The Government of India has recently set a new, truly ambitious target for solar energy: 100,000 megawatts additional generation capacity in the next five years. To put the number in perspective, India’s current installed capacity of electricity generation from all sources of energy stands at 250,000 megawatts, of which solar accounts for just 2,700 megawatts.
Prime Minister Narendra Modi has asked the Ministry of New and Renewable Energy (MNRE) to present an action plan this week for implementing this ambitious target. State governments have been directed to identify suitable land for solar installation – from deserts to wastelands, from national highways to river banks and even over canals. Top companies, financial institutions, and bilateral agencies have been approached to commit to solar power development.
So it came as no surprise that when the World Bank-Asian Development Bank joint mission of the Clean Technology Fund (CTF) met with the MNRE last week, one question repeatedly asked by Secretary Upendra Tripathy was: Can you help us mobilize the finance needed to reach this target?
It was not an easy question for the CTF joint mission to answer. We were in India to help the government update and revise its CTF investment plan endorsed in 2011. Back then – and, indeed, until recently – India’s target for solar power was 20,000 megawatts by 2022. Today, with Prime Minister Modi at the helm, the new target is five times that – and to be delivered three years sooner!
To date, almost half of the USD 775 million CTF allocation for India has been approved and more than USD 100 million has been disbursed. With the big push toward clean energy in India, the government is keen to receive continued, scaled-up support from the CTF to finance its renewable energy as well as energy efficiency programs.
The timing for the CTF, however, may prove to be a bit awkward. Five years following its creation, the CTF – one of the two funds under the Climate Investment Funds – has gained tremendous momentum in delivering climate finance to developing countries and emerging economies to initiate transformation in clean energy and transport. CTF disbursements have picked up, on-the-ground results have emerged, and important experiences and knowledge have been gained.
But at the same time, the CTF is facing a potential funding shortfall early next year of nearly USD 1 billion for projects already in the pipeline. Without additional contributions, the CTF would not be in a position to finance much of the remaining pipeline including projects in India. This includes the Solar Park in Gujarat, the home state of Prime Minister Modi, who, as the Chief Minister of Gujarat, oversaw the installation of 900 megawatts of solar power, making Gujarat the largest contributor to India’s total installed solar capacity.
India is leading the way for a new era of low-carbon development, and its solar ambition will help transform an energy structure currently dominated by coal, toward a cleaner, more sustainable and less carbon-intensive one. It would also form a key part of one of the potentially most effective climate change strategies in the world.
India wants to lead by example with a low-carbon development pathway. So only one question remains: Is the international community ready to walk the talk and support India’s grand solar ambition?