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 last month approved a national scheme for the implementation of floating solar photovoltaic (PV) projects, setting in motion a larger debate around the technology, including its potential in the Indian energy context, commercial viability and benefits.

 

What is floating solar and how does the PM-SSY scheme work?

 

The basic idea is simple. 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 or water treatment basins instead of being fixed to land. This helps avoid the massive land requirement solar power plants are notorious for and, at the same time, gainfully utilise the space occupied by large reservoirs. 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.

 

Broadly, the Rs 5,070 crore scheme aims to develop 5,000 megawatts (MW) of floating solar PV projects with co-located energy storage systems having a minimum storage capacity of two hours, or 10,000 megawatt-hours (MWh). The scheme promises central financial assistance (CFA) of Rs 1 crore per MW and an additional CFA of Rs 50 lakh per MW for de-risking projects. 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 Rs 28,500 crore in projects that will be implemented under a tariff-based competitive bidding model. The capacity projection under the scheme is based on a recent assessment of India's floating solar potential at 102 gigawatts (GW) by the National Institute of Solar Energy (NISE), the Ministry of New and Renewable Energy and the Indian Institute of Technology (IIT) Roorkee.

 

Why is floating solar commercially challenging in India?

 

However, floatovoltaic technology is known to face commercial viability challenges, apart from a host of other issues, including high upfront capital costs, structural vulnerability to extreme weather, complex impacts on aquatic environments and operation 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, told Business Standard.

 

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 2-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 FPV+2-hour BESS cost by about 15-20 percent, 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 BESS, avoided land conflicts and reduced water evaporation into their own cost-benefit analysis. The CFA component, then, creates a base for the states to start considering FPV as an option, at least in large reservoirs that are more amenable to such installations.

 

Can PM-SSY boost domestic floating solar manufacturing?

 

It is this argument for a humble beginning supported by state financial assistance that has given the domestic solar industry hope for rapid capacity creation, despite all the physical, commercial and environmental issues associated with FPVs. "Floating solar holds massive potential to become a cornerstone of India's future energy basket. NISE estimates our nationwide capacity at over 100 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 (ISMA). 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 adding extra gigawatts to the grid, but as establishing a complete, self-sustaining manufacturing segment within India's solar ecosystem.

 

Can the Surya Sarovar scheme attract Rs 28,000 crore in investment?

 

But can the Surya Sarovar scheme help attract Rs 28,000 crore in investment to create 5,000 MW of capacity? It is possible, say industry executives, arguing that the combination of post-commissioning CFA and tariff-based competitive bidding mirrors what has worked in ground-mounted solar and, therefore, the framework itself is sound. A key reason for this enthusiasm is that many of India's major reservoirs already sit close to established transmission and evacuation infrastructure, which removes one of the bigger uncertainties developers usually price in; continued investment in evacuation capacity as the pipeline scales up will be key to sustaining investor confidence.

 

"The CFA, along with the Rs 50 lakh de-risking grant for feasibility and hydrography studies, meaningfully narrows the cost gap for glass-glass modules, corrosion-resistant hardware and other 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 (BOS) equipment, and PM-SSY gives that base the demand visibility to scale and specialise.

 

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

 

The Ministry of New and Renewable Energy, which is anchoring the scheme, is carrying out a state-wise disaggregation 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 (RPOs). 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 accredited 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 strengthening up the ecosystem of market participants for such projects which will benefit the sector in the long-term."

 

What can India learn from the Omkareshwar floating solar project?

 

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 Limited, NHDC Ltd, AMP Energy Green and hydropower major SJVN Ltd, is recognised as 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 larger national scale.