The reduction in solar energy prices in India necessitates additional governmental reforms to bolster the country’s solar capacity.
SoftBank’s Solar Investment:
- In 2015, SoftBank Group from Japan proposed a $20 billion investment in Indian solar projects through SB Energy (SBE).
- India’s favorable conditions, such as ample sunlight and a large potential market, made it an attractive investment opportunity for Japan.
- Despite India having significant rural and rooftop solar projects, the cost of rooftop electricity remains 50% higher than coal-generated power.
Cost Trajectory in India:
- The Indian government increased the solar target for 2022 to 100 GW, up from the initial goal of 20 GW.
- Prices of solar energy have decreased since 2015 due to the availability of inexpensive solar modules from China and heightened competition.
- As a result, the cost of solar power has become half that of coal, making solar energy a more economically viable but slower-payback infrastructure.
Challenges
- The dominance of coal is expected to persist due to the limited annual tendering capacity of 6-8 GW, leading to higher costs and carbon emissions until larger-scale investor interest can be accommodated.
- India’s electricity markets face instability and low prices, requiring significant capital investment to stabilize and bring order to the sector.
Way Forward
- India needs serious investors like SoftBank willing to invest in slower-payback infrastructure.
- Development of integrated, stable services at reasonable prices is necessary, prioritizing efficacy over the lowest cost.
- Government policies and regulations should align with overarching objectives, while interdepartmental coordination and integrated planning are crucial for the energy sector’s advancement.
- Resolving financial issues of state distribution companies is imperative for ensuring energy security.
