India's floating solar plan: Strategic clean-energy move or risky bet?

India's PM-SSY targets 5 GW of floating solar capacity with two-hour storage and Rs 28,500 crore of investment, but high costs, viability concerns and technical risks could impede scale-up.

The Union Cabinet has approved a national scheme for floating solar power projects, setting in motion a larger debate around the technology, including its potential in the Indian energy context, commercial viability and benefits.

 

The technology, also known as floatovoltaics or floating photovoltaics (FPV), places solar panels on special buoyant structures that float on water bodies such as lakes, reservoirs and water treatment basins, instead of being fixed on land. This helps do away with the need for large tracts of land — something solar power plants are notorious for — and put water bodies to good use.

 

Large reservoirs are better suited to such installations.

 

The Pradhan Mantri Surya Sarovar Yojana (PM-SSY) builds an additional layer of integrated energy storage systems over this basic idea to boost grid stability. Finally, the scheme promises to promote domestic manufacturing of flotation systems as well as the projects’ entire value chain, such as PV cells, modules and energy storage systems.

 

Under the scheme, an amount of ₹5,070 crore — part of an overall amount of ₹28,500 crore — will go into incentives to develop 5,000 megawatts of floating solar projects along with energy storage systems with a minimum storage capacity of two hours, or 10,000 megawatt-hours (Mwh).

 

The incentive will be in the form of Central Financial Assistance (CFA) of ₹1 crore per megawatt (Mw), to be provided after successful commissioning of a floating solar project. In addition, an assistance of up to ₹50 lakh per project will be available for undertaking feasibility studies, environmental studies, and other preparatory activities required for de-risking the project.

 

Potential and challenges

 

The country currently has only 700 Mw of floating solar capacity. With the Surya Sarovar scheme, that capacity is sought to be increased to 5,000 Mw, with an expected investment of around ₹28,500 crore in projects that will be implemented under a tariff-based model under which the lowest bidder is awarded the project.

 

The capacity projection under the scheme is based on a recent assessment of India’s floating solar potential at a massive 102 gigawatts by the National Institute of Solar Energy (NISE), the Ministry of New and Renewable Energy (MNRE) and the Indian Institute of Technology (IIT) Roorkee.

 

However, the technology comes with its own challenges: Commercial viability, high upfront capital costs, vulnerability to extreme weather, impact on the environment, and operational and maintenance difficulties in humid aquatic environments over the long term.

 

“A recent study of MNRE, NISE and IIT Roorkee has assessed the potential for Floating Solar PV projects at 102 GW. However, commercial feasibility is a challenge, as most procurers do not want to buy the costly power from Floating Solar PV projects when compared with ground-mounted ones. There are exceptions, such as states like Kerala and Odisha, where land is substantially limited, and therefore FPV emerges as a very attractive opportunity,” Anujesh Dwivedi, partner, Deloitte India, said.

 

He added that overall capital expenditure per Mw in floating solar is typically 15-25 per cent higher than in ground-mounted solar. “While the CFA can reduce this cost-difference, it is also to be noted that in case of PM-SSY, there is a need for two-hour energy storage to be provided, the cost of which also needs to be accounted for. The overall CFA of 1 crore per Mw can effectively reduce the two-hour storage cost by about 15-20 per cent, which is reasonable,” Dwivedi said.

 

In addition, state electricity regulators and utilities may also factor the additional benefits of power availability in non-solar hours from storage units into their cost-benefit analysis. Two frequently cited positives are the likelihood of fewer land disputes and the water conservation from reduced evaporation (the panels block sunlight from hitting a large surface area of the water).  

 

Lighting hope

 

The CFA component, then, creates a base for the states to start considering floating solar as an option.

 

The argument for making a humble beginning, supported by state financial assistance, has given the domestic solar industry hope for rapid capacity creation, despite the physical, commercial and environmental challenges.

 

“Floating solar holds massive potential to become a cornerstone of India’s future energy basket. NISE estimates our nationwide capacity at over 100 gigawatt (Gw), far exceeding today’s 700 Mw base. What makes PM-SSY so significant is that it offers domestic manufacturers a long-term, predictable demand signal alongside physical installation goals,” said Amit Manohar, secretary general, Indian Solar Manufacturers Association.

 

He added that the 5 Gw-target gives local supply chains the confidence to invest in specialised floaters, anchoring systems and aquatic-grade components. He said the industry sees the scheme not simply as a way to add gigawatts to the grid, but as establishing a complete, self-sustaining manufacturing segment within India’s solar ecosystem.

 

But can the Surya Sarovar scheme help attract ₹28,000 crore in investment to create 5,000 Mw of capacity? It is possible, said industry executives, arguing that the combination of post-commissioning CFA and tariff-based competitive bidding mirrors what has worked with ground-mounted solar. A key reason for this enthusiasm is that many of India’s major reservoirs are situated near transmission and evacuation infrastructure, which removes one of the bigger uncertainties developers otherwise have to price in: The cost of laying down long pipelines needed to evacuate power.

 

“The CFA, along with the ₹50 lakh de-risking grant for feasibility and hydrography studies, meaningfully narrows the cost gap for water-specific components floating solar demands. Getting the framework right, including clear domestic-sourcing guidelines and dedicated technical standards for floating solar, will matter as much as the CFA quantum in bringing bidders in at scale,” said Manohar.

 

He also said that, when it comes to high capex and complex components, this is exactly the opportunity India was waiting for, as it already has a strong engineering and manufacturing base across floats, mooring systems, cables and balance of systems equipment. PM-SSY gives that base the demand visibility to scale and specialise.

 

What must India do to rapidly scale up floating solar capacity?

 

MNRE, which is anchoring the scheme, is carrying out a state-wise study of floating solar potential so that companies can start planning investments, match capacity with demand centres and align the plan with state-level renewable purchase obligations. With many major reservoirs already sitting close to existing grid infrastructure, the priority for rapid scale-up now is sustained investment in evacuation capacity and clear technical standards, backed by acc-redited domestic testing, so that quality and reliability keep pace with the scale-up.

 

As Deloitte’s Dwivedi puts it, “The Surya Sarovar Scheme is a step in the right direction and will make Floating PV Solar projects more competitive in the immediate term and help in stren-gthening up the ecosystem of market participants for such projects which will benefit the sector in the long-term.”

 

India already has a large-scale floating solar project operational on the Omkareshwar dam in Madhya Pradesh. The 600 Mw capacity project, developed jointly by Rewa Ultra Mega Solar Ltd, NHDC Ltd, AMP Energy Green, and hydropower major SJVN Ltd, is the largest floating solar park in India and currently has 278 Mw of operational capacity. Experts say the country needs to build on that experience and apply the learning on a national scale. 

The opportunity 

₹5,070 cr 

in incentives for developing 5,000 Mw of floating solar PV projects with energy storage systems

 

• Storage to have minimum capacity of two hours or 10,000 Mwh
• Govt promises assistance of ₹1 crore per Mw, and ₹50 lakh per project for derisking measures
• Expected investment at ₹28,500 crore in projects set up under tariff-based competitive bidding
• India’s floating solar potential is 102 Gw, against current operational capacity of 700 Mw
• One large 278 Mw floating solar plant operational at Omkareshwar dam, MP