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

The

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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

emission cuts.

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.

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