June 26, 2008
China and India Launch New Solar Energy Projects
By Johanna Peace, Breakthrough Fellow
While the US mires itself in controversy over the weakened cap-and-trade bill working its way through Congress, China and India have begun to look ahead with new government investment policies that rapidly expand solar power capacity in each country.
China recently announced a dramatic increase in its expected solar capacity target for 2011, planning to reach 2 GW within the next two years. Already, China has expanded its 2020 target from 1.8 GW to 20 GW-that's more than triple the amount of PV solar power installed in the entire world during 2008, the industry's best year ever. (Since details of China's planned $440-$660 billion renewable energy stimulus package have not yet been released, the precise figure for China's new 2020 solar target remains uncertain. Some Chinese reports put the number at 20 GW, while other experts say this is an upper-bound of estimate of what China expects to achieve with its new massive investments in renewable technology.)
The higher targets will be met by enhancing government subsidies and other deployment incentives, which currently stand at US $2.93/watt capacity for roof-mounted systems greater than 50 kW. Government officials have suggested that the current US $.16 per kWH feed-in tariff for ground-mounted PV systems may be adjusted in order to make solar power production profitable.
Last month, India also signaled that it sees solar as a crucial component of a future clean energy economy, when its New and Renewable Energy Committee announced a massive National Solar Mission. In what one Greenpeace India representative called "the most ambitious solar plan that any country has laid out so far," the National Solar Mission matches China by setting a new target of 20 GW solar capacity by 2020. What's more, India estimates that the plan could bring the now-prohibitive cost of solar down to US $.08-.10 per kWh by 2017-2020, making it cost-competitive with fossil fuels.
The cost of building rooftop systems and increasing local manufacturing capacity on the scale India has proposed would run about $20 billion over 30 years, economists say. India's solar plan will meet this cost by levying taxes on gasoline and diesel, as well as implementing other measures like a feed-in tariff, solar power purchase obligations, tax breaks for manufacturers, exemptions on tariffs for imported equipment, and a national renewable energy standard that mandates a certain percentage of India's power be generated from solar.
One part of the plan in particular has been making headlines: the provision that the Indian government will provide $100 billion in subsidies over 20 years to utilities for buying solar-generated power.
There are two lessons for the US as developing Asian economies continue to expand solar capacity. First, it's a clear opportunity for American investment. The Indian government will likely need help from developed countries to finance its huge subsidies plan; through US government investment and foreign direct investment in solar power plants, the US stands to profit while also contributing to India's clean development and the reduction of global GHG emissions. Such a mutually beneficial arrangement could be a focal point for a productive treaty between developed and developing nations in Copenhagen.
Second, in addition to facilitating international cooperation, the solar push by Asian nations should spark a sense of competitiveness for US domestic energy policy. Direct government investment in solar R&D, as well as subsidies and incentives for deployment of solar energy, could put the US in step with India and China as leaders in the deployment of this vital renewable energy technology. Despite a steadily growing solar PV industry with a current capacity of about 9000 mW, the US needs more solar deployment, and we need it to happen fast. China and India have shown us a model of how to do it.