India doles out a US$1.4b incentive for 15 countries to develop solar energy projects

Posted on 18 Mar 2018

In what is widely seen as a move to consolidate its geo-political clout in solar domain, the government has announced a splendid package for 15 countries to promote the use of solar power in their energy mix.

Prime Minister Narendra Modi, addressing dignitaries from 23 countries at the inaugural International Solar Alliance (ISA) summit held in New Delhi recently, said: “India will provide assistance to 15 countries for $1.4 billion. I am happy to announce that to fill the gap of solar technology India will start a solar technology mission with international focus which will cover all government technical and educational institutions.”

Outlining a 10-point action plan to step up the use of solar energy in power sector and make it more affordable, Modi also made some important observations. According to him once implemented the programme could kick-start a solar revolution worldwide.

“Solar energy will power India by 2022. The country will produce 175 gigawatts of power from renewable resources of which 100 gigawatts will come from solar energy alone. India has already achieved 20 gigawatts of installed solar power. In India more power is produced from renewable sources of energy as against traditional sources,” he added.

ISA was launched by Narendra Modi and the then French President Francois Hollande at the UN Climate Change Conference in Paris in November 2015. ISA is conceived as a coalition of solar resource rich countries to address their special energy needs and provide a platform to collaborate on addressing the identified gaps through a common agreed approach. Over 120 countries located between Tropic of Cancer and Tropic of Capricorn form part of the alliance and work towards resourceful utilization of solar energy to reduce dependency on fossil fuels.

Headquartered in India the prime objective of ISA is solar power utilization. India, besides pledging a target of 100 gigawatts, has also agreed to reduce carbon emissions by around 35% by 2030.

Current French President Emmanuel Macron who along with Modi inaugurated the first ISA summit believes that the target of 1 terrawatt of solar energy by 2030 is quite an ambitious one. It would perhaps require around US$1 trillion to achieve. He revealed that French Development Agency would spend an additional €700 million as part of its commitment to solar energy by 2022. In total France would spend close to €1 billion.

President Macron delivering his address urged countries to switch to solar energy for their power requirements. “We know the hurdles. There are financial hurdles, regulations, capacity hurdles as well. We shall therefore lift every single one of them. It is not enough to look at what governments are doing. We need a new international deal with the private sector, the international public sector and civil society as well,” Macron said.

On a positive note 62 member nations of ISA have agreed to increase their usage of solar power as a measure to control climate change as well as provide energy to the underprivileged in the society. As on date 32 countries have ratified the agreement and 30 have joined the group of nations that wants to promote solar energy usage in the developing world.

Meanwhile Ministry of External Affairs (MEA) has confirmed that the government has set up a project preparation facility (PPF) to assist projects across countries seeking concessional funding under lines of credit (LoC). Sources from MEA told Indoen that PPF would extend consultancy support on grant basis and request the government for project formulation. It will act as a quick access point for faster clearance of the priority needs of various requesting governments.

The summit also witnessed the launch of the Delhi Solar Agenda. It is expected that ISA will play an instrumental role in generating finance, providing access to clean and environmental-friendly technology and undertaking capacity building, and forging partnerships with international institutions for enabling the third world to develop.

ISA now needs to explore avenues for garnering funds and create a sustainable market for deploying cost effective solar technologies besides bringing forth constructive policy initiatives that could attract public and private investments and reduce the cost of solar projects in developing countries.

Over a five-year period beginning from 2016-17 to around 2020-21, India is expected to contribute US$27 million to ISA. The funds from the corpus will be used for building infrastructure and meeting the recurring expenditure. Solar Energy Corporation of India and Indian Renewable Energy Development Agency also contributed US$1 million each to create this corpus fund.

India is playing a significant role in advancing the usage of solar energy in developing countries by organizing this summit. The country will offer 500 training slots to ISA member countries every year and also provide 27 solar projects to the tune of US$1.4 billion to developing countries. ISA also becomes the first international body which will have a secretariat in India.

India’s solar push stems from the falling costs of providing solar energy. “Producing a unit of solar power costs Rs.2.50 (per kilo watt hour), a cost similar to that of more traditional energy sources,” Kanika Chawla, a senior program lead at Delhi-based Council on Energy, Environment and Water, a partner organization of the ISA was quoted by Reuters as having said.

Sector analysts believe that ISA is not just all about preparing nations for climate change but one that could have wider ramifications. They see this as an opportunity for India to play a big role among developing countries and counter China which has over the last two decades made its presence felt on the back of its economic prowess.

Analysts and industry experts believe India’s goodwill backed by French support has created a new chapter in the solar energy domain. New Delhi which is likely to be the headquarters for everything connected to solar in the future could exercise its clout in the geo-political scenario as India prepares for producing solar panels at rates that are cheaper in comparison to what comes from China.

Will New Delhi become the world capital of the solar energy? It can be so, if French President is to be believed.

(The author is a Delhi-based journalist. He can be reached at prasad.n@indoen.com)