SVKM’S NARSEE MONJEE COLLEGE OF COMMERCE AND ECONOMICS

(AUTONOMOUS)

2023-24

FYBMS SEMESTER 2

Macroeconomics Project

Development of Solar energy in India

SUBMITTED BY:

Name Roll No. SAP ID

Charvi Shah B041 45614230037
Isha Dalal B042 45614230054
Shreyas Sarvade B043 45614230108
Vedant Agrawal B044 456142300
 Growth of installed solar power capacity (Introduction)
-By Isha Dalal
India is the 3rd largest energy consuming country in the world and stands 4th globally in Renewable
Energy Installed Capacity , 4th in Wind Power capacity and in Solar Power capacity.[1]

[Source: Invest India, Renewable Energy in India]

At the COP26, India pledged the Panchamrit, a series of five pledges made by Prime Minister Narendra
Modi to combat climate change and make India more sustainable. This targets increasing renewable
energy, reduction in projected carbon emission and finally aims to target net-zero emission. To achieve
these goals India aims to reach 500GW of non- fossil fuel capacity by 2030, which it aims at making it
happen by solar, wind and hydropower energy.

India’s installed non-fossil fuel capacity has increased 396% in the last 8.5 years and stands at more than
179.57 GW , about 42% of the country’s total capacity (as of Nov 2023). India saw the highest
year-on-year growth in renewable energy additions of 9.83% in 2022. The installed solar energy
capacity has increased by 30 times in the last 9 years and stands at 74.30 GW as of Jan 2024. India’s
solar energy potential is estimated to be 748 GWp as estimated by National Institute of Solar Energy
(NISE).[ 2]

India has set a target to reduce its carbon emissions by less than 45% by the end of the decade and aims
to achieve net zero carbon emissions by 2070 by using sustainable energies. India aims for 500 GW of
renewable energy installed capacity and produce 5 million tonnes of green hydrogen by 2030. This will
be supported by 125 GW of renewable energy capacity and 50 solar parks with an aggregate capacity of
37.49 GW.
Between 2018 and 2021, the solar power capacity installed in India almost doubled, reaching roughly 40
gigawatts in the latter year. In 2022, the solar capacity installed in the country stood at 63 gigawatts. To
reach the targeted capacity for 2030, the installed capacity has to grow by more than four times.[3]

PLI Scheme
PLI SCHEME [MNRE (Ministry of New and Renewable Energy)]
Under the Aatmanirbhar Bharat umbrella, Shri Narendra Modi, the Union Cabinet chairperson, has
introduced the Production-Linked Incentive (PLI) Scheme for high efficiency solar PV modules to
enhance India’s manufacturing capacity, reduce dependency on imported solar panels and enhance
exports of solar PV modules.

This scheme has 2 phases

Phase 1
Launched in April 2021
Implementing Agency - Indian Renewable Energy Development Agency Limited (IREDA)
Budget allocation - Rs. 4500 cr.
Aim - establish an initial production ecosystem of PV solar modules and attract manufactures.
IREDA selected 3 successful bidders
1. Reliance New Solar Energy Limited
2. Adani Green Energy Limited
3. Sterling and Wilson Solar Limited
for setting up of 8,737 MW capacity of fully integrated Solar PV Module manufacturing units within
PLI scheme outlay of ₹ 4,500 crore.
This phase was likely a pilot to test the scheme's effectiveness and observe the response for further
refinement.

Phase 2
Launched in September 2022
Implementing Agency - Solar Energy Corporation of India (SECI)
Budget allocation - Rs.19500 cr.
Aims - to build a massive 65W of annual manufacturing capacity.
SECI selected 11 bidders to set up a combined capacity of 39600MW.

