5 Key Points for India on the Road to 300 GW Solar by 2030

India missed its 2022 goal of achieving 100 GW of installed solar capacity. The fact that this target is still unmet highlights the need for significant efforts to overcome various challenges if the country is to realize its vast solar potential. This is even more important considering last year’s government resolution of adding 50 GW of renewable energy capacity annually for the next 5 years, i.e., from Financial Year 2023-24 till Financial Year 2027-28, to achieve the target of 500 GW by 2030. To meet this target, the country must achieve at least 300 GW of fresh solar capacity, if not more, to even come close to its 2030 renewable energy goal. Look at it this way, almost 70 per cent of India’s solar capacity for 2030 is still to be created. Quite simply, that means the methods of old not necessarily have to be carried forward!

While the plan is set in motion, the country would need to put some sincere efforts on certain fronts to avoid missing such deadlines.

SaurEnergy identifies 5 key points India needs to get right to ensure a 300 GW cumulative solar capacity by 2030.

#1 Policy Consistency

Frequent policy changes, such as the ALMM saga, safeguard duties, basic customs duties, and increasing goods and services tax rates, have hindered solar progress in recent times. It made it difficult for the investors, developers, and financiers, to stick to long-term commitments, thus restricting seamless solar implementation in the country. To achieve 300 GW of solar capacity by 2030, policy stability must be maintained.

India’s current solar policies include tax relaxations, subsidies, and the Production Linked Incentive (PLI) scheme. The PLI scheme, launched with an outlay of INR 24,000 crore, aims to achieve a giga-watt (GW) scale manufacturing capacity for high-efficiency solar PV modules. Project developers benefit from a ten-year income tax exemption on all project earnings, the ability to recover 40 per cent of costs in the first year through accelerated depreciation (AD), and a tax waiver on 100 per cent of profits for ten assessment years from the initial assessment year. Additionally, the PM Surya Ghar Muft Bijli Yojana pushed rooftop solar with subsidies of up to 40 per cent of the installation cost of solar systems directly to people’s bank accounts and offers concessional bank loans.

Further exemptions include sales tax, excise tax, and customs duty. While the latter takes care of rooftop solar demand to an extent, the PLI scheme and other measures have ensured adequate domestic manufacturing capacity. The only remaining piece of the puzzle might be domestic pricing vis a vis import cost.

Initiatives like these are crucial for achieving 300 GW of solar capacity by 2030 as long as they remain consistent and do not change frequently.

#2 Green Financing

Renewable projects in India face investment risks from payment delays to regulatory challenges, which contribute to financing barriers to mobilising investment. India needs humungous financing to realise its renewable potential, including solar. As per one Ember report, India would need an investment of USD 293 billion to meet its solar and wind targets. The report further notes that India’s financing capacity must increase nearly threefold on average by 2030 from an investment capacity of approximately USD 75 billion in the previous eight years.

To meet these expectations, India needs to tap into public markets and green financing options. Green financing bridges the gap by attracting capital from both public and private sectors, incentivizing businesses to adopt sustainable practices, and empowering individuals to invest in a greener future. Various financial instruments, such as Green Bonds, Green Deposits, and Green Fixed Deposits, are available to promote green development.

The Indian green bond market has seen impressive growth, with issuances reaching a total of USD 21 billion by February 2023. The private sector has been a major driver, accounting for about 84 per cent of the total issuances. Additionally, the government issued sovereign green bonds in 2023, taking a significant step in mobilizing resources for green infrastructure projects. A rash of solar IPOs have also indicated optimism around the sector, and improved access to financing for quality firms.

India needs more green financing for its net-zero climate ambitions to come to fruition. According to a 2023 RBI report, India’s green financing requirement is estimated to be at least 2.5 per cent of GDP annually until 2030.

#3 Strengthening State Discoms

Distribution companies are often perceived as the weak link in the power supply chain due to their financial instability and inefficiencies. Their substantial unpaid dues further undermine the sector’s viability, and they frequently obstruct the growth of open-access and rooftop solar projects. Achieving the necessary solar growth in India requires improving the system of discoms, starting with professionalizing these companies.

To enhance their financial health, regulatory commissions must set remunerative tariffs. The loss levels assumed by these commissions while determining retail tariffs should be realistic and not overly stringent. Addressing managerial inefficiencies is also crucial for improving the financial health of discoms. It’s not just about having meters and infrastructure but also about the commitment to reduce loss levels. Additionally, the government should promptly pay all its dues, including subsidies.

Integrating renewable energy can help reduce power purchase costs through solar rooftop installations, which can curtail demand and enhance supply by injecting power into the grid. Properly structured rooftop solar projects can be highly beneficial for discoms, offering multiple advantages. They can help utilities reduce transmission and distribution (T&D) losses, strengthen the grid, and improve reliability. Rooftop solar can also reduce the investments needed in T&D networks and almost eliminate recurring subsidies, as the cost of procuring solar at the end of the distribution grid is much lower than the cost of supplying power to the same customer.

#4 Managing the Skill Shortage

India’s goal to reach net-zero carbon emissions by 2070 and use 50 per cent renewable energy by 2030 has significantly increased job opportunities and the demand for skilled workers in the solar power industry. In 2022, India’s solar sector employed 282,000 workers in both on-grid and off-grid systems, a number expected to grow substantially in the coming years. Importantly, green job opportunities are opening up outside the country as well, creating a massive opening to deploy Indian workers productively.

However, a skill shortage has emerged as a major obstacle to India’s solar growth. According to the ‘Solar Spectrum of New India’ survey, about 90 per cent of respondents acknowledged the need for specialized skills in solar panel installation, and 45 per cent believe skilled labour is unavailable locally.

To address this, developing a skilled workforce must be a strategic priority for policymakers aiming to accelerate solar expansion. This requires increased investment and funding for training programs and workforce upskilling, particularly since the country has long neglected this area. The policy makers need to realise that India can’t reach milestones set for 2030, and even 300 GW solar capacity is a stretch, if a skilled workforce in the sector is not ready to take the charge.

While government initiatives like the Suryamitra Skill Development Programme are training technicians for on-the-ground industry work, there is also a need for qualifications to prepare individuals for specialized jobs in project management, design, cost evaluation, and consulting. Only a few institutes in the country offer exclusive degree courses in Solar Energy, though the discipline is included in various Renewable Energy programs. The sector needs more focused efforts to bridge this skill gap.

#5 Ensuring Existing Schemes Deliver the Promises

India has been proactive in formulating ambitious solar schemes like PM SuryaGhar and PM KUSUM. Launched in 2019, the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan (PM KUSUM) Scheme aims to help farmers install solar pumps and grid-connected solar and renewable power plants. In August 2022, the scheme was extended until March 2026, to add 34,800 MW of solar capacity and a total central financial support of INR 34,422 crore.

The PM Surya Ghar Muft Bijli Yojana, launched on February 15, 2024, targets solar rooftops and aims to provide free electricity to households across India. Under this scheme, households receive a subsidy covering up to 40 per cent of the cost to install solar panels on their roofs. It is expected to benefit 1 crore households and save the government INR 75,000 crore per year in electricity costs.

India has also embarked on a major grid strengthening exercise, which needs to be accelerated if the transmission sector is to keep pace with renewable additions. Similarly, energy storage initiatives need to pick up pace now, again, to ensure energy from solar hours is utilised fully.

While these targets promise a significant boost to India’s solar capabilities, proper implementation is the real challenge. Having already missed its 2022 solar target, India must ensure that these schemes deliver on their promises. Achieving these targets is crucial for the country’s renewable energy goals for 2030, and for achieving at least 300 GW solar capacity by that time.