Energy |

India’s highly-praised solar energy plan unlikely to benefit the vulnerable

India came out as a frontrunner in the fight to tackle climate change after the Paris climate negotiations in 2015, especially when the Indian Prime Minister spearheaded a massive, 121 country-wide intergovernmental organization – the International Solar Alliance – dedicated to increasing solar energy and reducing dependence on fossil fuels globally. 

In fact, solar power is a rapidly developing industry in India, with some of the cheapest solar energy in the world being harnessed here. In 2016, the government increased the value of subsidies given to renewable energy by almost 400 per cent, bringing the total to around INR 9,300 crore (USD 1.4 billion) (IISD Report 2017). Although this amount is fairly small in comparison to subsidies for coal, oil and natural gas, it allowed the renewable energy sector to witness massive growth, sparked mainly by the push to meet the country’s energy targets. Because of these subsidies, the Indian government met its initial 2022, 20 GW target four years early (Economic Times 2019), and as a result set an increased target of 100 GW, to wide acclaim from the United Nations and other environmental groups. 

India’s commendable innovation in solar power has paved the way for a bright future – no pun intended – in renewable urban development. By 2018, the government had already drawn up plans for more than 50 ‘smart cities’ (Scroll.in 2018)  – cities where every home would be equipped with photovoltaic systems that produce electricity directly from solar panels, to be used alongside solar powered water heaters, street lights, pumps, kitchens and even traffic signals. Later that year, Diu, a union territory near Gujarat, became the first city in India to run on 100 per cent renewable energy during the day. 

So where’s the problem? While we definitely should encourage and celebrate leaps in bringing more renewable energy into structures of governance, we need to ensure that India’s energy transition is just and equitable for people from all demographics. Some of the environmental and renewable energy policies depend on public infrastructure – like traffic lights or communal generators – which would ideally be built and maintained by the government; many other policies target changing individual electricity consumption. In both cases, the actual solar infrastructure is being constructed and maintained by private companies.

Before solar energy can even reach the consumer, private companies are already operating at a loss. The massive slash in solar tariffs (Ghoshal 2017) – nearly 25 per cent in 2017 alone – should be great news. However, the immense competition between private developers has led to prices becoming so cheap that it is near unviable for them to keep up production. The government is keen on cutting these consumer tariffs further, which make it unsustainable for developers and lead to them having to cut corners – or stop generation altogether, pushed out of business.

 “The basic math for setting up a solar plant is that 1MW costs around INR 6 crore (approximately USD 8,00,000),” reads a 2017 Quartz report quoting Rupesh Sankhe, senior analyst at Reliance Securities. “His estimate is that if a developer wants a return on investment of around 14 per cent, then the tariff for the consumer needs to be between INR 4.5 and 5 per kWh. ‘If they come below INR 3 (per kWh), then the return will be zero,’ Sankhe said. ‘No matter what they do, they will not make profits’.

As a result, many of these projects have been delayed or put on indefinite hold, with private companies still waiting on subsidy payouts from a bureaucratic and otherwise corrupt government (Bhaskar, 2020). “In the last four months [of 2019], there have been 11 wind and solar project auctions. Only two of these auctions have been fully subscribed. None of the problems that the sector is facing seem like they are going away anytime soon, so the bidding uncertainty may persist,” Vinay Rustagi, managing director of renewable energy consulting firm Bridge to India, told news editorial Livemint last year (Thomas 2019).

As the demand for energy increases, this economic slowdown in energy production is likely to derail all of India’s big plans for a smooth and rapid transition to clean energy (Thomas 2019). What the government should do is bail out state power distribution companies (discoms) by shifting subsidies from coal to solar, to enable them to continue producing renewable energy. Instead, the government is encouraging consumers to install individual solar power systems in their homes – by providing another basic consumer subsidy – rather than systematically changing public electricity infrastructure to solar.

Even with consumer tariffs already precariously low for private companies, the government’s subsidies are largely insufficient for the scale of India’s population. More importantly, given India’s track record with corruption, it’s unlikely that the benefit availed from them trickle down to the country’s urban poor.

For instance, Bijli Bachao, a non profit mapping electricity consumption, lists the price of an individual solar panel system as between INR 45,000 (for on-the-grid solar) to INR 1,20,000 (off-grid) per kiloWatt (kW) of energy. Each 1 kW system includes photovoltaic panels – that account for the majority of solar energy harvesting – and requires about 100 sq. ft of shadow-free space where they can be fit at the correct incline, usually on a rooftop. On average, a 2BHK flat would require between 2.5 – 3 kW of solar energy and therefore up to 300 sq. ft of sunny, unobstructed space. The maximum consumer subsidy offered on the system by the Indian government is 30 per cent, which still requires an application and a process of approvals that lasts roughly a few months. 

So unsurprisingly, an estimated 87 per cent of electricity subsidy payments are received by households above the poverty line (IISD Report 2017). Those living below it (estimated by the Aisan Development Bank at being 286 million people in 2017) still rely on biomass and fossil-fuel based electricity for their household needs and do not benefit from consumer subsidies at all. 

With consumer subsidies not reaching the country’s most vulnerable populations and corporate subsidies stuck in a loop of red tape and inefficient disbursement, neither are private companies being able to sustainably generate the amount of solar power needed for India to meet its renewable energy targets nor are millions of consumers able to avail what clean energy is available. As the threat of climate change continues to grow rapidly and fossil fuels continue to deplete and pollute, we are at a precarious point where we have to choose between financial gain and climate justice. 

The demand for power will always be on the rise, and while coal and fossil fuel-based energy is far cheaper, it comes at a much bigger cost to our planet. Shortsighted solutions that stockpile profit and line the pockets of the already-too-rich will reach its tipping point within the decade. India has the right idea with its ambitious and seemingly sincere plans to transition fully to clean energy; it’s up to us now to not allow vested political and economic interests get in the way of the only future we might have. 

References: 

International Institute for Sustainable Development – Global Subsidies Initiative. 2017. India’s Energy Transition: Mapping subsidies to fossil fuels and clean energy in India. Available at https://www.iisd.org/sites/default/files/publications/india-energy-transition.pdf 

Economic Times. 2019. India achieved solar power target 4 years ahead of schedule. Available at https://economictimes.indiatimes.com/small-biz/productline/power-generation/india-achieved-solar-power-target-4-years-ahead-of-schedule-dst-advisor/articleshow/71078461.cms?from=mdr 

Devjyot Ghoshal. 2017. Solar is now cheaper than coal-based electricity in India, but the math makes no sense. Quartz. Available at https://qz.com/india/984656/solar-power-is-now-cheaper-than-coal-based-electricity-in-india-but-the-math-makes-no-sense/ 

Scroll.in. 2018. A smart city will be a solar city. Available at https://scroll.in/bulletins/178/a-smart-city-will-be-a-solar-city

Uptal Bhaskar. 2020.States making inadequate subsidy payments to struggling discoms. Livemint. Available at

https://www.livemint.com/news/india/states-making-inadequate-subsidy-payments-to-struggling-discoms-11581269555741.html

Tanya Thomas. 2019. The setting sun on India’s solar dreams. Livemint. Available at https://www.livemint.com/industry/energy/the-setting-sun-on-india-s-solar-dreams-11574612085929.html 

The author is a writer, videographer and editor based in Mumbai. Her work focuses on politics, feminism, social justice and human rights.

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