Live life off the grid or tap the sunshine in your backyard

IIf you thought sunbathing is for the skin and soul, think again. The holy grail of clean energy is in your living room powering your oven or charging batteries.

Some 150 million kilometres away, the Sun is all set to shine on the solar sector fuelling the great Indian entrepreneurial dream. Companies hoping to tap into the Sun’s energy are looking at an opportunity that could translate into $42-billion in investments over the next ten years.

Thanks to the concerns on climate change, the world has woken up to harnessing renewable energy to address growing energy needs. In the entire spectrum of renewable energy — wind, biofuel, hydro etc. — solar power has become the hot pursuit.

The immediate provocation for the solar rush in the country is the National Solar Mission (NSM), or the Jawaharlal Nehru Solar Mission, announced earlier this week, which targets an installed solar power generation of 20,000 MW by 2022. An ambitious target, but definitely achievable, says the industry. But the immediate action is to put in place a viable financial mechanism.

That is because, though, sunlight is in abundance in the country (about 5,000 trillion kilowatt per hour (kWh), with most parts receiving 4-7 kWh per square metre per day), harvesting it costs Rs 16-18 per unit or four times the cost of conventional fossil fuel-based power. Understandably, as elsewhere in the world, the industry in India too expects the government to subsidise solar power to make it attractive for consumers. But the 15-page Mission document has not made any headway in this direction. According to a purported draft of the policy, the fund requirement was pegged at Rs 34,000 crore by 2020 and Rs 92,000 crore by 2050.

However, a recent note from the Prime Minister’s Office, according to sources, pegs the subsidy bill at Rs 69,000 crore. Apart from multilateral mechanisms, this is sought to be met through budgetary and non-budgetary support. However, things are still hazy and prospective investors will have to wait till the next Union Budget for clarity.

In the meantime, however, clean energy has been attracting much attention.

According to venture capital and private equity tracking firm Venture Intelligence, 2008 saw a record 13 deals totaling $363 million. But more importantly, there was a virtual rush of proposals to set up solar photovoltaic manufacturing units in the country after the National Semiconductor Policy (NSP) of 2007, which clubbed technology for computer chip manufacturing and solar cells in the same basket, given the common raw material requirements and technology.

“Solar is another dotcom like boom. There will be many players and many disappointments for those who think it’s easy,” warns K Srinivas Kumar, co-founder and CEO of the Bangalore-based Kotak Urja Pvt. Ltd., a 12-year-old solar cell and module maker.

The Department of Information Technology has received 17 investment proposals of which 15 were for solar cell and module manufacturing at a whopping Rs 1.3 lakh crore investment. Of these, 12 received in-principle approval as of June this year.

According to Rajiv Jain, associate director, government affairs, India Semiconductor Association, there are 8-10 large solar manufacturers in the country with an installed cell capacity of 400 MW and module capacity of 700 MW. Compared to this,  15 proposals under the NSP will add 3000 MW, subject to their achieving financial closure and successfully kicking off operations.

States like Andhra Pradesh, Gujarat, Rajasthan, Maharashtra and Karnataka too have been proactive in wooing potential investors into the solar space. Andhra Pradesh is the first state off the block, thanks mostly to an opportunistic positioning of the FabCity, which failed to attract much of semiconductor investments, but proved ideal for solar photovoltaic manufacturing companies to set up shop there. It has received proposals from 25 companies totaling an investment of nearly Rs 10,000 crore over the next 3-4 years.

The state has also kicked off plans for a SolarCity project to attract companies for setting up solar farms at Kadiri, some 70 kms from Bangalore. At least, six companies want to set up solar generation utilities at an investment of Rs 4000-5000 crore over the next 4-5 years, say state officials.

When it comes to utilisation of solar applications, Bangalore has the largest deployment of rooftop solar water heaters that will generate energy equivalent to 200 MW everyday.

This apart, it will also be the country’s first grid connected utility scale project soon.
In fact, Bangalore, has the potential of emerging India’s Sun City, stresses Kotak Urja’s Srinivas Kumar. “We have a spirit of enterprise, the ecosystem for raw material availability and technology. All that is needed is a financial ecosystem to galvanise it,” he maintains.

Poornima Shenoy, president of the India Semiconductor Association (ISA), agrees. One reason why this will happen is because of Bangalore’s semiconductor ecosystem, which is central to the success of the solar photovoltaic industry.

Bangalore is also the first city in the country to put in place an incentive mechanism by providing a rebate, which has just been increased to Rs 50, on monthly electricity bills for residents using roof-top thermal systems which are now mandatory for all new structures.

The state has also signed 110 MW of solar capacity, according to K Jairaj, additional chief secretary in the Department of Energy. It is also setting up two demonstration projects of 3MW and 5MW each in North and South Bangalore for grid connected solar power systems, which will be one of the first such systems in the country.

The clean energy apart, major fallout of the solar rush will be the immense potential for job creation. According to the National Solar Mission document, the solar industry will need at least 1 lakh trained and specialised personnel across the skill spectrum. However according to others, this could be an underestimation.

Every megawatt of solar energy will provide direct employment to up to seven people in manufacturing and applications development alone, says ISA’s Rajiv Jain. This apart, a huge indirect employment potential exists in the balance of system (BOS), development and maintenance industry which provides the batteries and related equipment to store the power generated through solar photovoltaics.

According to a study by the Scientific Advisor to the Government of India, a 20 GW installed photovoltaic capacity by 2022 will generate a direct requirement of 61,000 skilled personnel in cell and module manufacturing.

A point for concern, however, is the huge demand that the solar industry will generate for highly skilled Phds in the country. It is estimated that a whopping 2000 Phds will be needed to meet the target set by the NSM over the next 10 years. Apart from finances, the industry and government have to focus on building a talent pool to make India a clean energy destination.