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05 July 2016 K2_CATEGORY IAS Blog


  • India’s push towards development of solar energy began with the Jawaharlal Nehru National Solar Mission.
    • Launched in 2009, the mission aimed at a target of 20GW of solar energy by 2022.
    • In 2015, this target has been increased to 5 times i.e. 100 GW by 2022.
    • This target will principally comprise of 40 GW Rooftop and 60 GW through Large and Medium Scale Grid Connected Solar Power Projects.
  • India's cumulative grid interactive or grid tied renewable energy capacity (excluding large hydro) has reached about 42.85 GW, surpassing the installed capacity of its Hydroelectric power in India for the first time in Indian history.
    • The country has already crossed a mark 26.8 GW of wind and 7.6 GW of solar power installed capacity during May 2016.
  • The projects now under execution include
    • solar rooftop technology-
      • identification of large government complexes/ buildings for rooftop projects; amendments in building bye-laws for mandatory provision of roof top solar for new construction or higher FAR;
    • bringing innovative solar and hybrid technologies to the market
    • transmission lines for solar-rich States
    • development of Green Energy Corridor
    • setting up of exclusive parks for domestic manufacturing of solar PV modules
    • provision of roof top solar and 10 percent renewable energy as mandatory reform under the new scheme of Ministry of Urban Development
    • clear survey of wastelands and identification of transmission/ road infrastructure using satellite technology for locating solar parks;
    • incorporating measures in Integrated Power Development Scheme (IPDS) for encouraging distribution companies and making net-metering compulsory.

Challenges faced in proliferation of solar power

  • Land: The setting up of solar projects requires vast land resources. Land is a scarce resource in India and per capita land availability is low. Hence, allocation of land for solar projects might compete with other uses
  • Weather- The availability of abundant sunshine remains subject to the vagaries of nature. Hence, production in sustained and continuous manner is a challenge
  • Technical difficulties in utilisation of solar energy such as grid stability and storage.
  • High initial investment in setting up of photovoltaic panels
  • Prices of solar power are still not as competitive as thermal power and hydroelectricity
  • Maintenance of solar power plants, especially cleaning of dust on solar panels requires substantial resources such as water, man power etc

WTO Verdict

  • Under, India’s National Solar Mission, to incentivise the production of solar energy within the country, the government under the programme agrees to enter into long-term power purchase agreements with solar power producers, effectively “guaranteeing” the sale of the energy produced and the price that such a solar power producer could obtain.
  • However, a solar power producer, to be eligible to participate under the programme, is required compulsorily to use certain domestically sourced inputs
  • This domestic content requirement was alleged to be discriminatory in nature. United States had dragged India to the WTO on this issue.
  • World Trade Organisation (WTO) panel found that the domestic content requirement imposed under India’s national solar programme is inconsistent with its treaty obligations under the global trading regime. Indian Government has been reported to appeal against the judgement.
  • Hence, Domestic manufacture of solar cells and panels has remained unattractive because cheap imports are available. Thus, domestic manufacturing in solar sector is yet to develop.

Recent Initiatives

  • Renewable Energy roadmap
    • The Government announced in 2015 an ambitious plan to target building up a renewable energy capacity of 175 GW by 2022
    • This includes 100 GW in solar energy, 60 GW of wind Energy, 10 GW from biomass and 5 GW from small hydroelectric projects.
  • Intended Nationally Determined Contributions (INDCs)
    • India pledged as part of its INDCs at the COP-21 in Paris, 2015 to achieve about 40 per cent cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030, with the help of transfer of technology and low cost international finance, including from Green Climate Fund.
    • This pledge demonstrates the country’s commitment to service a major chunk of its energy needs from renewable energy especially solar energy, in the near future.
  • International Solar Alliance
    • India launched an International Solar Alliance (ISA) at the CoP21 Climate Conference
    • The new body, which has invited all countries located fully or partly between the tropics of Cancer and Capricorn to join, is to function from the National Institute of Solar Energy in India, Gurgaon.
    • seeks to share collective ambitions to reduce the cost of finance and technology that is needed to deploy solar power widely; generation and storage technologies would be adapted to the individual countries’ needs.
    • Among the tasks that the Alliance would pursue are, cooperation in training, building institutions, regulatory issues, common standards, and investment including joint ventures.
  • World Bank Support
    • The World Bank pledged $ 1 billion in support of India’s ambitious solar generation plans, its largest financing of solar projects for any country in the world.
    • The World Bank Group also signed an agreement to be the financial partner for the International Solar Alliance. The World Bank will help ISA mobilise a trillion dollars in investments by 2030
    • While the cost of solar power has been declining, one of the biggest obstacles to a scale-up in developing countries has been the high cost of finance for photovoltaic projects. That problem can be addressed by the ISA through the World Bank partnership, as the agreement will help develop financing instruments, reduce hedging costs and currency risks, and enable technology transfer.
  • Draft Solar-Wind Hybrid Policy
    • The Government has sought public comments for a draft National Wind-Solar Hybrid Policy
    • The goal of the policy is to reach wind-solar hybrid capacity of 10 GW by 2022. The policy aims to encourage new technologies, methods and way-outs involving combined operation of wind and solar PV plants.
    • The policy aims at providing a framework to promote large grid connected wind-solar PV system. This would mean optimal and efficient utilisation of transmission infrastructure and land, reducing the variability in renewable power generation, thus, achieving better grid stability.
    • Solar and wind power being infirm in nature impose certain challenges on grid security and stability. Studies have revealed that solar and winds are almost complementary to each other and hybdridation of two technologies would help in minimising the variability
    • Superimposition of wind and solar resource maps show that there are large areas where both wind and solar have high to moderate potential. The existing wind farms have scope of adding solar PV capacity and similarly there may be wind potential in the vicinity of existing solar PV plant.

