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As the world is moving towards more sustainable and eco-friendly ways of development, most national governments have taken initiatives to increasingly move towards clean sources of energy to meet consumption demands, with developing countries such as India at the forefront of this shift.

Promotion of renewable energy sources on a large scale is now recognized as viable option for ensuring a sustainable low carbon growth worldwide. India also has favoured this viewpoint, as renewable energy was never absent from India’s policy matrix. But the thrust and the prominence in renewable energy policies and execution are a more recent phenomenon. Despite being a country largely dependent on fossil fuels for its energy needs coupled with the enormous challenge of providing access to modern energy services to its 1.25 billion people, India has consciously decided, post 2014, to harness its full solar potential as part of a big push to the renewable energy sector in India.

National Solar Mission

Although talk of harnessing existing solar potential was present since the 1990s, the first comprehensive scheme in the solar energy sector was perhaps the ‘Jawaharlal Nehru National Solar Mission’, launched by former Indian Prime Minister Dr. Manmohan Singh in 2010. This was one of several initiatives that were part of the National Action Plan on Climate Change that dealt with promotion of “ecologically sustainable growth while addressing India’s energy security challenge”. National Solar Mission aims to promote the development and use of solar energy for power generation and other uses with the ultimate objective of making solar competitive with fossil-based energy options. One of its most important objectives was “to create an enabling policy framework for the deployment of 20,000 MW of solar power by 2022.” The plan includes: Specific goals for increasing use of solar thermal technologies in urban areas, industry, and commercial establishments; a goal of increasing production of photo-voltaic to 1000 MW/year; and a goal of deploying at least 1000 MW of solar thermal power generation.  Other objectives include the establishment of a solar research centre, increased international collaboration on technology development, strengthening of domestic manufacturing capacity, and increased government funding and international support. Subsequently, various schemes were launched on a larger scale.

In the run up to, and post Paris Agreement, the Indian Government announced further ambitious renewable energy targets. With a potential of more than 100 GW, the target is to achieve 60 GW of wind power and 100 GW of solar power installed capacity by 2022. Given that in 2014 the world’s entire installed solar power capacity was 181 GW, this target is extremely ambitious and clearly places India as a major potential renewable energy player (World Resource Institute, October 2015). Under the landmark Paris Agreement, the Indian Government, as part of its Intended Nationally Determined Contributions (INDCs) submitted to the United Nations Framework Convention on Climate Change (UNFCCC) took up a target of generating 40% of its power needs through non-fossil sources, considered to be an ambitious target for a developing country.

The Solar Rooftop Scheme and the Viability Gap Funding (VGF) Scheme, both under the Solar Energy Corporation of India, saw more ambitious targets. While the rooftop scheme has set a goal of achieving 40GW of rooftop solar power generation by 2022, for which the Government has provided a subsidy of 30%, the VGF scheme has seen the successful implementation of the “first 750MW allocation” out of which a significant capacity has already been commissioned. Moreover, schemes such as the development of solar parks under the Jawaharlal Nehru National Solar Mission scheme gave a further boost to the solar sector.

Even internationally, India gained prominence for its constant efforts for the promotion of solar energy and the resultant pathway of low carbon climate resilient development. One such effort spearheaded by India, the International Solar Alliance (ISA), came into effect post the Paris Declaration of November 2015. The ISA’s underlying goal was to enhance energy security and ensure more sustainable ways of development for its member states, through collective efforts. It laid emphasis on “joint efforts required to reduce the cost of finance and the cost of technology” and “mobilize more than US $ 1000 billion of investments needed by 2030 for massive deployment of solar energy”.

There has been a remarkable progress in the Indian Renewable sector. The total generation capacity which was 3.3 per cent in 2002 increased to 13.4 per cent in 2015. In addition, there has been a declining trend in the solar tariffs in the last few years.

The Government has declared the trajectory of bidding 60 GW capacity of solar energy and 20 GW capacity of wind energy by March 2020, leaving two years’ time for execution of projects. The share of renewable in the total installed capacity has been increasing over the years and the current share is around 3 times what it was in the year 2007. This has been made possible through various fiscal and promotional incentives for the solar sector (Table 1).

Table 1: Fiscal and Promotional Incentives for Solar Energy Sector – A few examples



Capital subsidies

Under the Off-grid and Decentralized Solar Applications, the MNRE provides 30% subsidy on the cost of the system.

Under Off grid solar applications, for installation of stand-alone SPV power plants by Central and State Government Bodies and their establishments in Special Category States and North East States and Islands the Ministry provides 90% subsidy ranging from Rs.72/- to Rs.396/- for off-grid solar PV applications

The Ministry is implementing a programme on Grid Connected Rooftop and Small Solar Power Plants Programme which is providing subsidy upto 30% of benchmark cost for the general category states and upto 70 % of benchmark cost for special category states is available for residential, institutional and social sector. For Government sector incentives upto 25% of the benchmark cost is provided.

Interest Subsidy

Indian Renewable Energy Development Agency has formulated a scheme of low cost financing with interest rate of 9.9% to 10.75% per annum.


Generation based incentives

GBI incentive is provided to solar under Rooftop PV and Small Power Generation Programme (RPSSGP).

FDI Policy

100% FDI is allowed under automatic route for projects of renewable power generation and distribution subject to provisions of The Electricity Act, 2003

Renewable Generation Obligation (RGO)

-New coal/lignite based thermal plants after specified date to also establish/procure/purchase renewable capacity

Priority sector lending norms

Renewable energy projects included in priority sector lending norms of commercial banks

Waiving off charges

Inter-sate transmission charges and losses for Wind and Solar projects have been waived off

Ease of doing business

Renewable energy has been re-classified as ‘white category.’ Previously, this sector was under ‘green category’ and the re-classification will enable ease of doing business as setting up of solar and wind power plants will be exempt from seeking environmental clearances from Ministry and consent from State Pollution Control Boards.


Road Ahead:

While what has been achieved in the solar energy space in India is indeed commendable, there are challenges going forward. It is necessary to accelerate deployment of solar energy at a scale required for India; Government has to take further concerted action through various targeted Programmes. One of the challenges yet facing is the relatively high cost of borrowing.  This has to be addressed so as to better harmonize and aggregate the demand and mobilize large amount of resources at a scale required. Another challenge is deploying mature solar technologies at scale. Simultaneously, Government has to address the issues of capacity building, need for collaboration in Research & Technology etc.


Aggarwal, J. (2018, January 16). The Top Government Programs in the Solar Sector. Retrieved from: https://amplussolar.com/blogs/the-top-government-programes-in-the-solar-sector

Government of India. (2018). Economic Survey 2017-18.

India Brand Equity Foundation (2018). Indian Renewable Energy Industry Analysis

ISA Mission. International Solar Alliance. Retrieved from: http://isolaralliance.org/ISAMission.aspx

Ministry of New and Renewable Energy. Jawaharlal Nehru National Solar Mission Towards Building SOLAR INDIA.

Press Information Bureau. (2016, April 23) Government of India.

Image Credit: MERCOMIndia

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Written By Mahananda Ray

Undergraduate student

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