India to ramp up solar power production

India could install 40 gigawatts of solar power capacity by 2022, or twice the government target.

Welspun Energy Ltd., India’s largest developer of solar projects, said India will also exceed its solar power generation target by two-fold over the next decade. The government’s goal is to install 20GW of solar capacity by 2022.

Welspun estimates that it’s more likely to reach 40GW as renewables close the price gap with fossil fuel-based.

“A lot of investment planned for thermal power projects will go to renewables,” said Vineet Mittal, managing director of Welspun Energy.

India will need to add 169GW of power, equivalent to that of 154 nuclear plants, over the next five years to maintain an economic growth rate of 9%, according to the government. Gross domestic product rose 5.3% in the three months ended March, the slowest pace in nine years and is expected to shrink further in the aftermath of the global financial crisis.

This massive demand cannot be met by renewables alone. One analyst said that India will need power 24 hours around-the-clock, which is something only coal, gas and nuclear plants can provide since wind and solar are too expensive.

Mittal said India is different from the U.S. or Europe because renewables aren’t just competing on cost with fossil fuels.

“It’s a question of energy security,” and renewables are attractive because they’re not vulnerable to disruptions.

India relies on coal, oil and gas for 70% of its energy needs. That supply has been disrupted by poor rail and pipeline infrastructure constraining fuel delivery, and domestic coal and gas production failing to meet demand.

Solar and wind power are already cheaper than diesel, which is used by factories, businesses and homes during blackouts. They remain more expensive than coal, however.