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Multi Billion Dollar opportunity for Solar Energy in India

The Indian government has okayed a $19.4 billion plan to scale up solar power generation from virtually nothing at present to 20,000 MW in just 11 years, and 10 times that by 2050 — well, at least in principle.

The draft “National Solar Mission” received a nod of approval from Prime Minister Manmohan Singh’s council on climate change this week. But deal-breaking issues remain.

Namely: Where will all that money come from?

The Indian government expects rich nations to foot the bill, raising a potential obstacle to the plan’s success.

Wealthy countries will be urged to fork over international financing and transfer the low-cost solar technologies needed to realize the world’s most ambitious solar vision.

That represents a shift from the previous draft plan, seen by the Guardian, which had called for an Indian government subsidy of around $20 billion and falling production prices to cover the costs of the plan.

The about-face shouldn’t come as a surprise.

It is entirely consistent with India’s increasingly vocal position in the international climate arena —  that the developed world bears historic responsibility for global warming and must pay the price for the global changeover to green technologies.

Lately, much to the annoyance of some wealthy nations, the Indian government has been loudly refusing to embrace any mandatory emissions caps, even though the developed world hasn’t asked for them.

Last week, the nation’s environment minister, Jairam Ramesh, said there was “no way” India would even discuss mandatory emissions curbs before 2020. A week before that, Ramesh accused the developed world of needlessly raising alarm over vanishing Himalayan glaciers.

And in June, to the astonishment of some Western officials, India demanded that industrialised countries pay poor countries at least $200 billion a year to cut their emissions and grow their fledgling renewable energy economies.

Currently, coal remains the backbone of India’s power sector, accounting for some 60 percent of its electricity generation and fueling its fast, fossil-powered industrial growth.

The solar mission would limit future climate damage from the dirty power source.

The plan forms the core of India’s seven-part “National Action Plan on Climate Change.” And the vision it offers should allay the mounting criticism that India has done too little to fight global climate change.

Some even expect the solar program to give India, the world’s fourth-largest emitter of greenhouse gases, the “moral high-ground” in the lead up to international climate talks in Copenhagen in December.

“Such unilateral action will give India the moral high-ground because the rich countries have not committed to anything (in terms of finance and technology),” said Siddharth Pathak, Greenpeace India’s chief climate campaigner.

There is no doubt India is expecting to use the plan as a major bargaining chip this year. Time will tell if it works: If it gives New Delhi the stronger negotiating position it so clearly is seeking in Copenhagen, if it compels rich nations to dig deeper into their pockets for climate action in poorer countries, or if making its much-needed solar revolution contingent on international financing backfires altogether.

What’s clear is this. The solar plan is massive, especially when you consider that the whole planet can generate just about 14,000 MW of solar power today. In 2020, global solar capacity is expected to be only 27,000 MW, according to data from the International Energy Agency.

The goals of India’s three-phased plan are as follows: 20,000 MW by 2020, 100,000 MW by 2030, and 200,000 MW by 2050. Solar generation is currently at 5 MW in India. All of the nation’s coal, gas and nuclear plants add up to 150,000 MW of power generation capacity.

The resource potential for solar energy is enormous. With 250 to 300 clear sunny days a year, India’s solar capacity is a thousand times greater than the country’s likely electricity demand by 2015.

And so is the economic opportunity for investors. Nearly 56 percent of India’s 1.1 billion-plus population does not have access to electricity. Meaning, India must build, and not rebuild, a vast piece of its energy infrastructure. While rich in coal reserves, the nation could feasibly fill the electricity gap with job-generating and economy-building clean energy.

It could become a solar superpower.

According to the draft plan, India intends to make solar energy as cheap as coal by 2030, reducing the cost of electricity from photovoltaic cells to around 10 cents per kWh.

Certain nuts and bolts of the plan have raised some eyebrows, including its seemingly impossible-to-meet 2020 target and its low cost estimate. A March 2009 Greenpeace report found that for a cost of $195 billion in international financing spread out over 20 years (not including capital costs), India could add 310,000 MW of new renewable energy capacity. Around 45 percent of that would come from solar.

The “National Solar Mission” is expected to be finalized in September. More details will flow.In the meantime, Environment Minister Ramesh continues to assure the world,

Solar Mission suggests fiscal incentives

Aarti Dhar NEW DELHI: The National Solar Mission, approved by the Prime Minister’s National Action Plan on Climate Change, envisages fiscal incentives, including a 10-year tax holiday for solar plants, both photovoltaic (PV) and thermal, set up by 2020 and exemption from customs and excise duties on specific capital equipment, critical materials and project imports.

However, it also proposes to impose a “small cess” on all fossil fuels at the rate of Rs 0.20 per 10,000 Kcal to meet the requirement of the funds. International funding may also be sought for various components of the Mission.

The Mission proposes the extension of the current offer of five-year loans at 2 per cent interest for solar thermal water heaters for domestic use and 3-5 per cent interest loans to install off-grid solar PV lighting systems for institutional and commercial use. A 10-year loan at 2 per cent interest for off-grid solar PV of 100 W to 10 KW capacity to replace diesel generators, UPS and inverter systems with solar-based systems.

A number of similar fiscal incentives and interest rate subsidies are also envisaged to promote solar manufacturing, in addition to the Special Incentive Package (SIP), for the setting up of an integrated solar manufacturing plants.

The Mission envisages an investment of Rs. 91,684 crore over the next 30 years. This will include an interest subsidy to the tune of Rs. 7,300 crore. It proposes to add 20,000 MW of power by 2020 and 100,000 MW by 2030.To unfold in three phases, it aims to achieve parity with coal-based thermal power generation by 2030.

In the first phase of implementation (2009-2012), a sum of Rs.10,130 crore would be required. The monetary requirement would be Rs.22,515 crore and Rs.11,921 crore in the second (2012-17) and third (2017-20) phases of implementation respectively.

The existing Solar Energy Centre (SEC) will be upgraded into a Centre of Excellence for Research and Development in Solar Energy, which will coordinate a network of solar research centres across the country. These will also become a focal centre for all international cooperation in solar research.

Autonomous authority An autonomous Solar Energy Authority of India will be set up under the Ministry of New and Renewable Energy to provide guidance and support to implement the Mission. There is also a proposal to set up a Solar Energy Commission as an autonomous body.

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