Harnessing Solar energy, Options for India

capital subsidy of `150 per W p promised by the government, an additional generation-based
incentive of `4.25 per kWh generated can be provided for twenty-five years of operation of the
microgrids, and the net present value of this will be `110 billion.
Slicing the numbers differently, providing 13.5 million households each with 18 W solar PV panels
will work out to be 500 MW, and would require a total investment of `97 billion. a The magnitude of
this must be judged in relation to the 40,000 villages and 28 million households that may still remain
un-electrified in 2012. b Hence, off-grid applications for rural electrification should be prioritised
considering they make economic sense as well. Moreover, given the inadequacy of the grid, kerosene
is likely to remain the mainstay for lighting in many households. Kerosene is expensive, subsidised,
and has adverse environmental and health effects. The net present value of subsidising kerosene for
fifteen years to 28 million households (at a 10% discount rate) is around `167 billion. c This should
be compared to the total expenditure of ` 45 billion for 28 million solar lanterns at the rate of `1,600
per lamp.
2. Photovoltaic Applications
Utility-scale PV plants pose few technical challenges. Though generation of electricity from solar
energy is expensive today, with the generation-based tariff offered by the government, it becomes
economically viable to the investor. The real advantage of solar-PV-based electricity is that it can be
generated close to demand centres, thus avoiding large T&D losses. Furthermore, in India today,
diesel is used by small commercial enterprises as well as large buildings (private and public) to
generate electricity during grid outage. Given that power generation from diesel is highly polluting
and is increasing India’s dependence on oil imports, solar energy could play a crucial role here. The
chapter on solar photovoltaic applications discusses several applications that are either
economically viable today or will be in the near future. A brief summary of the analysis follows.
2.1. Solar PV Options for Rural Electrification in India
Simple effective solutions including solar lanterns and solar home lighting systems (SHLS) are
discussed in the chapter on photovoltaic applications, along with solar-based microgrids. While solar
lanterns can be a stopgap measure till electrification, SHLS and microgrids can provide sufficient
power to meet residential and community-based requirements, and can easily be integrated if and
when the grid does reach these areas. Microgrids based on solar energy and other renewable energy
sources to meet the needs of a village or cluster of villages can be viewed as a permanent solution as
long as appropriate institutional mechanisms are in place for sustainable operations. Prevailing
financial, policy and institutional mechanisms for wide-scale adoption are discussed.
Even at today’s high prices, solar-based microgrids offer a competitive solution to grid extensions. A
detailed techno-economics of grid extension versus solar-based microgrids can be found in the
section on rural electrification. Alternate subsidy regimes to the current capital subsidy are also
discussed.
a Each 18 W solar PV system is valued at `7,177.
b Village electrification status from the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGYV) as of 30 March
2010.
c Assuming per household usage of 50 litres per annum and a subsidy of `15.67 per litre (subsidy amount for
year 2009–10) for fifteen years.
Executive Summary CSTEP | Page 13