How Can India Become a Global Leader in Solar Power Generation?

The advancement of the International Solar Alliance by India and France has gained prominence in the field of solar power generation. However, there are some critical challenges that India faces, such as poor supply chain of production, severely low tariffs and over-dependence on Chinese imports. 


The 24th conference of the United Nations Framework Convention on Climate Change (UNFCCC), held in Katowice, Poland and the G20 Summit 2018 that took place in Buenos Aires, Argentina saw Prime Minister Narendra Modi pitching his brainchild, the International Solar Alliance (ISA), under the vision of "One World, One Sun, One Grid." Undoubtedly for India, forums like the G20 and the UNFCCC provide an ideal platform to collaborate with major powers on new areas of growth and in bringing about global reforms. In fact, New Delhi has a significant say in most of the G20 deliberations, considering India’s growing economic and strategic might. By participating in various development agendas, such as promoting inclusive development, upholding fair trade, addressing climate change and fighting terrorism, India has become an important stakeholder. Most recently, the ISA, formed by India and France in 2015, has grabbed headlines in the field of renewable energy development (Choudhary 2016). It has already been signed by 75 countries and ratified by 44 of them. It has also signed a joint declaration with the European Union at the 24th UNFCCC conference, highlighting the need to develop several synergies between Europe and India. In this regard, 2019 will serve as the litmus test for the Indian administration—while there is tremendous scope for development, considering the projects it has got lined up for 2019, tackling certain domestic challenges and negotiating with China, who is still not a member of ISA, can prove to be tricky. Being the leading producer of solar panels and having already attained high performance in solar power use, China’s absence in the ISA cannot be denied. To promote the ISA as India’s new contribution to climate diplomacy, it is important to set the tone right from the very beginning of 2019 for constructive decision-making.

The Inception 

India’s approach to international climate negotiations began with the debate of common but differentiated responsibilities (1992) at the UNFCCC of Earth Summit in Rio de Janeiro. According to this debate, countries were divided based on their level of development, which was in turn used to determine their required amount of reducing carbon emission and adopt an alternate mode of growth.
Though there was a period of inertia for more than a decade, in the 2009 UNCCC in Copenhagen, known as the Copenhagen Summit, India shifted to undertake a dialogue-based and constructive engagement with other global partners (Saha and Talwar 2010: 160–174). It took on more responsibilities as one of the world’s biggest carbon emitters, especially with Jairam Ramesh becoming the Minister for Environment and Forest and Climate Change in the same year. He was very vocal about increasing India’s role in the global climate change mitigation and sought to incorporate it within India’s national interests. According to him, India would fare better aligning with G20 countries if it seeks to institute better environmental policies. India’s climate diplomacy further got more weaved into its wider foreign policy agenda with the 2015 Paris Agreement (Lakshmanan et al 2017). India became a much more strategically critical actor in international climate negotiations, reflected not only in its rising geopolitical importance and increasing global presence but also in the initiatives it has been taking to curb rising temperatures.
The ISA—a treaty-based and UN-sponsored international alliance for countries to invest in solar energy, and cooperate in research and development (R&D) of solar power technologies—is actually India’s brainchild to restructure the international climate order. India has two of the world’s largest solar plants, and this solar energy has always formed the bedrock of the country’s emerging climate diplomacy (Murthy 2014). According to India’s Intended Nationally Determined Contribution (INDC) goals, solar power capacity target has to reach 100 gigawatts (GW) by 2022 (Ministry of Environment, Forest and Climate Change, Government of India). Prime Minister Modi has been on a path of industrious renewable energy cooperation with countries like France, Germany, Japan, the United States (US), Canada and other countries. The ISA was in fact announced by Modi and French President Emmanuel Macron at the 2015 Paris Summit. What has changed for India is that it has finally positioned itself at the important decision-making high-table—partaking in constructive climate diplomacy and global governance. As emerging economies like China, India and Brazil among others are in a quest for cleaner energy, this initiative does well in projecting India as a responsible global climate leader. Thus, ISA has a twin-pronged purpose—to aid India in its quest to rejuvenate its solar energy and be energy independent, and also translate it into India’s geopolitical leverage at the UN.

Domestic Setbacks 

There are, however, certain domestic issues that need to be overcome. First, India imported 89% of its total solar cells imports—the chief ingredient to produce solar panels—from China in 2017–18. China accounted for India’s Rs. 224 billion worth of import out of the total Rs 252 billion. Conversely, India only exported solar cells worth Rs. 9.37 billion (Business Standard 2017). According to the Directorate General of Anti-Dumping and Allied Duties (DGAD), such over-dependence on China and Chinese solar panel dumping has resulted in the loss of 2 lakh jobs in the country. The solar manufacturers find it inexpensive to use the cheaper solar panels than manufacturing it themselves at a higher price (Raghavan 2017). According to the government, however, this is not a viable plan if the Make in India, the initiative has to be successful. It also prevents India from achieving economies of scale in its solar power production. 
Therefore, the Indian government has imposed 25% safeguard duty on the import of Chinese solar cells till July 2019. This duty shall be decreased to 20% till January 2020, and further to 15% until July 2020 (Financial Express 2018). While this is supposed to have undesirable repercussions for buyers purchasing the Chinese solar cells, it does not guarantee a better supply for Indian solar power generation. Second, the solar power tariff is decreasing rapidly within the country—Rs. 2.44 per unit—while the cost of the equipment and the cost of setting-up is still the same. In the absence of government incentives, solar stakeholders are not motivated to generate enough. Third, the solar power supply chain in the country is not as developed, reliable and robust as it should be if India wants to achieve its goals of securing 175 GW of clean energy, where 100 GW is supposed to be derived from solar power (Seetharaman 2018). The big conundrum lies in the fact that while India is facing a huge financial crisis at home competing with Chinese solar panels, the government is still willing to offer a $1.4 billion line of credit to African countries, Sri Lanka and Bangladesh for their solar projects at an interest rate cheaper than that offered by China (Kumaraswami 2018). Thus, it can be observed that India’s climate diplomacy today is heavily derived from its aid and cooperation with external relations. However, a strong domestic base if absent can make the whole gamut of development unsustainable. More effort has to be taken to in ameliorating the domestic vulnerabilities and expanding the domestic use of solar power. 

