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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.
India generates nearly 700 billion units a year and with 30% loss, consumption paid for is about 490 billion units. If a 2 paisa additional tariff is levied upon each unit it would raise resources to the tune of Rs 9.8 billion that can support annually solar power of nearly 55 mw without any strain on government budget except probably a little for those under BPL category. Otherwise also, this huge amount could be a driving force for subsidising interest rates on loan for renewable energy as a whole. A cess of 2 paisa for the sake of solar power to be shared equally by generation undertakings, transmission companies, distribution utilities and the consumers would not have any perceptible effect in the overall tariff structure. In fact, Rs 125 crore or so earmarked as subsidy from government of India under the present scheme should serve a more gainful purpose by subsiding interest rate to encourage solar power. About 50 mw restricted in a year under present...
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