Positive side effects

- Job creation of around 30,000 direct and 120,000 indirect jobs.
- Reduction of reliance on imported solar panels, potentially saving Rs.17500 cr. annually.
- The PLI scheme will encourage R&D which will help in potentially lowering the solar panel
prices for consumers
- Other incentives offered under this scheme include financial grants, tax breaks and duty
concessions. [1] [4]

The Role of Government Policy in Driving Solar Energy Adoption

-By Shreyas Sarvade

Developing nations especially India which is endowed with vast solar energy potential need to balance
between economic growth through industrialization and sustainable development for which the
development of solar energy, which is a clean and green energy, is very essential. Energy production and
consumption impact economic growth, to achieve energy independence, the dependency on imported oil
has to be reduced by developing alternative energy sources like solar energy. India is ranked 5th in the
world's GDP rankings in 2024. India has attracted a total of $3.8 billion in foreign direct investment
(FDI) in the solar energy sector over the past three financial years and the current financial year until
September 2023, according to Bhagwant Khuba, Minister of State for Ministry of New and Renewable
Energy, and Chemicals and Fertilisers. Currently, India stands 5th in solar PV deployment across the
globe at the end of 2022. Solar power installed capacity has reached around 70.10 GW as of 30-06-2023.
[5]
[Source- IEA, International Energy Agency report] [Source- Bloomberg NEF]

The investments in solar project development are dominated by economies that have a developed solar
PV market, such as China, USA, Japan, Spain, Australia, Netherlands, South Korea, Brazil, Vietnam,
Germany, and India. These economies together accounted for ~80% of the total solar investments in
2021. One of the world’s major power resource user countries, China, has put forward the “double
carbon” target to reduce emissions. [6] Government policies are vital to build a more secure solar PV
supply chain. New policies in the USA and India can lead to more diversified global solar PV
manufacturing supply chains. Solar PV manufacturing investment in India and the USA is expected to
reach almost $25 billion over 2022-2027, a sevenfold increase compared with the last five years.[7]

The solar radiation reaching the earth’s surface in one year provides more than 10,000 times the world’s
yearly energy needs. Furthermore, harnessing just one-quarter of the solar energy that falls on the
world’s paved areas could meet all current global energy needs comfortably. India is densely populated
and has high solar insolation, an ideal combination for using solar power. Because of its location
between the Tropic of Cancer and the Equator, India has an average annual temperature ranging from 25
°C to 27.5 °C. Therefore, India has huge solar potential.[8]

Solar Schemes (Introduced by Indian Government):

1. CPSU Scheme Phase-II (Government Producer Scheme)- The Government of India, through the
Ministry of New & Renewable Energy (MNRE), on 05.03.2019, approved the implementation of CPSU
Scheme Phase-II for setting up grid-connected Solar Photovoltaic (PV) Power Projects by Central and
State PSUs, Government Organisations, with Viability Gap Funding (VGF) support of Rs 8,580 crore,
for self-use or use by Government/ Government entities, either directly or through Distribution
Companies (DISCOMs).

2. Grid Connected Rooftop Solar Programme- The scheme aims to achieve a cumulative installed
capacity of 40,000 MW from Grid Connected Rooftop Solar (RTS) projects.

3. Development of Solar Parks and Ultra Mega Solar Power Projects- The scheme for
“Development of Solar Parks and Ultra-Mega Solar Power Projects” was rolled out in December 2014
to facilitate the solar project developers to set up projects expeditiously.

4. Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan (PM KUSUM)- The scheme
aims to add solar capacity of 30,800 MW by 2022 with total central financial support of Rs. 34,422
Crore including service charges to the implementing agencies. The Scheme consists of three
components:

1. Component A: 10,000 MW of solar capacity through the installation of small Solar Power
Plants of individual plants of capacity up to 2 MW.

2. Component B: Installation of 20 lakh standalone Solar Powered Agriculture Pumps.

3. Component C: Solarisation of 15 Lakh Grid-connected Agriculture Pumps.

5. New Solar Power Scheme (for PVTG Habitations/Villages) under Pradhan Mantri Janjati
Adivasi Nyaya Maha Abhiyan (PM JANMAN) was launched to focus on eleven critical interventions
through Nine Line Ministries for implementation. In addition, the New Solar Power Scheme has a
provision for providing solar lighting in 1500 Multi-Purpose Centres (MPCs) in PVTG areas where
electricity through the grid is not available. [9]

The government of India has taken several steps for the promotion of solar energy in the country
which are:

