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Current Challenges in Diffusion of Solar Power in India

Over the last decade, the cost of producing electricity from solar power has reduced substantially, yet the usage of solar power has not increased proportionately. This Note analyses the constraints in power transmission and distribution, including infrastructural constraints and demand-side factors. It goes on to propose strategies for policy makers to increase the diffusion of solar power. Energy is the backbone of progress in any country. It is critical for running industries and households and increasing productivity. Goal 7 of UN Sustainable Development Goals (SDGs) ensures access to ‘affordable, reliable, and sustainable energy’ for all. The UN acknowledges that this goal is a prerequisite for achieving other SDGs, such as poverty eradication, industrialisation and mitigating climate change (United Nations, 2020). Not surprisingly, energy security remains a matter of priority in both governance and strategic considerations in India. Major contribution to the electricity mix in India comes from conventional sources of energy such as coal and gas. However, there are externalities involved in coal-fired power generation. To add to it, there are strategic costs of coal-based power. Hence, the focus in India has been shifting towards renewable sources of power such as wind and solar power. The major challenge in adoption of solar power about a decade back was in commercialising it in spite of higher direct costs in comparison to fossil fuels. This has changed now due to significant reduction in production costs. It is reported that falling cost of solar production has led to cancellation of few planned coal projects (Bloomberg, 2017). The solar power tariff in an auction conducted in 2020 reached an all-time low of `2.36 per unit, lower than the tariff in many coal projects (Bhaskar, 2020). Note