K Subramanya has the distinction of being the first employee of Tata BP Solar in 1985 and leading the company from scratch to its global reputation and scale today. Last week, he resigned as the CEO of the joint venture between Tata Power and BP Solar. He has been particularly active in terms of awareness creation and development of the nascent solar market in the country. In a recent interview with Sudhir Chowdhary, before his resignation, he discussed the importance of solar power and measures needed to accelerate its market development. Excerpts:
Why is solar power important for India? Globally, how has the market evolved?
India has huge potential to become a global renewable energy hub by virtue of the abundance of alternate energy sources in the country. India is one of the world?s most diversified ecologies. The total installed electricity generation in India has grown over a hundred fold since the days of Indian independence; however one of the biggest challenges that are being faced by the country today is the possible shortage of energy, which actually decelerates the growth rate of the economy.
In order to achieve the expected growth rate, it is important to ensure that the energy production levels reach the targeted levels of up to 1350 GW by the year 2050. Globally around 50GW of solar manufacturing capacity exists out of which around 30 GW is the saleable/ bankable capacity.
Solar has entered commodity cycle and hence size and scale of operations is important to bring down the cost. Leading companies (particularly Chinese companies) around the world have crossed the 1GW threshold manufacturing capacity driven mostly by manufacturing subsidies support granted by respective governments in the South East Asian region coupled with cheaper loans (averaging 5%) thereby making manufacturing expensive in other locations such as US, Europe and India.
Some of the nations have adopted trade measures to ensure that the local companies are protected such as the local content requirement in US, Canada, Europe. India also has put in place the requirement of domestic content in the JNNSM projects. However, this is limited only to solar farm projects and that too for crystalline silicon cells and modules which defeat the purpose of protecting the domestic industry as the most of the developers have selected thin films for their projects.
What role has the Indian government played in supporting solar programmes?
The ministry for new and renewable energy (MNRE) has been playing a pivotal role in promoting renewable technology in India over several years. The launch of Jawaharlal Nehru National Solar Mission in 2009 paved way for India?s entry into solar markets. JNNSM has been phenomenally successful in spreading awareness about the importance of solar power.
Renewable energy, and solar energy, is now mandated at stipulated percentages of energy supply. JNNSM has set specific targets for solar power and has pushed for both off-grid and on-grid solutions. Because of JNNSM and MNRE, India is on its way towards achieving grid parity between conventional and renewable energy.
What should the government do to accelerate the development of solar power market?
Right now, the policies are not in favour of manufacturing. At present there are many Indian companies manufacturing photovoltaic cells and modules. Over the last few years, these companies have been exporting much of their produce to European countries since the Indian solar market has been quite small since it is off-grid. With the National Solar Mission in place now, the framework for large, on grid power plants is in place. Indian solar manufacturing companies can now look at India itself as a market for their produce.
However there is still a problem that we are grappling with. The problem is that solar project developers are asking for foreign made modules for use in their plants since they come at a supposedly lower cost. Their view is that they should be allowed to source material from wherever they want.
However India will not be in a position to become a global solar leader if it is in not a position to manufacture the equipment needed to reach the ambitious target of 20,000 MW by 2022.
What are the costs involved in solar power today?
Pre-JNNSM, the major barrier in solar power was its high cost. Within the two years of its launch, the cost of solar has come down drastically from R17-18 per unit to R 7.50 per unit. The prices have dropped for various reasons. There are economies of scale, as both production and demand increase. The costs of conventional power have also increased. In general, costs of finance are globally lower and excess capacity in some countries has led to a decline in prices in emerging markets like India.
Solar power today is already better than diesel parity, making it a very attractive option for DG displacement. The life time cost of solar power in MW scale project is about Rs. 9 per kWh and this was hovering around R12/kWh last year and about R15/kWh in 2009-10.