Most state grids are near bankrupt and cannot pay for the ever-increasing subsidy amounts doled out. Once the elections are over, they will have no option but to stop these freebies.
In mid-January, the Centre for Science and Environment (CSE) published its annual report on the State of Renewable Energy in India. The report is a damning indictment of the government’s poor implementation of its policies.
Of notable interest is the statement: ‘Although India has set itself a massive goal of 40 GW of solar rooftop by 2022, only 3.4 GW had been installed till September 2018 — most of it by commercial and industrial customers, as the government has not promoted it with the right set of policies.’
It talks about the government’s implementation schedule (table below) disclosed by Upendra Tripathy, then secretary, at the Ministry of New and Renewable Energy.
Two-and-a-half years later, it is clear that of the 6 GW that were to have been installed, only 3.4 GW have been achieved.
The reasons for this shortfall are many. Primary among them is the ministry’s inability to get State-owned grids to push rooftop solar power. These grids are reluctant as they would not want to lose prime customers (industry and business establishments) from opting for solar power. Some state governments even slapped additional stand-by power charges on those that installed solar power panels on rooftops. This is because solar power can be generated at less than Rs 3 per unit (kWh) against the tariff of Rs 8-14 per unit that state governments charge for various types of industry and businesses. Display advertisements and shopping malls pay the highest slabs in most states.
About five years ago large industries were not willing to opt for solar power, but the mood has changed since then, and this is because batteries are becoming cheaper.
Batteries are crucial to the success of solar power because extracting power from the Sun can be an intermittent affair. Batteries attached to solar panels can store this intermittent power and allow for a steady stream of good quality and reliable power supply to industries.
Thus, with batteries getting cheaper and solar power popular, state grids could lose high-value customers. This will further strain the budgets of state governments that have generously doled out power subsidies. It’s these customers (and the ordinary customers who pay around Rs 6-8 per unit) who have helped state governments subsidise power to farmers. This has also helped states cover up power theft which in many cases was shown under agricultural consumption. The rise of solar power is the biggest threat to all these questionable practices.
That could explain why the Centre insists on charging a 25% safeguard (import) duty on solar panels and an 18% GST on batteries. If solar power helps reduce imported fuel bills, there is no justification for the high import duties and GST levies.
The benefits of solar power generation cannot be denied, especially for far-flung villages. Decentralised solar power generation and distribution facilities are needed there. One of the reasons why decentralised grids work is because the distance between the power generation source (the rooftop) and the consumption destination is short. The longer the transmission lines, the greater the losses (and potential theft). State governments are reluctant to accept this changed environment.
No wonder why the government could not meet its rooftop solar targets.
There is, however, reason to feel optimistic. Most state grids are near bankrupt and cannot pay for the ever-increasing subsidy amounts doled out. State power generation stations are nursing a pile of debt and are nearing breaking point.
Once the elections are over, they will have no option but to stop these freebies. If things go unchecked, they may not have the money to buy power from Independent Power Producers (IPPs) or even the NTPC. State-owned power stations may not have money for coal. Power plants may shutdown and state governments may give away clusters to the power sector to provide decentralised rooftop power.
That is when there is hope that the Indian power sector will change.For more Opinion pieces, click here.