The Indian PV plan

As part of the National Action Plan on Climate Change, the Indian government has announced this month its plans to install 20GW of solar generation capacity by 2020, 100GW by 2030 and 200GW by 2050.

This plan will be launched in three phases:

During phase 1 from 2009-2012, India will deploy 100MW of solar PV on public sector buildings, promote utility-scale PV projects and set up local solar manufacturing parks. The plan envisions 1GW installed solar generation capacity by 2012, up from almost nothing in 2008. During phase 2 from 2013-2017, the government plans an installed capacity of 6-7GW by commercial operations of various pilot programs and during phase 3, government expects rapid scale-up of solar programs with minimal subsidies and to reach 20GW capacity in 2020 with 3GW rooftop PV installed on 1 million rooftops.

Three types of incentives are expected: Feed-in-tariffs for 20 years set annually and without official cap, 10 year tax holiday and customs and excise duty exemptions on capital equipment and other critical materials. Additionally, the government plans to introduce National Solar RPS - whereby states would be required to generate 1-3% of electricity from solar resources by 2017. In order to facilitate the creation of solar facilities, additional policies are expected to be introduced.

The Indian PV Sector

The electricity consumption per capita in India is expected to increase from 660 kWh currently to over 2,000 kWh by 2032. India's per capita consumption is about 7% of the OECD countries and 20-25% of the world average. Furthermore, India's grid connected capacity is estimated to grow from 146GW in 2008 to over 460GW by 2030. Although wind currently dominates renewable energy generation in India, solar PV has the potential to outpace wind generation given attractive solar conditions. Several studies show that approximately 0.5% of India's land area would be sufficient to meet all electricity needs using solar PV technology by 2030.

Approximately 70% of India's population lives in rural areas and more than 450 million of the Indian population have no access to grid electricity. Approximately 80,000 villages are not even connected to the grid. The Indian government spends approximately $2-4 billion annually to subsidize the price of kerosene, which is the primary fuel used for electrification of rural India. Therefore, PV has also a major card to play in this market. In addition, solar PV is also ideally suited for the 21 million Indian irrigation pump market. Electricity consumption by the irrigation pump sector is estimated to account for between 10-15% of India's total consumption.

Finally, there is significant potential for solar PV to replace estimated 20-25GW of captive power generation, which is currently supported mostly with diesel power generators running at costs comparable to solar PV costs today.

Source: Barclays Capital