India Announces Groundbreaking Solar Plan

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India's National Solar Mission was approved "in principal" last week by the Prime Minister's Council on Climate Change.

The solar mega-project, aimed at expanding India's solar capacity from the current 3 megawatts (MW) to a reported 20 gigawatts (GW) by 2020 and 200 GW by 2050, will form the centerpiece of a National Climate Change Strategy and cost an estimated US$20 billion to implement.

With worldwide installed solar-generation capacity totalling just 16.5 GW, and India's power generation capacity at 150 GW, the plan is notable for its scale and ambition.

Speaking at the launch of India's National Action Plan on Climate Change in June 2008, Prime Minister Manmohan Singh said the sun would occupy "center stage" in India's climate strategy and that the success of the solar endeavour would "change the face" of the country.

Already, India's Solar Mission represents one of the world's largest renewable energy plans to date, with promises to establish India as a global solar leader, draw new investment to the country, and spur the creation of new industries and jobs. 

Early drafts of the Solar Mission indicated that domestic funds could finance a significant share of the plan's budget. Newer reports imply that the government will ask for full funding from international sources. "We have kept several options open - budgetary support, taxes on fossil fuels, and international funding or a combination thereof," said Shyam Saran, India's special envoy on climate change, in an interview with Worldwatch.

Several international studies have pointed to the potential benefits of solar energy for India, including lower long-term energy costs, greater energy security, rapid scalability, and job creation, in addition to multiple environmental benefits. But the studies observed that India had not yet demonstrated the political commitment needed to jumpstart the industry.

Among other elements, the Solar Mission will rely on a portfolio of policy measures to support the growth of local industry and innovation around solar technology - from raw materials to components - through the establishment of dedicated solar and technology parks. The goal is to achieve cost parity of solar energy with grid power by 2020, making solar "very cost competitive with respect to other fossil fuel based power," according to an early draft of the plan.

"To encourage technology and investment flows, it is necessary to create the right market signals that show where demand will be," said Nicholas Parker, co-founder and executive chairman of the Cleantech Group. "In providing assurance of this demand, the Solar Mission could play a key role."

India's solar entrepreneurs appear to support the new policy as well. "India's intellectual capital can create the next generation of solar solutions and a paradigm shift in the way we harness this great and inexhaustible source of energy," said Bhoo Thirumalai, CEO of Aspiration Energy, an emerging solar company. "This kind of government support and targeted approach can provide opportunities for new enterprises to flourish."

V. Subramanian, former secretary of the Ministry of New and Renewable Energy and CEO of the Indian Wind Energy Association, has suggested that the success of the plan will depend not on massive government or international funding, but on changes to national and state energy laws and "the appropriate institutional structures to facilitate implementation at the state level". Such changes would allow the solar industry in India to thrive as it has in Germany and Japan - countries with meager solar resources in comparison, he said. 

With approval of its solar strategy, India is taking significant steps toward asserting global leadership with respect to both clean energy and climate change. Making the plan a success, however, will require sustained and effective efforts by the Indian government in combination with other stakeholders.

Looking to the future, Nicholas Parker believes that the solar plan could be just the beginning. "If current calculations are right, solar will be cost competitive with fossil fuels in the next 5-10 years," he said. "Hopefully by then, we will look back and say that this plan was not audacious, but a tentative first step."

Anna da Costa is a Worldwatch Institute fellow based in New Delhi.