Feed-in-tariff and solar energy

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Solar power in India had found it difficult to attain commercial viability for quite some time. It had generally been pushing forward in niche areas like rural electrification, which of course is justifiable in areas deprived from grid connectivity. Certainly alternative viable options to provide power to the remote rural population are an essential necessity for raising living standards. However, inhibitions about the potential of solar power because of its high cost seem to be slowly eroding and right steps are being taken by the government for boosting growth. After the government of India announced feed-in-tariff (FIT) to the maximum of Rs 15/kwh in case of grid connected systems in March 2008 West Bengal became the first state to declare FIT at Rs 11/kwh and other states are soon set to follow. The stream of applications for setting up solar photovoltaic (SPV) power plants varying from 1 mw to 5 mw has exceeded a figure of 1,000 mw by mid-April, despite the annual limits of 50 mw—5 mw for each installation and 10 mw for each state—declared by the government of India.

The aspirants to invest in solar power include entrepreneurs from all strata from Ambani group down to ordinary investors. Nevertheless, the restriction on annual capacity addition, mainly because of fears of FIT subsidy increasing beyond budget outlay, appears to have become an artificial barrier in the process to the growth of solar power.