India to subsidize solar power

January 4, 2007 (Daily Kos) – India is making the choice to seriously subsidize solar power to kick start its solar industry. While renewables already account for 7.5 percent of India’s electrical generation capacity (of 127 gigawatts), hopes are that this will expand significantly. As for the subsidy levels,

“My ministry will provide financial assistance amounting to 12 rupees (30 cents) per kilowatt hour in case of solar photovoltaic and 10 rupees per kilowatt hour in case of solar thermal power fed to the electricity grid”
The incentives are to run for ten years, on top of any incentives to come from elsewhere.

A Siegel’s diary:
At this time, of the 127GW capacity in India, just 20MW is solar even though India is a major solar panel producer. Until now, most of the solar panels produced in India have been exported, mainly to Europe. In 2007, India exported 140MW of solar panels.

This program will provide a path to change this.

For India, this is a new path toward incentives. In the past, incentives have been capital funding which does not, necessarily, ensure power generation.

Over the next five years, private industry is expected to invest $250 million in solar plants eligible for this aid.

There is a limit to the program, no more than 10 megawatts per state and no more than 5 megawatts per company.

This is an interesting incentive program. The incentives are high enough to almost certainly guarantee a profit. Solar pv, on large scale, can already come in below 30 US cents/kwh, and solar thermal is just slightly above that ten cent figure for new plants (and perhaps lower), thus these incentives guarantee a profit.

What looks good about this is the requirement for distribution — both throughout India and across multiple companies. This is a path toward building capacity (of all types) for solar across India.

A real question comes with that first kilowatt of capacity past 10 megawatts. Will there be a cliff, with no incentives, or will a sliding scale of some sort come into effect to help insure continued expansion of India’s solar electric sector.

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