only for 10 years against 20 years elsewhere, and investors setting up plants for own use or trade are excluded. In contrast, eastern Germany, the hotbed of solar technology, offers diverse incentives beyond the federal programs, such as interest rebate on loans, state guarantees (up to 80% of loans), labour grants, training assistance, and R&D support.

These incentives and guarantees are valuable to a capital and skill intensive industry such as solar. Upstream solar involves large capital investments (which is 60% of an integrated plant) and is cyclic and technology intensive. It needs considerable power and water (a mid-sized manufacturing plant can demand a 100-mw peak load).