How India Jump-Started Its Solar Economy

This month, the chief minister of the Indian state of Gujarat announced that the world’s largest solar plant had started producing electricity. The plant’s solar panels fill thousands upon thousands of acres and, in theory, can produce about half as much power as a nuclear plant. Opening a solar plant of that size would be an impressive feat anywhere in the world, but it’s especially noteworthy considering that two years ago, India's total solar power capacity was next to nothing.

The potential for solar power in India is astronomical. Much of the country averages 300 days of sunlight each year: If much-wetter Germany can go solar, India certainly can. In 2010, India’s national government launched a project to rapidly ramp up the country’s solar power capacity, and it's worked: As of March, the country has 30 times more solar power than it did at the beginning of the program—enough to power a small city.

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Enthusiasm for solar in states like Gujarat has helped pump up India’s infrastructure. But while large projects are grab headlines, the federal program has focused primarily on smaller-scale efforts.

In Phase 1 of its National Solar Mission, the Indian government held a “reverse auction” for solar projects, which offered agreements to purchase power at rates that would ensure building a solar power plant would be profitable. The lowest bids won the contracts. In the first round, the country fielded bids from 500 companies for just 63 projects. During the second round, the bids were so low that they put the cost of producing electricity with solar panels close to that of fossil fuels.

But these early successes don’t guarantee that India will fulfill its solar potential. In a new report [PDF], the Natural Resources Defense Council concludes “it is unclear whether [India] is on course” to meets its 2022 goals. The first round of bids might have been too low to do the work the companies promised, and there’s some worry that projects already bid out won’t be completed,. And NRDC says every task the Indian government has set out for itself—“commissioning projects, increasing their bankability, developing a manufacturing base, and creating an enabling environment”—needs improvement.

But if India can get it right, the country will provide a model for how other countries can create successful renewable power systems. The lessons? Start small, gin up competition, create strict oversight, and support local leaders with big dreams.

Photo via (cc) Flickr user Hector Garcia