India has a great potential to generate electricity from solar energy and the Country is on course to emerge as a solar energy hub. The techno-commercial potential of photovoltaics in India is enormous. With GDP growing in excess of 8%, the energy ‘gap’ between supply and demand will only widen. Solar PV is a renewable energy resource capable of bridging this ‘gap’.
Most parts of India have 300 - 330 sunny days in a year, which is equivalent to over 5000 trillion kWh per year - more than India’s total energy consumption per year.
Average solar incidence stands at a robust 4 - 7 kWh/sq.meter/day.
About 66 MW of aggregate capacity is installed for various applications comprising one million industrial PV systems - 80% of which is solar lanterns, home/street lighting systems and solar water pumps, etc.
The estimated potential envisaged by the Ministry for the solar PV programme, i.e. solar street/home lighting systems, solar lanterns is 20 MW/sq. kilometer.
The potential of the solar thermal sector in India also remains untapped. The Ministry proposes an addition of 14 MW during the 11th Five-Year Plan period (2007-2012).
Establishing manufacturing units at Export Oriented Units, SEZs or under the SIPS programme presents a good opportunity for firms which can leverage India’s cost advantage to export solar modules at competitive prices to markets in Europe and the United States.
The Government of India is providing various incentives and duty concessions for both manufacturers and users of solar products such as:
- To help in running of solar projects, the GOI will provide, through IREDA, a generation-based incentive for solar power of up to INR 12 per kWh for solar photovoltaic power and INR 10 per kWh for solar thermal power that is fed into the grid, after considering the tariff provided by the SERC or the utility;
- Capital subsidy available in case of semiconductor based units;
- Provisions for Accelerated depreciation available for solar manufacturers;
- NIL excise duty for manufacturers;
- Low import tariff for several raw materials and components;
- Soft loans to users, intermediaries and manufacturers
Following the Central Government’s guidelines, a number of states are also pursuing solar energy development aggressively with good response from industry and have come out with their incentives. These include an enhanced feed-in-tariff rate when electricity is sold to the grid.
Incentives are also provided for Roof Top solar Systems, targeting a capacity addition of 4.25 MW during the rest of 11th Plan. These are:
- INR 75 per watt of SPV panels to a maximum of 30 percent of the cost of systems to profit making bodies that can also avail accelerated depreciation benefits.
- INR 100 per watt to a maximum of 40 percent of the cost of systems to non-profit making bodies.
Systems could be with or without grid interaction; and support will be available for systems whose capacity varies between 25 to 100 kW.
Tax credits and capital subsidies are also provided to solar energy developers. Loans are available through the IREDA at subsidized rates and income tax exemptions are provided for first 10 years of commissioning of project.