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In 2009, when I said that India would have two to three gigawatts [of solar energy] by 2015, people said ‘That’s not possible’,” says Inderpreet Wadhwa, founder and chief executive of Azure Power, one of the country’s biggest producers. “Today we have 5GW running.”Mr Wadhwa left a technology career in California after he came home to India on what was supposed to be a short personal trip eight years ago and saw the “huge” opportunities presented by the shortage of electricity.
He started with small solar plants for electricity-hungry districts and rooftop systems for companies to replace costly diesel generators.Mr Modi has championed solar power and helped launch a global solar alliance at the Paris climate summit to mobilise an attention-grabbing $1tn of funds worldwide by 2030.India itself, with current electricity grid capacity of less than 300 gigawatts, aims to increase its solar installations from below 5GW now to 100GW by 2022 — more than double the present solar capacity of China and Germany, the two biggest solar nations.The latest contract awards suggest that, in sunny India at least, solar power can compete head-on with coal in terms of price, albeit not in terms of 24-hour availability.SB Energy — a joint venture between Japan’s SoftBank (which has promised 20GW or $20bn of solar investment in India), Bharti Enterprises of India and Foxconn of Taiwan — last month won a reverse auction for a 25-year, 350MW project in Andhra Pradesh.
The price of the electricity to be sold, Rs4.63 per kilowatt hour, equalled the record-low winning bid of SunEdison, the struggling US group, for a 500MW project auctioned earlier in the same state.
That price, says Mr Wadhwa, is cheaper than for the power to be supplied by recently auctioned projects using imported coal. “Maybe another year, and you’ll be cheaper than new domestic coal projects as well,” he says, noting that Indian conglomerates with interests in coal are now among the active bidders for solar plants.
According to the US-based Institute for Energy Economics and Financial Analysis, which promotes green power, investments of over $100bn have been announced for Indian renewable energy in the months since last February by companies and lenders from east Asia, Europe and India itself.“India is executing one of the most radical energy sector transformations ever undertaken, and this year  has shown that the flow of finance is matching the ambition,” the IEEFA’s Tim Buckley said in November.Bridge to India, a consultancy, says some 9GW of solar projects are under development, portending “a massive jump in India’s total installed capacity” in 2016.
BMI Research, part of Fitch, has raised its forecasts for solar projects in the coming years, projecting “solar capacity to reach nearly 45GW by 2024 — short of the government targets but a ninefold increase from current installed capacity levels”.For all the optimism among investors and suppliers — Ulrich Spiesshofer, who heads Swiss engineering group ABB, sees India’s “massive aspiration on renewable energy” as an opportunity for more equipment contracts — they will have to deal with two big challenges if they are to make profits.The first problem is the grid, which needs to be extended and modernised, especially if it has to handle sometimes volatile supplies of renewable energy
. India’s grid currently can handle 272GW in all, of which less than 30GW is from renewable sources, “and there are already issues of evacuation [of power from the plants],” says Manish Shrivastava, a fellow at the Energy and Resources Institute, a think-tank.
If that is solved — and organisations such as the Asian Development Bank are investing heavily in grid improvement — investors face the question of whether bankrupt Indian state electricity distributors or even central institutions can be relied on to pay the agreed cost for a quarter of a century when prices are in constant decline. In Mr Modi’s home state of Gujarat, a solar pioneer, the state distribution company has even mounted a challenge against the pricing of a past agreement it signed itself.
Such issues are not unique to India — Spain enraged solar investors by retroactively cutting subsidised prices five years ago — and investors hope the reverse auction system applied to most contracts since 2010 is sufficiently robust and transparent to protect their interests.Arunabha Ghosh, chief executive of the Council on Energy, Environment & Water, a research group, says India is trying to achieve what Germany did to develop alternative energy over two decades, but in half the time.While many see the mission as a “leap of faith”, he reckons India can succeed, even if it reaches the 100GW mark a few years late. “The solar ambitions are definitely reachable,” he says.