Economy

Solar Power – How COVID-19 Pandemic and Make in India Campaign Are Driving the Low Cost Technology

After years of policymaking and debates, India finally launched its ‘Make in India’ campaign to register India into the ‘Global Manufacturing Hub’ on 25th September 2014. To become a successful participant, India has to produce its products efficiently at the lowest possible prices within the country, supported by cost-reducing technology. The jargon cost-reducing technology implies the procedure of manufacturing of standard quality goods at the least possible price in the market. This process requires not only extensive research on the same but also the requisite incentives from the Government’s end to provide a boost to the process. Given the current situation of the pandemic and the sharp fall in imports by over 19% as in September 2020, the campaign can find a way to generate domestic employment opportunities.

It has been noticed that there are some particular sectors, where India is progressing with its efficient technology. Solar power would find its name in this list as India has been able to emerge as the cheap producers of solar power and the 5th largest producer of solar power within a short period. Within just a span of eight years (2010-2018), India has managed to reduce the cost of setting up solar photovoltaic (PV) projects by 80%. It is indeed a huge achievement for the country as compared to the initial stages of the launch of National Solar Mission (when the price was Rs 17 per unit for solar power), the current price of solar power is Rs 0.44 per unit according to 2018 figures. The Ministry of New and Renewable Energy has also played a major role in streamlining the process through the implementation of the necessary policies. The MNRE has taken the initiative to conduct campaigns and awareness programs to promote the uses of solar energy. The incentives and subsidy policies provided by the Government and the Jawaharlal Nehru National Solar Mission (JNNSM) have also proven to be beneficial in setting up the solar power plants. The key tax incentives that boosted the growth are the Accelerated Depreciation Benefit and tax holiday announced under 80-1A in the initial years between 2010 and 2015. The Government played a major role in the development of the rooftop solar market in the initial years of the mission though now it has reduced its role to subsidizing the projects up to 30%. Custom and excise duty benefits were also provided to contribute to a high rate of growth. However, with the GST policies, certain benefits are no more available, leading to an increase in the import prices of PV modules. In fact, according to a recent Economic Times article, the Government and the State Nodal Agencies (SNAs) have joined their hands to introduce schemes and provide subsidies to people for installing the rooftop PV systems in their houses so that people can take advantage of the solar energy which will, in turn, help them to reduce their electricity bills. According to MNRE, the Central Government is paying for about 30% of the costs in the upfront states and about 70% for the states lying in the general category.

In the early 2000s, the main law which was remotely related to the use of renewable energy was India’s amended Electricity Act, 2003, which allowed 100 per cent FDI under the automatic route for renewable energy generation and distribution projects. However, According to the Ministry of New and Renewable Energy Report 2018-19, the Government is promoting solar energy through fiscal and promotional incentives such as capital and/or interest subsidy, viability gap funding (VGF), generation-based incentive, accelerated depreciation, concessional excise and custom duties, financing solar rooftop systems as part of home loan, and Foreign Direct Investment (FDI) up to 100 per cent under the automatic route etc. Apart from this, the Government also supports solar manufacturing through a Modified Special Incentive Package Scheme (M-SIPS) of the Ministry of Electronics & Information Technology (MeitY).

Heavy machinery manufacturer Schwing Stetter had set up a system of a solar power plant at its Chennai Factory in 2014. Another Chennai based firm named Grundfos Pumps gets around 26% of its power requirements from the solar sources. Leaving aside the positive impacts of the environment, the reason why they chose to switch to solar energy was because of the low per-unit cost associated with it. Though the initial costs of setting up the plants seemed a bit expensive, the long-run costs are quite low due to the technological improvement in the field and subsidies and incentives provided by the Government. The Big shot Indian firms such as Infosys, Tata Motors, Hatsun Agro, and even RE100 are contributing towards sustainability by using renewable sources to meet their power requirements. Dinesh Jadhav, the Executive Director of t Hindustan Coco Cola Beverages supply chain in India had announced in 2017 that it was their target to meet 40% of their energy requirement through green energy. And in all this, solar energy is a step forward to technological advancement as it is proving to be an important source of energy to replace the existing ones running on nonrenewable sources.

According to the Ministry of New and Renewable Energy Report 2018-19, the Government was planning to achieve a target of 100 GW using solar energy by the year 2022, and solar panels worth capacity of 18455 MW has already been installed as of 31rst January 2018. However, certain limitations or challenges faced by the country, according to the Ministry of New and Renewable Energy Report 2018-19 are that India does not manufacture the Poly-silicon, Ingots/wafers, the upstream stages of the solar PV manufacturing chain, which are a part of the process. The price of the solar equipment produced in the country is not very low as compared to Chinese manufacturers. According to the Industries, lack of skilled labour force, high rents on land or electricity, a low outcome from the invested capital, etc. are some of the reasons for low solar manufacturing capacity in India. An advantage that India currently possesses is the recent Coronavirus lockdown and the global boycotting of Chinese manufacturers which may help it to speed up the process of engagement in solar power generation.

-Malavika Nair (Freelancer)

Picture Credits: climatechangenews.com /  Prashanth Vishwanathan / IWMI / Flickr



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