The Union Cabinet has decided that India’s solar power capacity target under the National Solar Mission is to be dramatically revised upwards to reach 100,000 MW (or 100 GW) by 2022. The new solar target of 100 GW is expected to abate over 170 million tonnes of CO2 over its life cycle.

In the first phase, the Government of India is to provide capital subsidy to promote solar capacity addition in the country. This capital subsidy will be provided for rooftop solar projects in various cities and towns for projects to be developed through the Solar Energy Corporation of India (SECI) and for decentralized generation through small solar projects.

Solar power projects are also to be developed using what the government calls a “bundling mechanism” together with thermal power with investments envisaged to come from large public sector undertakings and also from independent power producers. State governments meanwhile have also come out with state-specific solar policies to promote solar capacity addition.

The statement by the Ministry of New and Renewable Energy (MNRE) has said: “Solar power can contribute to the long term energy security of India, and reduce dependence on fossil fuels that puts a strain on foreign reserves and the ecology as well.” The solar manufacturing sector in India will benefit with this long term trajectory of solar capacity addition.

This scaling up plan for solar power has a target of 40 GW through decentralised solar power generation in the form of grid connected rooftop projects. Coordination is required, says the central government, so that the land areas required for the largest solar farms are unculturable land, for solar photo-voltaic units to be encouraged, and for large government buildings to be identified for rooftop solar projects, for the Ministry of Urban Development to make mandatory the provision of roof-top solar and 10% generation of renewable energy (presumably per building unit).

Financial incentives envisaged include giving the status of ‘infrastructure’ for solar projects, raising tax-free solar bonds, including roof-top solar units within housing loans provided by scheduled banks. It is also foreseen that amendments to the Electricity Act will be needed so that renewable purchase obligations and renewable generation obligations can be enforced.

The National Solar Mission was begun in 2009 with an initial target for grid-connected solar projects of 20,000 MW by 2022. In the last two to three years, the sector has witnessed rapid development with installed solar capacity increasing from 18 MW to about 3,800 MW during 2010-15. The price of solar energy has come down significantly from Rs 17.90 per unit in 2010 to under Rs 7 per unit today.