1. Permitting Foreign Direct Investment (FDI) up to 100 percent under the automatic route,
2. Waiver of Inter-State Transmission System (ISTS) charges for inter-state sale of solar and wind
power for projects to be commissioned by 30th June 2025,
3. Declaration of trajectory for Renewable Purchase Obligation (RPO) up to the year 2029-30,
4. Notification of standards for deployment of solar photovoltaic systems/devices,
5. Setting up of Project Development Cell for attracting and facilitating investments,
 6. Standard Bidding Guidelines for tariff-based competitive bidding process for procurement of
Power from Grid Connected Solar PV and Wind Projects.
7. The government has issued orders that power shall be dispatched against Letter of Credit (LC) or
advance payment to ensure timely payment by distribution licensees to RE generators.
8. Notification of Promoting Renewable Energy through Green Energy Open Access Rules 2022.
9. Notification of “The electricity (Late Payment Surcharge and related matters) Rules 2002 (LPS
rules).
10. Launch of Green Term Ahead Market (GTAM) to facilitate the sale of Renewable Energy power
including Solar power through exchanges. [10]

In reality, these projects face challenges in execution because in India, local banks have been financing
large commercial solar projects but their lending to the residential rooftop segment is minimal owing to
small ticket-sized loans, lower risk appetite, and policy and regulatory challenges. Some local banks
such as Canara Bank and Union Bank of India have come up with dedicated solar loan products, but the
interest rates offered are not attractive and often require a home mortgage as a guarantee. [11] The
overall growth in solar investments has been mainly driven by the growth of solar investments made in
the Asia and Pacific region, contributing nearly 50% since 2015, with an average growth rate of about
13% over the past 5 years. [12] However, the increase in investments is mostly in two countries, India
and China, primarily because of a suite of favorable policies and regulations such as tax exemptions and
central financial assistance. Growth in terms of deployment of solar PV in India has not so far translated
into massive growth of local manufacturing capacity. In 2022, India achieved a remarkable milestone by
introducing approximately 14 GW of additional solar capacity, marking it as a record-breaking year for
annual capacity expansion. By the close of December 2022, the cumulative solar installations in India
reached an impressive 63.5 GW, solidifying the nation’s position as the world’s fifth-largest in terms of
installed solar capacity. Furthermore, India has undertaken a significant revision of its solar target for
2030, now aiming to achieve 300 GW out of a total of 500 GW of renewable energy capacity. As a
result of this ambitious adjustment, India is poised to experience an annual surge in solar capacity
between 20 to 30 GW starting from 2023 onwards.[13] To conclude active participation, and increased
public funding along with government policies and subsidies are equally important to sustain growth in
this sector in the future.
 Socio-economic Impact

-By Charvi Shah

Job creation

[Sources: Solar photovoltaic employment in 2022: Top ten countries, IRENA Annual Review on Jobs
and Employment, 2023]

India’s total solar jobs are estimated to be at 281 400. On-grid solar is estimated to have generated 201
400 jobs, with another 80 600 in off-grid settings (14.IRENA and ILO, 2022). The fiscal year 2022
brought an additional 52,100 solar industry jobs, mainly in project development. Utility-scale solar saw
an 83% increase in solar PV capacity, resulting in 72,700 jobs, up from 42,900 in 2021. Meanwhile,
rooftop solar employment grew to 65,400 positions, a jump from the prior year's 43,000 jobs (15.ET
EnergyWorld, 2023).
[Sources: Women in the solar photovoltaic sector compared with other sectors, IRENA Annual Review
on Jobs and Employment, 2023]

Women’s representation across solar PV job roles is uneven. They are most frequently hired for
administrative positions, where their share reaches 58%. Meanwhile, women represented comparatively
small shares, 32% of STEM (science, technology, engineering and mathematics) positions and 35% of
non-STEM technical positions (such as lawyers or procurement experts). Further, women hold 38% of
other non-technical positions (e.g. marketing, sales, distribution, product assembly or installation). The
better performance in this category is largely due to off-grid solar, which has multiple positions and
initiatives targeting women. This may also influence leadership composition, with women accounting
for 30% of managerial jobs. However, women represent 17% of the total senior management roles in the
solar PV industry (IRENA and ILO, 2022).

