Make haste slowly on solar

India should not go overboard despite the sharp fall in prices

Solar power tariffs dropped to Rs 3.15 per unit in recent power auctions, a level where solar energy seems roughly competitive with thermal power. Lower solar power costs are now a global phenomenon. California, for example, derives about 40 per cent of its grid power from solar energy. This has led to wholesale electricity rates dropping to zero at noon, when solar power generation actually exceeds grid demand. India, too, has set ambitious targets. The current solar power capacity is about 12 Gigawatt (GW) and if the Jawaharlal Nehru National Solar Mission targets are fulfilled, it will hit 100 GW by 2022. As solar power capacity increases and it becomes cheaper to boot, it could replace thermal power, which uses coal and gas. At first glance, this is an excellent trend since solar energy is relatively much cleaner and does not involve dependence on imported fossil fuel. However, building huge solar capacities at breakneck speed may not be an unalloyed blessing. A phased pace of adoption may actually be beneficial.

While solar power costs have declined considerably, the industry still receives large subsidies that make this form of energy deceptively cheap. Without the subsidies and generous tax holidays, solar power is still substantially more expensive than thermal power. What is more, solar power is intermittent. It is expensive and hard to store. There are technical issues about wheeling stored energy onto the grid. Hence, when solar power is available, it receives preference on grids, forcing thermal power plants to “backdown” and reduce production at such times. This affects the plant load factor and hence, profitability, of thermal power plants. Thus, fast growth in the highly subsidised solar power industry could lead to economic distortion: Solar power availability might make the cheaper and more efficient thermal power capacity financially unviable. In strategic terms, solar power could also lead to a critical import dependency on China. Solar energy equipment needs rare earth metals and China is pretty much the only source of these at the moment.

Perhaps the most telling point is that the solar power industry could be poised for technical breakthroughs that could lead to another round of dramatic cuts in costs and to easier technological solutions. For example, breakthroughs in storage technologies could create cheaper, more efficient batteries. At the laboratory level, recent demonstrations of new technologies promise to create supercapacitors that are potentially 30 times as efficient as current storage options. There have even been demonstrations at the Royal Melbourne Institute of Technology of thin-film panels and “super” graphene electrodes that can both capture and store solar energy without external batteries being required. Storage solutions of this nature could deal with intermittency, making it much easier to manage the energy mix at the grid level. There have also been experimental efforts led by the Japanese to initiate undersea mining of rare earth metals. More conventionally, other nations have started looking to develop whatever rare earth deposits they possess. As such, it is very likely that current state-of-the-art solar energy technology will be outmoded in a few years. A phased adoption will ensure that India’s solar energy industry is not locked into technology that could soon become obsolete. It will also provide the thermal power industry a chance to review future investments, and grid managers breathing space to develop smarter grids that manage the energy mix better.