If India has to develop at the rate of above 8 percent in the years to come and achieve its mission of being a developed nation by 2020, the most crucial sector that we need to focus upon is Power. For a country that is being heralded as the new land of opportunities, the fact that forty five percent of its 1 billion people live in a state of electricity deprivation does not bode well. India has over 1,67,077 MW (as per the latest figures by the Ministry of Power) installed capacity of power generation and yet there is an energy shortage of 9.6 percent when it comes to peak power and peak power shortage of 12.61 percent. If something is not done to bridge this gap and new sources of power are not created, it has the potential to derail the entire Indian growth story.

Let us now look at the targets for power production for 2020. If the growth continues at similar levels, the power requirement for 2020 is expected to be around 400000 MW. It is obvious that this growing requirement cannot be met by conventional sources of energy. To achieve this target, renewable sources of energy have to play a role. Among various sources of renewable energy, Solar looks the most promising source. India, with about 300 clear sunny days in a year, is well endowed by nature to harness this clean source of energy. The technology involved, i.e. Solar Photovoltaic (SPV) is extremely flexible, reliable and moving rapidly towards grid parity. In fact, a solar photovoltaic (SPV) project can be created in any size and at almost any location in India. For instance a small 5KW home lighting system can manage energy requirements for a household, a 100KW system can run a small commercial center and a 1MW facility can produce enough power for 20 villages. The modular approach for solar power (PV) expansion is very attractive for the Indian market. The government, after carefully studying the escalating prices of non-renewable sources of energy like coal and the negative environmental impact that they cause has come up with The Jawaharlal Nehru National Solar Mission, an ambitious but achievable mission that plans to produce 20 GW of solar power by 2020.

When it comes to harnessing solar power, Solar Photovoltaic (SPV) is the world’s fastest growing energy technology and holds tremendous potential for India. Solar Photovoltaic Systems (SPV) are experiencing considerable decline in prices year after year due to intense research, commercialization of utility projects and increase in poly silicon production. Even though it is still expensive in contrast to conventional sources of power in tangible costs, there is a growing realization that this source is the most promising one when it comes to generating power without polluting the environment. Although the world over installed capacity of solar photovoltaic (SPV) power is approximately 8000MW, in India its installed capacity is just a meager 100 MW. An important reason for low capacity installation so far has been the absence of favorable feed-in tariff as incentive to entrepreneurs. However, this problem has since been addressed. The Central Electricity Regulatory Commission has declared an FIT for Rs 17.91/KWhr SPV power sale for a period of 25 years as compared to the earlier 50MW Generation-based Incentive scheme, where the maximum allowable tariff was Rs 15/KWhr for a period of 10 years. The National Solar Mission (NSM) promises rapid growth of utility scale SPV power projects in the country. The cost of solar power has shown significant reduction year over year and with increase in production, a downward trend continues. It is expected that solar power will become grid competitive in costs around the year 2017.
Azure Power operationalised India’s first private MW scale solar power plant on the Solar as a Service model – in Punjab, in December 2009. This is the first MW scale commercial sale of solar power to a State Utility (Punjab State Electricity Board) and a landmark deal in itself as it paved the way for future commercial Power Purchase Agreements for Solar Power in India. The Azure Power 2MW plant in Awan Village, Amritsar District has been built over 10 Acres of land and is a pioneer for MW scale generation of solar power in India in many ways. The Azure Power business model is one such example. We understand that the high cost of owning and operating a solar power generating system is one of the reason why solar power is less developed in India. Therefore, Azure Power developed the Solar as a Service business model where instead of selling to individual households; the company builds large scale solar power facilities to service demands of several households with a single facility. In fact, aggregating electricity demand in rural and semi-urban areas in India and improving the livelihood of households by offering energy security through large scale solar power generation facilities is one of the guiding principles of Azure Power. These facilities also help stabilize the grid at the tail end and minimize transmission losses which at present are as high as 23 percent in India. Solar Power and other distributed sources of energy can thus help in reducing the impact of grid losses.

The greatest scope for solar power generation today is in the distributed model i.e., in building a large number of small and medium scale projects, rather than a few large scale projects. The distributed model will mean small power plants that can cater to the needs of a collection of villages and ensure power generation at the point of consumption. There is a need for projects that directly benefit the consumers and it makes great sense for projects to be set up where grids do not exist.

There is also a lot to look for in terms of commercial projects as well, with large corporations showing interest in the sector; huge roof-top based projects being an obvious opportunity. The energy security (guaranteed availability of power) offered by Solar Power clearly attracts attention from the commercial sector. Also, the ‘high cost’ of solar power is also not a deterrent for the commercial sector, because the alternative in many cases is the high cost of power generated by diesel generator sets.