"Solar power tariff will soon fall to Rs 1.50 per unit"

Bringing affordable solar power on the doorsteps of common citizens and enabling Universal Energy Access seem to be the guiding force behind the unassuming, soft-spoken Upendra Tripathy, the Interim Director of the International Solar Mission. He speaks to Moushumi Basu on the future of solar power in India and the world

By Moushumi Basu
Published: Thursday 05 October 2017

Source: IISD

With solar energy tariffs touching a new low at Rs 2.44, what is likely to happen to the Indian energy market?

In fact, the tariff per unit of solar power is expected to fall further to Rs 1.50 soon. This is happening due to falling capital costs and cheaper credit with assured purchase pacts. In India, the cost of capital per unit is 70 paise. This is certainly giving a big boost to our solar energy market. The International Solar Alliance (ISA) has ambitious plans to scale-up solar applications in a big way for agricultural and rural use. There is an aggregated demand for 0.5 million solar pumps, 5 million street lights and 500 Mega Watt (MW) mini grids and other similar solar applications in ISA member countries of Bangladesh, Ethiopia, France, India, Nigeria, Mauritius, Seychelles, Senegal, Sri Lanka and Uganda. So, there is a flood of opportunities in the green energy market for manufacturers.

The big push for entrepreneurship in this sector began with RE-Invest 2015. This was the first major platform for investment promotion connecting the global investment community with renewable energy stakeholders in India. It generated a commitment for 266,000 MW of renewable energy capacity by 2022, of which the contribution of solar energy is 200,000 MW. We plan to hold the second edition of Re-Invest in December.

Since solar tariff is falling worldwide, will there be a saturation point in the future that may discourage manufactures from investing?

No, I do not foresee any such possibility. Demand and supply are market-driven. If solar power continues to remain competitive, as it is at present, consumers will increasingly shift to this energy. Many investment funds are developing dedicated portfolios for green energy, whereby the cost of the capital can be comparatively less.

Given that storage holds the key to pricing solar energy, how do you propose to handle this challenge? What are the new technologies being developed? Who are the main players and are these technologies open access or patented?

Our primary target is to bring down the storage cost of solar power. Solar Mission offers subsidies to the storage market. Though the cost of lithium batteries is coming down, it is still not within the reach of common citizens.

Certain research organisations in India are working on cost-effective solutions through the manufacture of indigenous state-of-the-art lithiumion batteries. However, India still largely relies on imports from Japan, China and South Korea. But we expect such ongoing research initiatives would make the country self-reliant in the manufacturing of lithiumion battery in the future.

Further, maintenance of solar batteries is still a challenge. ISA plans to come up with programmes to impart technical knowledge for at least 100,000 mechanics from 121 member countries for installation and maintenance of solar power systems. Further, there is also the Solar Technology Application Centre as a part of ISA’s collaborative R&D with the UN, World Bank, India, USA, France and other nations. The idea is to come up with various commercially viable local applications and strategies in various spheres of solar energy, aimed at Universal Energy Access.

Do you foresee any breakthroughs in solar technology—with regard to equipment, storage and distribution and its impacts on cost?

Of course, yes. Look at the way, the quality of panels, technical complexities have evolved over the years, steadily bringing down the cost of solar power. There is a buzz on new kinds of panels such as the non–silicon based and 3D printed flexible ones. The R&D world is really exciting.

The role of the corporate sector is immensely important to boost the green energy sector. How are you facilitating or incentivising the corporate sector?

The role of the corporate sector is extremely important and the suggestion for ISA to have corporate partners will be placed in its assembly. These partners can be from any field. We are tapping the corporate sector through the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) besides the Terrawatt Initiative (in France) to finalise the optimal terms and conditions on investment flows in ISA member countries.

We also propose to involve the Fortune 2000 companies in our activities to create a corpus of US $1 billion. The interest accrued from the amount will be spent on various activities. In order to incentivise manufacturers, we plan to use 35 per cent of it on distribution of solar devices such as solar lamps, home lanterns and other solar applications, which will bear the logo of ISA along with the producer company.

Then, 15 per cent of this would be spent on global solar awards to promote initiatives on R&D with a special thrust on women researchers. Moreover, the green energy sector has laid out an array of financial incentives such as tax holidays, viability gap funding, accelerated depreciation and customs duty exemption to facilitate the investors.

There is a proposal to set up a US $300 billion fund for initiatives in the solar energy sector. How do you propose to garner the funds?

One of the key strategies of ISA is to strive for the establishment of a US $300 billion Global Risk Mitigation Fund, in persuasion of the UN Millennium Development Goal of Universal Energy Access.

It would be used to create innovative financial mechanisms in ISA countries as credit risk guarantee funds, first loss facility, security payment mechanism over a period of 10 years.

This will help derisk investments and reduce the cost of financing for solar projects in eligible ISA member countries, besides mobilising the investment inflow necessary to scale-up solar energy projects.

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