Land Acquisition

[Sources: Annual Solar Installation, Mercomindia 2023]

In 2023, large-scale solar installations fell 51 per cent to 5.8 GW from 11.7 GW in 2022. Extensions
granted to several large-scale projects and delays primarily due to land acquisition and transmission
connectivity issues impacted capacity additions during the year. Large-scale solar accounted for 77.2 per
cent of annual solar capacity additions, and rooftop solar contributed 22.8 per cent (16.Q4 and Annual
India Solar Market Update, 2023).
 Bhadla Solar Park

An initiative towards empowering nation

[Sources: Soaking Up Sun in the Thar Desert, NASA Earth Observatory]

Economic Rationale

The proposed project will help the state of Rajasthan develop its renewable energy potential to meet its
own renewable energy purchase obligations and help other Indian states do the same. The Rajasthan
Solar Policy 2011 aims to develop the state as a solar hub with the addition of up to 12,000 megawatts
(MW) of capacity over a twelve-year period with private sector participation. Renewable energy
development is expected to provide lessons benefiting Rajasthan in subsequent stages of its expansion of
renewable energy (17.RRP IND 45224)

Cost–Benefit Analysis

The economic analysis model examines the welfare implications of producing and evacuating renewable
power in Rajasthan. Project 1 aims to complete by 2016, with transmission investments expected to
evacuate 1,900 MW of renewable capacity. Benefits include consumer and environmental benefits,
including reduced air pollution and climate change effects. The Indian government considers
augmenting renewable energy capacity to mitigate climate change (RRP IND 45224)
Land related implications

The Bhadla Solar Power Park has led to a significant loss of land used by local farmers, affecting 82%
of families with livestock. The park's presence has resulted in extreme poverty and a lack of access to
common land. Despite the creation of 5,500 jobs and new businesses, many jobs require specialized
knowledge of solar power, which locals lack. This unplanned and non-participatory implementation has
resulted in a double marginalization of the local people. They lost access to land they used for
generations to graze their livestock and were excluded from employment in the newly built solar energy
mega-infrastructure (RRP IND 45224)

Conclusion

India, home to 18% of the world's population, uses only 6% of the world's primary energy. India's
energy consumption has almost doubled since 2000 and the potential for further rapid growth is
enormous. In India, renewable energy such as solar energy can replace the use of fossil fuels in the
upcoming years. Solar energy technology is currently making a major contribution in the field of
economic development of the country. A brief assessment of the global status of solar energy in this
paper indicates that a minimum level of maintenance appears necessary to encourage solar power
deployment, and also shows the goal which is necessary for the growth of solar power in India. To
improve the condition of rural areas, solar panels should be installed near villages to produce electricity
for the villagers. India's solar power industry still has a long way to go but if it works at a steady pace
and correct plans, the country will soon stop being dependent on non-renewable resources.There is a
desperate need to reduce the cost of retail solar energy to make it more accessible and inc
References

[1] - REN21 Renewables 2022 Global Status Report

[2]- Invest India, Renewable Energy in India

[3]- Statista, solar power capacity installed

[4]- Ministry of New Renewable Energy, PLI for Solar PV Modules

[5]- REN21’s Global Status Report 2023 & IRENA’s Renewable Capacity Statistics 2023

[6]- Carbon peak and carbon neutrality in China: Goals, implementation path, and prospects

[7]- ISA (International Solar Alliance) World Solar Power Report 2023

[8]- Souvik Sen, Sourav Ganguly, Ayanangshu Das, Joyjeet Sen, Sourav Dey- Renewable energy
scenario in India: Opportunities and challenges

[9]- Schemes by the Ministry of New and Renewable Energy

[10]- Ministry of New and Renewable Energy- Solar overview

[11]- ISA (International Solar Alliance) World Solar Investment Report 2023

[12]- Bloomberg New Energy Finance (BNEF) 2023

[13]- ISA World Solar Market Report 2023

[14]-IRENA and ILO (2023), Renewable energy and jobs: Annual review 2023, International Renewable
Energy Agency, Abu Dhabi and International Labour Organization, Geneva

[15]-Solar dominates as India adds nearly 1 million renewable jobs in 2022: Report

[16]-2023 Q4 AND ANNUAL INDIA SOLAR MARKET UPDATE - 1.8 GW INSTALLED IN Q4 2023

[17]-Rajasthan Renewable Energy Transmission Investment Program-Project 1