The proposal, yet to be approved, calls for $100 billion investment in solar energy over the next two decades to install 20,000 MW of solar energy
plan proposes that the government should give out $5 billion subsidies
to the power utilities, every year for the next 20 years, which will
then buy solar generated power from the solar power plants. The goal
seems quite ambitious given the fact that the International Energy
Agency predicts global solar energy generation to be 20,000 MW by the
year 2020. The proposal comes after the announcement made by the Indian
Prime Minister last year that solar energy would be the focus of the
energy transformation in the country.
Solar energy gains importance from the fact that the coal fired power
plants in India have been struggling to get coal supplies and there is
lack of consistent gas supplies from other nations. Solar energy makes
sense as it can be an alternative to connecting all the remote areas of
the country to the grid.
Grid expansion and transformation (for renewable energy) is a cost
intensive exercise which is one of the major obstacle in large scale
proliferation of renewable energy even in the developed countries.
India still has thousands of remote villages which do not have access
to electricity, with off-grid solar energy systems these areas could
become self reliant.
Officials in the Indian government would love to call this a proactive
measure dodging all arguments pointing to pressures from the developed
countries to reduce carbon emissions. With the negotiation for the next
climate treaty under way India would definitely point to the
transformations it intends to undertake in its energy policy and would
look to dodge any demands for mandatory or, even, voluntary emission
reductions. There has been tremendous pressure on India to agree to
some kind of emission cuts especially after China agreed to sectoral
Instead, it is a very likely possibility that the Indian government
approaches the developed nations to partly finance the subsidies plan.
The developed countries could directly invest in the solar power plants
or could invest through the Clean Development Mechanism through trade
of carbon credits. The Indian government would certainly avoid sharing
the massive load of subsidies with the consumers, which is why a plan
to apply additional tax on coal and gas generated power was scrapped.
India is likely to continue investing in promoting renewable energy
while avoiding demands for emissions cuts. Recently, a World Bank
report justified India’s stand on resisting mandatory emissions cuts
noting that any such attempt could result in adverse consequences for
India’s efforts to eradicate poverty. Therefore, it seems pretty
reasonable that the developed countries provide financial help to
India’s efforts set up large scale renewable energy-based power plants
which could replace the coal-based power plants in the future and, in
the process, reduce the amounts of carbon emissions produced.