Driving in India is a challenge. A taxi driver once answered a question about the traffic regulations with, "You need a good horn, good brakes and good luck!"
As for the development of the PV market in India and Rajasthan, the opposite seems to be the case. Without making too much noise about it, the market in India is booming. Numerous new players have entered the market. Brakes are not required since India is in need of new power and at the same time needs to rapidly support its economic growth. And further development is not a matter of luck. Rather, it seems to be an inevitable natural fact. Even today, PV in India is already a competitor to diesel-fuelled power generators. Up until now, the focus has been on the large PV power plant projects under the National Solar Mission Government Programme. Diesel replacement will definitely become a major market segment. Think just in terms of the thousands of new telecom towers that will be necessary to support the tremendous growth of cell phone usage in India. The hotel manager in Jaipur, where we hosted the Solar Future Conference, stated, “We don’t know much about solar and maybe should attend your conference, as we did not know that solar PV is cheaper than our diesel generator.”
The PV market in the super-sunny State of Rajasthan alone is expected to grow to at least to 1 GW by 2013 and to 3 GW by 2017. But, as often before, this estimate by government officials may very well be too pessimistic and only based on the large power plant projects. Rajasthan offers 320 days of sunshine a year, growing needs for power and a government trying to get PV project development and industrial development of the ground. So, what is missing in order to fire-up this market? The answer: Cheap and easy financing. It is kind of the "chicken and egg" problem: the banks still view solar more as a risk rather than an opportunity. They claim that there is a lack of reliable data on PV power plants currently in operation. But this data will not become available if new PV projects are not financed - unless new projects are built with much cheaper financing from Chinese developers, supplying modules or even turnkey projects.
The government is trying to support local industrial PV development, with local content requirements for the NSM projects. But for a state PV program, for example in Rajasthan, this is not required - and the same goes for private PPA PV projects developed for private companies, or PV plants replacing diesel power. Once good returns are being made on PV-powered telecom towers, foreign money will find its way.
The price of diesel will continue to rise in India, simply because the government will reduce related subsidies. At the same time, PV will become cheaper due to economies of scale in the manufacturing industry. Furthermore, solar PV power with storage will be available at a lower price fixed for 20 years. It is not hard to imagine a very profitable business model for this situation...
Soon, foreign and Indian entrepreneurs will discover these opportunities. If they are unable to obtain financing from local banks, but can obtain much cheaper financing from Chinese PV module and system suppliers, guess what will happen...
In a country where both chicken and eggs are eaten frequently, this "chicken and egg" financing problem should be easy to resolve. Indian bankers should drive off-road more often; PV financing is not about tooting horns and warning about the risks involved. The bankers should take their feet off the brakes. There is no luck involved. Financing PV systems is not so much a risk, but rather a very secure asset providing fixed returns. Solar energy in India is the safe (high)way to travel!