The country needs to tap emerging routes of debt and equity funding to accelerate towards its avowed target of 100 Gw of installed solar capacity by 2022.
To reach the envisaged solar goal, an estimated $140 billion in additional funding is needed. Securing the financing will need exploring new models as traditional approaches to funding will not suffice.
A report by the US-based Institute for Energy Economics & Financial Analysis (IEEFA) suggests broader use of green funds, development of a green climate fund and tapping new infrastructure development funds to achieve solar power targets.
"The push for 100 Gw of solar capacity by 2022 may seem unreachable, but looking at the massive changes just since 2010 clearly shows that it is a doable proposition. India's solar transition began with the Jawahar Lal Nehru National Solar Mission (JNNSM) in 2010, which set a then-aggressive target of 20 Gw by 2022 -- a goal that was easily reached in 2017. There has also been a clear shift in capacity addition over the years, with renewables overtaking thermal power to meet the country's growing energy needs," Vibhuti Garg, energy economist at IEEFA, said in a report titled 'More Advances in Solar Transition'.
The report points to a paradigm shift in the country's capacity additions in energy. Renewable sources have overshot conventional thermal power to meet the incremental energy needs.
At present, India has 23 Gw of installed capacity in solar power, which is made up by 1.2 Gw of solar rooftop and 21.8 Gw from ground-mounted solar projects.
To inch closer to the 2022 target, the Government of India has announced many interventionist measures to spur solar power development. The steps include allowing accelerated depreciation for developers, cutting transmission-related charges for projects going online within the deadline and introducing renewable energy credits to incentivise each unit of green energy generated. Further, the government is encouraging projects across the solar spectrum such as conventional solar parks, promoting solar-wind hybrid models, floating solar and solar photo voltaic (PV) with storage facilities.
The rapid fall in solar tariffs at auctions to the level of Rs 2.44 per unit has also enabled large-scale deployment. This is half the tariff needed to support a new coal-fired thermal project minus a captive block.
"However, while these low tariffs are excellent news for Indian consumers, they require developers and investors to carefully account for project risks while bidding or they may potentially face the same boom-bust power cycle of poor investment currently undermining the country's coal sector. To avoid the huge bad debts and asset stranding in the coal-generation arena, India's solar sector needs policy certainty from the government and proper due diligence by developers," Garg said.