What’s desirable is often not practical. The National Solar Mission has set a target of 20,000 MW of solar electricity by 2020. This may be desirable, but at today’s solar technology costs, it will be economic suicide.
Remember that just 700 MW of high-priced power from Enron in 2001 was enough to bankrupt the Maharashtra government, which therefore refused to pay. At the time, Enron’s power cost Rs 4 per unit if run at 90% capacity, and Rs 7 per unit if run at less than half capacity, as was often the case. Solar power today costs Rs 9 to Rs 10 per unit in roof-top photovoltaic panels and other applications.
Hopefully, technological breakthroughs in the next decade will send costs crashing and make solar power economical. Rich countries are spending billions of dollars on solar R&D. The National Solar Mission Plan hopes to reduce the cost to Rs 4 to Rs 5 per unit by 2017-20 in order to make solar power competitive with coal-based power. But this represents a hope unsupported by any track record and grossly overestimates the cost of rival coal-based power.
Globally, no technical breakthrough may come. After the second oil shock in 1980, many hoped that amorphous silicon and other photovoltaic technologies would make solar power economical. Alas, photovoltaics remain hopelessly uneconomical today.
Meanwhile a breakthrough has come in concentrated solar thermal (CST) technology, using parabolic mirrors. Pilot CST projects in the US and Spain have raised hopes of solar power at Rs 5 per unit. But this is still far higher than the tariff per unit for India’s ultra-mega power projects at Sasan (Rs 1.19), Tilaiya (Rs 1.77), Mundra (Rs 2.26) and Krishnapatnam (Rs 2.33). The first two are based on Indian coal, and the other two on imported coal. Even allowing for rising coal import prices and a heavy carbon tax, coal-based power looks much cheaper.
Now, some private power plants are selling limited amounts of electricity at Rs 6 to Rs 7 per unit to industries desperate for power. This encourages the government to think it can bundle expensive solar power with cheap coal-based power, and remain viable. Maybe, but remember, this was exactly the argument used for Enron — that expensive Enron power could be bundled with cheap power from MSEB stations — and it proved a financial fiasco.
Besides, solar power needs a lot of land. This can be neglected in a small pilot project, but not in large, commercial projects. The biggest CST projects in the US use 6 to 10 acres per MW of power. By this yardstick, even a pilot project of 100 MW requires 600 to 1,000 acres of land. A commercial project of 1,000 MW needs 6,000 to 10,000 acres. After the troubles of Tata Motors at Singur and Posco in Orissa, we must be cautious about land-intensive projects.
State governments rightly want companies to buy land at commercial rates, not ask for acquisition. The market rate in many states is now Rs10 lakh to Rs 20 lakh per acre. So, 1,000 acres for a small solar project could cost a whopping Rs 100 crore to Rs 200 crore, making it totally uneconomical.
Cheaper land is available in the deserts of Kutch and Rajasthan. But even in Kutch, industrialists have paid Rs 2 lakh to Rs 10 lakh per acre. Besides, CST projects need huge amounts of water for cooling towers, and the Rajasthan desert is inappropriate for that. However, CST plants in Kutch could use sea water.
So, while solar power is desirable, we should proceed cautiously. Global spending on solar R&D runs into billions, and any breakthroughs will come from abroad. We should not waste money duplicating global R&D. Rather, we should limit ourselves to pilot projects, testing the best global technologies in Indian conditions.
If global technical breakthroughs arrive, then we can scale up in a big way. That will not require fancy National Solar Missions. Private entrepreneurs will flock to build solar plants once they are proved viable. But if no breakthrough comes, we must not waste money on an arbitrary target of 20,000 MW of solar power by 2020. We must learn from the fiascos of Enron and Singur.
A small voice in my head tells me i may be on the wrong track. “Swami, the government knows all this. But it needs to do something in global climate negotiations. The US will not come on board unless China and India are seen contributing, and without US participation the climate talks will fail. So, we have made fancy long-term projections — 20,000 MW by 2020; 100,000 MW by 2030 — getting good publicity. But our near-term target of 1,000 MW by 2013 implies no more than some pilot projects. This will keep climate negotiations going at little cost.”
Is that the government’s hidden agenda? If so, I need to think again.