Way Ahead

  • Strong policy support is necessary to improve domestic manufacture of solar cells
    • Developing a strong solar manufacturing industry is essential for sustained economic growth, and to connect those who never had the boon of electricity.
  • A transparent regime that enables individuals and communities to plug into the grid without bureaucratic hurdles would unlock small-scale private investment.
  • Utilising the experience of Germany, a leader in solar and wind energy, to gain insights into best practices and innovative solutions
  • Using innovations such as roof top and canal top projects to tackle challenges of excess land use
  • Arguably, the strength and reliability of a power grid capable of handling more power than is available are fundamental to induct higher levels of renewable power. The emphasis here must also be on improving transmission lines: the World Bank programme promises to provide the necessary linkage to solar-rich States.
  • Making power grids intelligent to analyse and give priority to use the output of renewables, accurately forecast the weather to plan next day generation, and viability mechanisms for conventional coal-based plants are other aspects that need attention.
  • Innovation in battery technology is a potential gold mine for the solar alliance and for India to exploit.
05 July 2016 K2_CATEGORY IAS Blog

The article talks about the three big challenges in front of India hampering India’s growth and productivity.

  • The financial disruption due to the Brexit has been less than feared.
  • Fears of a sharp rise in global risk aversion haven’t materialised and it would appear that for now the adverse impact on near-term growth is likely to be limited to the UK and, to a lesser extent, the EU and Central European emerging markets.
  • There are two main reasons why this has likely happened:
    • The direct trade and financial linkages between the UK and the non-EU world are small, despite London being a major financial centre.
    • The actual impact will not only take time to take effect but at present it is also unclear what these are.
  • Brexit hasn’t happened yet. The brexit process hasn’t even begun as UK is still to invoke clause 50 of the Lisbon Treaty.
  • Once this clause is invoked, the negotiations will start, which are likely to be long drawn and complicated, as these will have to cover a large number of issues that took the EU several decades to agree.
  • The Lisbon Treaty specifies a maximum of two years for these negotiations to end. Once the negotiations with the EU are over, the UK will then need to negotiate new cross-border treaties with non-EU countries on trade, financial transactions, and many other areas.
  • This includes the UK’s membership of the WTO, which has also been on the basis of its membership of the EU. The non-EU countries are unlikely to negotiate ahead of knowing the terms of the EU separation and will likely be in a stronger bargaining position after that.
  • Only when these negotiations are over, can one, with any degree of certainty, start assessing the impact of Brexit on the UK economy and its implications for other countries.
  • In the meantime uncertainty will rule over number of issues:
    • There is the economic uncertainty of not knowing what the regulatory and trading landscape will look like in two years, which will delay individuals’ and firms’ spending and hiring decisions.
    • There is the political uncertainty. While the UK as a whole voted to leave the EU, Scotland voted to remain. Reports already suggest that Scotland could hold its own referendum on independence and separate membership to the EU.
    • The rest of the EU appears torn between fear and fantasy — fear that a UK exit will lead the region to unravel, and fantasy that without the UK the Euro area can take a leap forward in terms of integration.
  • Brexit and India:
    • The UK imports about 3.5 per cent of India’s total exports and the EU about 13.5 per cent.
    • In terms of financial linkages, capital inflows from banks headquartered in the EU make up 20 per cent and that from the UK 13 per cent of total bank-related foreign inflows into India.
    • As the rise in uncertainty shaves off growth in both the UK and the EU, cross-border traffic in trade and financial flows could well slow down. However, this is likely to affect only specific sectors and companies. But barring China, no other emerging market economy has started to rebalance its growth drivers.
    • In India, we are still chasing the export dream. This time dressed up as a strategy to gain market share.
    • With global export growth languishing at 2 per cent, India needs to keep gaining market share every year almost inexorably to sustain GDP growth anywhere close to its 2003-08 pace.
    • If Brexit lowers global trade further, this task becomes all that more difficult.
    • Rather than using up the limited policy and reform space pursuing this uncertain strategy, India needs to introspect and explore new engines of growth. Unfortunately, the conversation hasn’t even begun.

The export-led growth model, which all emerging market economies adopted in varying degrees in the 2000s, now lies broken and new sustainable engines of growth need to be found. Discuss.

Suggested approach:

  • Why export led growth model is not useful today.
  • New ways to be find out to push growth such as consumption based economic model of India.


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