In less than four years, India has increased the country’s installed solar power capacity more than sevenfold from 2.6 GW to 20 GW (as at the end of January 2018), well ahead of the targets set. This is the equivalent of 23 nuclear reactors2. The goal is to reach 100 GW by 2022, an almost insane figure for such a short space of time.
In 2015 alone, a million solar lamps and 1.4 million solar-powered cookers were sold.
Huge room for improvement
While these figures are collosal, they are commensurate with the size of the country and they hold the promise of the sector's potential for growth. After all, there is huge room for improvement. Photovoltaic power accounted for only 0.4% of national electricity production in 2015. Yet, with 300 sunny days a year, India is the world's top-ranking nation for potential solar yield9. And it has finally decided to make use of this free and endless source, a trend that is set to develop. In just 90 minutes, the Earth receives enough of the sun’s rays to supply power for a whole year. This is true on a global scale and it is particularly true for India.
Between 2015 and 2022, the country plans to invest USD 100 billion in solar power in all its forms. The generic term solar power actually includes the following different forms:
- Photovoltaic solar power
- Refrigeration and airconditioning
- Solar thermal energy
- Concentrated thermodynamic solar power
Solar power in its various forms and uses
- Photovoltaic solar power is electric power produced by exposing "photovoltaic" cells to the sun's rays. The photoelectric effect turns the photons emitted by the sun into electricity. At the end of its service life, a photovoltaic cell will have produced 20 to 40 times the power that was needed to manufacture and recycle it. By 2030, India could have an installed photovoltaic capacity in excess of 200 GW, almost the current capacity of its coal-fired plants, and by 2020, electricity produced by solar power plants could cost less than their coal-fired counterparts. As proof of its commitment and determination, the government has recently doubled the tax on coal and offers subsidies to close down coal-fired plants that are over 25 years old.
- Lighting. In 2012, 5.4 million solar lamps (4.6 million street lamps and 0.8 million household lamps) were installed. By 2022, the figure is predicted to reach no less than 20 million. Government incentives include a subsidy of at least 30% of the cost as part of its policy to reduce greenhouse gas emissions. Banks have also been instructed to facilitate low-rate loans for citizens wishing to transition to solar energy.
- Farming. Low-power photovoltaic pumps are increasingly being used to irrigate crops. Again illustrating the penetration of solar, irrigation canals are gradually being covered with PV modules, with the two-fold benefit of producing electricity and reducing evaporation. The cells installed for these uses also recover rainwater, which has the appreciable advantage of being free from bacterial contamination and suspended matter; in a country still suffering from endemic diseases such as hepatitis and typhoid, this process can supply drinking water for village populations when used in conjunction with simple filtering and disinfection systems.
- Refrigeration and air-conditioning. Photovoltaic solar cells are installed on the roofs of houses: during the day, they provide the power needed for refrigeration or ventilation and air-conditioning systems7. The excess is used to power batteries which take over once night falls.
- Solar thermal energy means the use of sunlight to heat up a fluid (liquid or gas). The energy received by the fluid can then be used directly (for domestic hot water or heating) or indirectly (to produce steam to drive alternators and thereby produce electricity). In March 2016, India's total installed capacity of solar thermal collectors reached 6.3 GW (from collectors totalling 8.9 million square metres in area), the world’s sixth largest but far behind China (309.5 GW) and the US (17.4GW). The nation aims to install 20 million square metres of collectors (mainly solar water-heaters) by 2022.
- Concentrated thermodynamic solar power is used in concentrated solar power (CSP) plants. These plants use mirrors to concentrate the energy from the sun to heat a heat-transfer medium, generally to produce electricity. By storing the medium in a tank, these plants extend their operating time for several hours after sunset. The Indian government recently decided to reduce funding earmarked for the CSP industry in favour of photovoltaic solar power.
As a manager of sustainable and responsible investment funds, BNP Paribas Asset Management is following these transformations closely with a view to finding the winners of the future. In light of the tremendous environmental challenges we are facing today, solar power giants will no doubt emerge, particularly in the most densely populated countries such as India or China. And it is a reasonable assumption that they will be Indian or Chinese.
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More articles written by Alexandre Jeanblanc