India Looks up for Power!

As India moves towards realising its dream of becoming a manufacturing hub, it will require humongous amount of energy to keep the manufacturing facilities running. Now instead of relying heavily on fossil fuels to meet the energy requirements, efforts are on, to develop an energy sector that is distinctive: more secure, more sustainable, more innovative.

To this end, India has established goals to rapidly expand its use of renewable energy and more efficient technologies. Coal is by far the most important fuel in the energy mix, but India’s recent climate pledge underlined the country’s commitment to a growing role for low-carbon sources of energy, led by solar and wind power.

As per a recent report by IEA, India’s power system needs to almost quadruple in size by 2040 to catch up and keep pace with India’s electricity demand. The demand is going to be boosted by rising incomes and new connections to the grid – increases at almost 5% per year. And if government (both center and states) efforts are anything to go by, solar energy would form a significant block, illuminating India.

Solar energy forecast and the reality check

The Indian Government has set a target of 100GW of solar energy by 2022. The target might look little stretched at the first glance. However a report released by the Cleveland-based Institute for Energy Economics and Financial Analysis has suggested that the installed capacity of solar power in India can reach 75 GW by 2022 (still an admirable target), delivering up to 110 TWh, or 22% of the required electricity increase in the country during the same period.

As per Tim Buckley, Director of Energy Finance Studies at IEEFA: “India is replicating Germany’s (one of the largest solar energy producers in the world) and China’s systematic electricity sector transformation, with the added advantage that the cost effectiveness of this is accentuated by the fact that the price of solar electricity has dropped by 80% in past 5 years.”

However these projections can change quickly for the better since there is a lot of focus on solar energy now and the policy environment for solar has also become very dynamic. Thus, making accurate projections is difficult.

Apart from the policy frameworks, other important factors that will determine the growth of India’s solar market are the pace at which vital overall electricity sector reforms are pushed through, whether consumer power prices are further rationalised (increased) and the speed at which transmission and distribution infrastructure will be improved and expanded.

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