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Transforming India into a solar power leader

Case Summary: 

India faces significant challenges in its energy supply. The population of India is about 1.1 billion while approximately 400 million people and 28 million households lacked access to electricity in 2011. To meet growing energy demand in a sustainable manner the Jawaharlal Nehru National Solar Mission was launched in 2009. This mission sought for: solar power to achieve market parity by 2022, 20 GW of deployed solar power by 2022, solar panel manufacturing growth in India, solutions to potential environmental impacts of solar panel production, and the empowerment of rural residents to meet their energy needs with self-generated electricity from solar power.

The mission functioned through several mechanisms with targeted assistance for on-grid and off-grid systems with tailored incentives. For on-grid systems, the mission created regulatory framework for 25-year power purchasing agreements at a subsidized tariff for electricity generation. For off-grid systems 30-90% of the system capital was subsidized, loans were guaranteed at a 5% interest rate, and villages that achieved 75% solar electrification were awarded a cash prize. The mission also subsidized manufacturing and research activities.

The ongoing program in India is aggressive by international standards. But the rapid pace has resulted in many lessons learned through both successes and failures. Lessons learned from the program include:

  • Providing secure investment structures. Whether on or off-grid, it was found to be necessary for the Indian government to provide clear, long-term, and consistent involvement in the solar industry. Loan guarantees and minimum requirements for solar developers and solar systems were deemed essential to the program’s success.
  • Establishing a regulated competitive bidding process for commercial deployment. Competitive bidding can provide rapid price decreases. But initial tariff structures were generous, and bids were received from developers with little to no experience in the power industry. Ownership and experience requirements-built program success and encouraged investor confidence.
  • Highlighting the needs of the rural poor. The initial program allotted only 7% of its funds to rural projects. While less profitable, rural programs have a high quality of life impact potential. Activist groups and NGOs worked with the Indian government to expand the focus towards rural poor and achieved successful implementation of low-tech solar solutions, such as solar lanterns and pumps.
  • Developing international participation. Other countries and NGOs were willing to invest and work in India when approached. However, international organizations only invested after well-defined data was made available which was initially a challenge, but ultimately benefited the overall program.

The national mission implemented a three-phase approach to radically increase solar power adoption. Phase 1 focused on the small-scale deployment of proven technology. Phase 2 funded large-scale utility and community solar deployments. Phase 3 increased domestic manufacturing to supply the growing industry. Moving forward there is increased desire for more rural involvement, international financing, and better investigating the impact of solar development. The growth of the solar industry seeks to enable India’s energy-poor to leapfrog from dirty fossil fuels directly to eco-friendly solar energy.

Action Area 
Planning and Implementation Activity 
Developing Strategies and Plans, Developing and Implementing Policies and Measures, Governance and Stakeholder Engagement, Financing Implementation, Low Emission Development Strategies, Long-Term Strategies
Sectors and Themes 
Industry, Jobs and Livelihoods, Renewable Energy, Rural, Urban
Climate and Development Knowledge Network (CDKN)