In India, Subsidies for Solar May Hinder Uptake

Banks of Solar Panels

By Arman Kazemi

September 4, 2014

The growing popularity of solar power has prompted many governments to chase the sun toward joining the world's top solar-producing nations.

But willpower alone doesn't ensure a thriving solar industry, as India is learning.

A CleanTechnica post claims that recent trends in India’s solar policy have gotten so bad that clean energy proponents in that country are begging the Ministry of New and Renewable Energy to have mercy on the domestic sector and cut back on subsidies for rooftop PV.

That’s because as early as mid-June of this year, according to the report, “the MNRE had a subsidy backlog of about $350 million,” doing more to discourage potential solar customers than to convert new buyers to the grid.

“Even in cases where subsidy is approved, the time and effort spent in chasing the subsidy payments only adds to the cost” for prospective customers, the article states.

According to an earlier report from The Times of India, these outstanding payments are a legacy of the old UPA coalition government, which had originally set out a 30 percent subsidy for solar panel manufacturers, with a target of adding 20,000 MW of solar power to the grid by 2022.

Yet as an emerging BRIC economy, the Indian government may not want to be seen as moving away from a sector so many other nations are scrambling to get a lead on.

Canada has achieved a higher rate of solar production per capita than India, largely because of subsidies by Ontario’s provincial government. In a bid to phase out coal-generated power, which it accomplished last April, Ontario has become host to more than 70 large-scale solar farms, thanks to a feed-in tariff program promising to pay upwards of 40 cents per kilowatt hour for new solar PV installations.

With an estimated 2,000 MW of solar power to be connected to the Ontario grid by the end 2015, Ontario’s renewables initiative has put Canada among the top 10 countries for installed solar.

Canada still lags far behind Germany, the top producer of solar in the world with a robust and wide-ranging national solar policy.

In 2012, Germany boasted solar capacity of nearly 400 MW per million people, compared to 22 MW per million Canadians and only 1 MW in India.

In both cases, the principal differentiator is not the availability of sunshine, but the willingness and ability of government to feed it to the grid.