India has a whopping 77.17 gigawatt of renewalble power generation capacity either under implementation or in the process of being allocated for implementation, according to data from the ministry of new and renewable energy, Government of India.
This is equal to about 83% of India’s total renewable energy capacity of 93 GW in place as of end of February 2021. These numbers are in addition to the 40 GW or so of capacity that comes under the ‘large hydro project’ or large dam category.
The growth of renewable power generation is being driven by the central and state governments through various rounds of reverse auctions in which large companies bid to set up solar and wind farms and sell power back to the government at the lowest rate.
The 77 GW under implementation number suggests that India will not miss its renewable energy targets and that renewable power is growing at a far higher pace than thermal power — which currently supplies around 80% of India’s power needs — and large hydro power.
The total, in-place thermal (coal, gas and diesel) power generation capacity in India is around 235 GW, and has been rising at a rate of only around 5 GW per year for the last two years.
Out of this 235 GW, 210 GW is coal-based and almost the entire remaining portion comprises gas-based thermal power generation capacity.
India has a goal of building up its renewable power capacity — excluding large hydro projects or dams — to 175 GW by December next year.
Given that 93 GW has already been put in place and another 77 GW is at various stages of implementation (total 170 GW), the country is all set to meet the 175 GW target for renewable power generation capacity by next year.
LAGGARDS
However, within this, the performance of various segments — such as small hydro, wind, rooftop solar and farm-based solar — has been anything but uniform.
In particular, rooftop solar installations — which are supposed to contribute about 40 GW out of the 175 GW by the end of next year — has been a big laggard.
As of February end, India had rooftop solar power generation capacity of just 3.9 GW, against the target of 40 GW by the end of next year.
This is primarily because of poor response from the residential sector, which has in turn been blamed on too much red tape and a lack of incentives for setting up solar power plants on top of houses and apartments.
Even though it is possible for households in India — one of the sunniest countries on earth — to generate all the power they need by installing a 2,000 to 5,000 watt solar panel system on top of their house, very very few people actually do so.
This is because of the difficulties of setting up and maintaining the required power storage and conversion equipment, such as batteries and inverters.
The production efficiency of solar panels in India is around 18-20% of their rated capacity, which is much higher than the 11-14% seen in less sunny countries such as Germany and Japan.
In other words, if you install a 3,000 watt solar panel that should produce 3 units of power every hour, the actual production would be one fifth of that because the sun does not shine uniformly throughout all 24 hours of the day. The actual production would be as if the panel worked only for 4.5 to 5.0 hours.
Therefore, instead of 72 units per day, such a panel would generate only about 10 to 15 units of electricity per day, or about 300-450 units/month, depending on the location, season and so on.
Still, most households in India consume only between 200 to 500 units of power per month, and for this, they pay between Rs 1,200 to 5,000 per month, or Rs 14,000 to Rs 60,000 per year, to utility companies.
At the current market price, the price of a 3,000 watt solar panel is just around Rs 1 lakh. Including the mounting structures and labor, the total cost works out to around Rs 1.5 lakh.
However, what makes the situation complicated is the need to store the power in batteries and reconvert it to mains voltage using an inverter at night. This not only adds another Rs 50,000 or so to the installation cost, but also makes the system more difficult and costly to maintain in the long term. It is also less efficient, as around 25% of the power is lost in storage and conversion.
In recent months, many state power utilities have tried to address this problem by making it easier for consumers to feed whatever electricity they produce back into the power grid, and draw it back from the power grid when they felt the need, making the grid act like a power storage mechanism.
In addition, the government has also introduced higher incentives under the Rooftop Solar Programme Phase-II, both for consumers as well as power distribution companies.
The target is to set up an additional 4 GW of rooftop solar capacity by providing direct central financial assistance or CFA.
Under this program, central financial assistance of up to 40% of the cost of a solar power installation is provided for projects upto 3,000 watts of capacity. For rooftop installations above 3,000 watts and up to 10 kw, the subsidy is reduced to 20% of benchmark costs.
For Group Housing Societies/Residential Welfare Associations (GHS/RWA), CFA is limited to 20% for RTS plants of capacity upto 500,000 watts for supply of power to common facilities.
The benchmark cost, based on which the subsidy is calculated, is published by the government based on prevailing market prices.
To reduce red tape, the government has also made possible to get all required permissions for setting up rooftop solar from the state electricity distributor or discom.
In addition, to ensure that state distribution utilities are properly incentivized to encourage customers to set up rooftop solar plants, the central government also gives incentives to state discoms directly, based on the growth of rooftop solar power generation capacity in their area.
Discoms can get an amount equal to 5% of the benchmark cost of setting up the capacity if the total rooftop solar power capacity of their customers increases by more than 10% over the previous year.
If the growth is more than 15%, then the incentive for the discom also rises to 10% of the benchmark installation costs borne by the end consumer.
Beyond 15%, incentives are given only for initial 18,000,000 watts of extra capacity created at the rate of 10% of the cost.