Bucking Solar Predictions, India Surprises Itself
A worker prepares to clean panels at a solar power plant in Khadoda in Gujarat State.
When the Indian government embarked on an ambitious solar power project two years ago, I wrote that its goals seemed farfetched. Since then, things have changed significantly, and as I note in Thursdays paper, analysts say the projects goal of having 20,000 megawatts of solar capacity by 2020 seems well within reach.
The main reason for the change is the striking drop in the global price for solar panels and modules. Another interesting factor in the fall in prices is an auction process that India adopted to force solar power producers to compete with one another. In one recently concluded auction, for instance, the prices at which developers agreed to sell power to the government were nearly 30 percent lower than a year earlier. More than 100 companies bid in the auction, including many that have never built a solar power park before.
It almost didnt happen that way.
Initially, Indian policy makers intended to buy solar power for the grid at a fixed and subsidized price of 15.4 rupees (29 cents) for a kilowatt hour. The sense was that we will not get up to 1,000 megawatts and there will not be too many offers, said Shyam Saran, a former Indian diplomat and energy policy maker.
But what the government found was that there was far more interest in providing solar power to India than it was willing to buy; 6,000 megawatts were offered when it was interested in buying just 1,000 megawatts. So it decided to set up a reverse auction in which developers would bid to sell power to a state-owned electric utility.
Two auctions have been held so far, and they have been far more successful at driving down costs than anybody had anticipated. The lowest winning bid in the most recent auction was 7.50 rupees and the average bid was 8.77 rupees, about half the fixed price at which the government was initially willing to buy power.
The government is doing the right thing by following a trial and experiment approach, said Tobias Engelmeier, the managing director of Bridge to India, a research and consulting firm based in New Delhi.
Indias approach to solar power is in stark contrast to the murky policies it set in some other industrial sectors. In 2008, for example, it gave away telecommunications spectrum on a first come, first served basis at fixed prices that had been set in 2001. A government auditor later estimated that India may have lost as much as $40 billion by not conducting an auction. Several former public officials and corporate executives involved in the telecom affair are now on trial on corruption charges.
Indias auctions also buck the approach commonly used elsewhere in the world. Germany, Spain and other European nations have heavily subsidized solar power by setting fixed prices for it. Some of those countries were forced to cut those prices after policy makers realized that the government had to buy lots of expensive electricity for many years to come.
As a result, India is emerging as one of the major solar markets in the world, said Alan Rosling, the managing director of Kiran Energy, an Indian solar power developer.
Until two years ago, very few international companies were taking India seriously, he noted.
Still, there is no guarantee that the future will remain bright for solar power in the country. Some Indian companies are complaining that the nations policies do not protect local manufacturers, which cannot compete with low-cost Chinese manufacturers and innovative American start-ups. Indian producers say that without subsidies, they cannot offer the kind of generous credit and low prices that some foreign competitors can. And they want the government to impose duties on imports of solar equipment.
A longer-term concern is figuring out a way to assure continued growth in the spread of solar panels to the rooftops of homes and businesses. That will become a more important issue after developers have blanketed the arid northwestern states of Gujarat and Rajasthan with panels. Space can become a constraint very quickly once you have taken care of the Rajasthan desert or the Gujarat desert, Mr. Saran said.
But for now, the industry and policy makers are looking forward to flipping the switch on the next group of new solar plants, which are expected to begin sending electricity to the grid in January.
Bucking Solar Predictions, India Surprises Itself - NYTimes.com
Indias Novel Solar Auctions Fuel Boom
An electrical grid at Azure Solar Plant in Gujarat.
India's Novel Solar Auctions Fuel Boom - NYTimes.com