Global efforts for ISA  

It would be erroneous to assume that India will be able to tackle this issue domestically. Since ISA is a global platform, it can potentially generate funding for solar power projects, and also help India engage in R&D with countries that are already peaking in their solar power usages, such as France, Brazil, Germany, Malaysia and others. Besides bilateral engagements, the ISA’s partnership with global institutions such as the European Investment Bank, the European Bank for Reconstruction and Development the International Energy Agency, the World Bank, the African Development Bank (AfDB), the Asia Infrastructure Investment Bank (AIIB), the Asian Development Bank (ADB), the New Development Bank (NDB) and the Green Climate Fund (GCF) can be put to better use (Ministry of Finance, Government of India 2018). The G20 also has a Climate Sustainability Working Group which holds annual meetings to prepare better responses to the effects of climate change create long-term strategies to diminish carbon emissions and assemble climate finance flows.
It cannot be denied that to achieve ambitious renewable energy goals domestically and as part of ISA, India requires ample financial inputs from China and the developed world.  A glaring deterrent in this regard is the absence of China from the alliance. It is the leading producer of solar energy, dominating the solar panel industry and single-handedly investing in renewables in several countries, mostly those that are a part of its Belt and Road Initiative (BRI) (Mathews and Huang 2018). In this regard, it would be fruitful for India to engage with China through multilateral associations like the G20 and BRICS (Brazil, Russia, India, China and South Africa). China’s investment in solar power within ISA would certainly bear wider consequences on its leadership in the renewable energy market. 
Taking such incremental steps still counts as steps towards forming an institutionalised body to create, share and implement renewable energy. Individual efforts, if collaborated can leave a much broader and stronger impact. However, it also does not mean that countries have to rely on G20 Summits, or other such multilateral forums to come to the negotiating table. Steadfast climate action can also result from countries forming smaller, but global coalitions. It prevents leadership voids, as all countries have equal but different proposals to offer. On the other hand, while taking the climate discussion beyond the UNFCCC and G20 Summit is important, the platform that they offer should not be disregarded either. 

Scope for India 

The ISA could be extremely important in advancing technology transfer, finding funding sources and creating better storage technologies. In fact, to reduce dependency on imports from China, many countries are focusing on creating their own technology and schemes to boost renewable energy use. For instance, Thailand already reached 3 GW of solar power installations in 2017, amounting to 50% of their 2036 renewable energy target (Pugnatorious 2018). If the five BRICS countries are considered, a lot of progress can be traced, though at different scales, in renewable energy production. 
While the Indian and Chinese figures have already been discussed, the situation in Brazil is also worth examining as 88% of its total energy production is renewable energy, according to the Boletim de Monitoramento do Sistema Elétrico (Electric System Monitoring Report), released by the Brazilian Ministry of Mines and Energy (Nascimento 2018). It was also the first country to run the auction-based scheme to obtain renewables and distribute it among various local and international stakeholders (Bellini 2018). Their technology is advanced and has reached a mature level. In fact, according to Brazil’s solar association, their solar photovoltaic capacity is expected to attain 2 GW by the end of 2018. South Africa and Russia, which are known to rely heavily on fossil fuel, are also making slow progress. South Africa had increased its renewable capacity and plans to boost it to an ambitious target of 18 GW capacity by 2020 (Renewables 2018 Global Status Report). In Russia, though there has been very little investment in this field (only about an allocation of $1 billion in 2014), the Vladimir Putin government has emphasised on putting more effort in this direction (Reilly 2017).

As history reflects, changing trends of power and wealth are heavily dependent on how much a country can obtain and leverage the emerging energy source. As more and more countries are adopting a greener form of technology, replacing carbon use with more environmental-friendly sources, a global systemic change can be seen—with newer manufacturing tactics, forms of trade and investment, supply chains, and like-minded partners harnessing green technology together. While this will take place over several decades, slowly getting reflected in a country’s governance structure and foreign relations, it is going to be fundamental in shaping the development course of emerging economies. As both China and India want to be the global leaders of renewable energy use, it is vital for the two countries to get their policymakers as partners, rather than strategic competitors.
It is this challenge of coping with a strategic neighbour like China that the ISA, and particularly India, has to overcome. Currently, the alliance is offering India an obvious chance to prove its global leadership in shaping a potentially game-changing discourse in the environmental governance regime. India’s partnership with European countries has given it the leverage to learn and harness new forms of technology, and secure its financial requirements. Its membership in multilateral forums like G20 and BRICS has allowed it to have a global influence. The developmental aid it is providing to the African and Pacific countries improves its soft power, and thus enhances its diplomatic outreach. Finally, participation in all of these multilateral arenas has shaped the Indian policy-makers’ intellect to engage in strategies of creation, procurement and investment. The anticipation of the coming general elections in 2019 is bound to make Modi test new waters, at least in the field of securing renewable energy. So as to achieve the clean energy target of 175 GW by 2022, he has to either rely on cheaper Chinese imports at the cost of local manufacturing or give China partnership in the ISA and secure its energy goals for a long-term basis.

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