International Solar Alliance Could Earn India a Place in the Sun

The launch of the International Solar Alliance is a diplomatic coup by Prime Minister Narendra Modi. It gives India – long considered a reluctant negotiator at UN climate summits – a seat at the high table. It will no longer be considered, as former Environment Minister Jairam Ramesh said last year, “the last man standing in Paris”.

India has often been seen by the West in the past, but not so much after allying itself with the consortium known as BRICS – Brazil, Russia and China – from Copenhagen in 2009, as blocking international agreements on climate change.

It still rightly asserts the principle of “common but differentiated responsibilities”, meaning that industrial countries which have caused the problem have to put their money where their mouths are. It has now taken the lead in an area which the West ought to have initiated.

The HQ of the Alliance will be in India, for which Mr Modi announced the land and $30 million, that would be provided for five years to get the initiative off the ground.

“This day is the sunrise of new hope,” Prime Minister Modi intoned in the presence of French President Francois Hollande and UN Secretary General Ban Ki-Moon.

The alliance will bring together some 100 countries between the Tropics of Cancer and Capricorn, some of which have vast tracts of land and abundant sunshine but are too poor to exploit this source of clean energy.

Mr Modi referred to how the Alliance would promote R&D, best practices, training and institutions in solar energy. He looked forward to investment from developed countries in the developing world’s solar sector.

So far, only around $0.5 billion has been invested in India’s solar sector by other governments, multilateral institutions like the World Bank and bilateral agencies. France and Holland have already indicated their willingness to fund part of the new initiative.

By projecting India as the hub for this cutting-edge, fossil fuel-free technology, Mr Modi has carved out a niche in a developing country. The institution could arguably be seen at par with the UN Environment Programme in Nairobi, the only major UN agency to be located in a poor nation. India could bridge the gap between developing and developed countries in this sector.

If India itself is able to absorb more of this technology, it will help the country meet its ambitious target to create a capacity of 100 gigawatts (GW) — or 100,000 MW — of solar power by 2022. By 2016, it seeks to treble its capacity to 12 GW.

Industry Welcomes Initiative

Indian industry has welcomed the initiative. Last month (November), the US company SunEdison bagged a solar power project in Kurnool district of Andhra Pradesh with the lowest-ever bid of Rs 4.63 a unit, which makes it competitive with electricity generated from fossil fuels.

The project is being launched by the National Thermal Power Corporation – itself a votary of “old” coal – in the first round of auctions under the National Solar Mission.

Other investors are eyeing the Indian market, like $3 billion worth of projects from China’s Sany Group and $20 billion by Japan’s SoftBank Corporation.

The previous lowest tariff for a project was Rs 5.05 a unit by Canada’s SkyPower for a plant in Madhya Pradesh. The leading state for solar in the country is, not surprisingly, Gujarat, followed by Rajasthan.

At Monday’s launch, Mr Ban Ki-Moon cited how he was impressed on a visit this January, when he saw the innovative scheme to install solar panels atop a Sardar Sarovar canal in the Prime Minister’s home state.

However, it will be a mistake to get too euphoric about Mr Modi’s bold gamble. SunEdison, the world’s largest renewable energy producer, is itself laying off 5-10 per cent of its staff in India. It wants to sell off all projects it won between 2011 and 2014 due to doubts about their viability.

Commentators have warned that a steep fall in solar power prices is not necessary beneficial. While this can make it competitive with gas, or even coal, it may send the wrong signals to investors, whether from India or abroad.

Land is also a major issue, since it needs a square kilometre of land to erect a 40-60 MW solar plant. This may underline the attraction of Africa in a partnership, where vast tracts of land are up for grabs.

Already, Indian companies are buying or leasing large areas in countries like Ethiopia to grow roses and other cash crops. The availability of land at throwaway prices may well be an unstated reason propelling India’s global solar power ambitions.

(The writer is a Mumbai-based senior journalist)