maandag 6 december 2010

Why the Indian PV market will grow fast

India will not wait for centralized electricity grids

Why is India set to soon become one of the world's largest PV markets? Because all the necessary ingredients are there: Permanent energy shortages, strong economic growth, growing energy demand, lack of fossil energy sources, and abundant sunshine. Solar PV is already competitive in India in several market segments such as for powering telecom towers. Tens of thousands more will be built in the coming years. Interesting market... But let’s take it one step further. Solar PV will be competitive with grid electricity in India within 5 to 10 years.

We are talking serious business

Average electricity consumption per household in India is expected to show a stunning growth, from a little over 600 kWh to more than 1000 kWh. So wake up Europe and the US - this is still per year and not per quarter as is the case for us! Because India’s population is more than double that of Europe and the US combined, we are talking serious business. How to power the rapid economic growth in India?

Can anyone make a serious guess as to coal prices in 20 years’ time?

Import more fossil fuel? Build more coal and nuclear power plants? Like in most democracies - and India is the world’s largest - it takes a couple of years to have such a plant available for power supply. Bureaucracy comes with democracy. Let’s say the plan to build a new central power plant starts today. You will be a winner if the power supply is operational in 5 years’ time. Plus, you will need expansion of the grid. On the other hand, what will the cost of (decentralized) solar PV systems be in 5 years’ time? At the very least, a lot cheaper than today - and likely close to grid prices. But even more important, you can calculate the exact cost of the produced (solar) energy for its 25 years’ lifetime. Those costs will be flat and completely predictable. Put that against the cost of electricity from coal or oil over the next 25 years - not forgetting possible CO2 taxes. Can anyone make a reliable prediction? So, if you are an investor and you don’t like risks in your business model, what makes more sense?

Skip the old-fashioned cable phase

No wonder the Government of India is taking first steps with solar energy under the National Solar Mission. The target: 20,000 megawatts of cumulative installed solar power by the year 2022. This seems an impressive number, but the program might indeed become reality...
Let’s make a comparison with telecommunication systems. Countries like China and India went straight from no telephones to mobile telephones for everybody. They never went through the era of cabled phones. Phones with wires - how old-fashioned is that? Now, will it make sense for India to invest its money into expensive and financially risky projects like centralized fossil power plants and grid expansion? With solar PV sure to become competitive in India within 5-10 years, this outdated approach can be skipped. Like with mobile phones, India can go straight to a decentralized power supply from financially more attractive and predictable PV systems.

No waste of money on old-fashioned technologies

In fact, their growth and development stage gives India a clear advantage. They don’t have to waste money on old-fashioned technologies. They will learn from the mistakes we made in the past - and this in a period of strong economic growth. Compare that with financially struggling economies in the Western World, where government budget constraints hinder investments in renewable energies.

Bureaucracy? Talk to a Californian installer!

There are some hurdles here and there - such as bureaucracy and corruption. But, is that much different from the Western world? Ever talked to a Californian solar entrepreneur about all the paperwork required for a new PV installation?

Power to the wireless people

It won’t surprise me if market development in India progresses at a faster rate than the National Solar Mission is targeting. Within a decade people in India will not wait for the Government stimulus programs in order to use solar power - just as no-one waited for the Government in order to install cables underground for “new telephone connections.” Photovoltaic energy systems will just provide the cheapest energy. This decade, no-one will wait for expensive centralized fossil power stations and grid expansions. People and new entrepreneurs will use and provide decentralized cheap solar energy. More than ever it will be “Power to the people!”

1 opmerking:

  1. Interesting thoughts. Off Grid Solar has already taken off much more than expected and decentralized Solar power will definitely be more successful than Utility scale grid solar. As you have rightly mentioned anything running on diesel and generators today, can be replaced by Solar at even the existing price points with minimal subsidy.
    As you have mentioned, it takes up to 24 months for a coal power plant irrespective of size to obtain just the environment clearances, where as renewable energy in India has little or no procedure in that regard. The bigger challenges remain in financing, technology and the quality of developers.
    Government has taken a very proactive and a feed back based approach with respect to the Solar Mission and the biggest debate going on right now seems be that of the domestic content requirement and whether it is a necessary condition for the same. Even in that regard, some state governments including Gujarat that have been in the forefront of Solar PV power development do not have any such requirement.
    Panchabuta has a detailed analysis of all this and more in its India focused renewable energy and cleantech blog at