"Over 300 million people in India don’t have access to the electricity grid and are living in complete darkness," PM said.

The slow pace of capacity addition in the solar sector has created room for a variety of off-grid solar solutions to grow and provide electricity to those as yet not connected to the power grid, according to a private sector industry leader.

“In solar, there are two parts – one is the government utility projects, and they are going super slow,” Nidhi Modi, executive director, RAL Consumer Products, the largest off-grid solar company in India, said in an interview. “They are targeting 12 GW a year of capacity addition and they are getting 6 GW a year. So they are heavily dependent on the off-grid solar industry.”

Off-grid solar is increasingly being viewed as the way to bring sustainable and cheap lighting to the vast segments of India that are yet to be connected to the electricity grid, especially in difficult terrain.

“Over 300 million people in India don’t have access to the electricity grid and are living in complete darkness,” Ms. Modi added.

“They live off kerosene lanterns, which are extremely harmful to health and often result in huge losses of life and property due to fires.” The coming together of various factors, both external and domestic, has meant that there are several types of household solar products entering the market, ranging from simple solar lanterns powered by in-built solar panels, to entire solar invertors that use rooftop solar panels.

“Solar tariffs have become competitive now, the efficiency of solar panels has improved substantially, battery technology has improved, LED prices have gone down, and the price of plastic has reduced due to the fall in oil prices,” Ms. Modi said. It was a combination of all these factors that has led to a surge in the industry over the last three years.

These off-grid solar solutions, apart from helping the government meet its renewable energy target, also provide economical savings — both to the government and the consumer.

“The government is spending Rs.30,000 crore a year on importing kerosene, which is a complete waste of foreign exchange,” Ms. Modi said. “The average rural household uses 18 litres of kerosene a month, 12 of which are used only for lighting. The rest is for cooking. They spend Rs.150 a month only on kerosene.”

Cost factors

However, despite some cost factors easing in the off-grid solar industry, others still pinch, leading to economic activity that could have taken place in India moving to China instead.

“Most of the input products have zero customs duty on imports,” Ms. Modi said. “But this is a limited benefit. We could create a lot of job opportunities by manufacturing in India if the Centre would cut the battery import duty. We can then just import the battery and make the rest in India.” The battery makes up 30 per cent of the cost of the product, according to Ms Modi, and the company has to pay a 30 per cent duty on its import. This renders making solar lanterns and invertors in India economically unviable.

First published by The Hindu