India to Boost Funding for Solar Power

By AMOL SHARMA
NEW DELHI -- India plans to announce increased subsidies for solar-power generation, a senior government official said, as the country looks to boost production of renewable energy and show it is committed to mitigating climate change.

India's Ministry of New and Renewable Energy is expected to release details of the latest solar-power policy in the next weeks. In an interview, Dr. B. Bhargava, a director in the agency, said the plans will significantly increase the number of solar projects that can receive government support.
The hope, he said, is that the new policy will encourage manufacturers of solar panels such as Moser Baer India Ltd. and Tata BP Solar India Ltd. to ramp up production, thereby reducing per-unit costs and driving down the high price of solar power.
It is now about five times as expensive to generate solar power than oil-based power. "If the costs aren't reduced, this [subsidy] policy can't be sustained on a long-term basis," Mr. Bhargava said.
Climate change will be among the issues on the agenda when Indian Prime Minister Manmohan Singh visits the White House next week.
India generates a tiny fraction of its power from solar energy. Coal accounts for more than half of the country's power capacity, and wind makes the biggest contribution among renewable sources, which together provide about 7.5% of India's energy.

Solar power is promising, because sunlight is abundant across the country, unlike wind and hydro power, which are better for only some regions. The government's new policy is aimed at increasing solar-power generation to 20,000 megawatts by 2020 from three megawatts. "The potential is infinite with solar," Mr. Bhargava said.
India's existing policy supports a modest amount of solar-power capacity -- 50 megawatts -- with subsidies of up to 25 cents per kilowatt hour. Mr. Bhargava said that program is already "fully subscribed" and will be expanded substantially, though he declined to offer specifics. He said the new guidelines also will streamline the process for solar-power developers to collect subsidies and payments from state utilities.
Beyond expanding solar power, India has pledged in a "national action plan" on climate change to pursue a range of other measures, from increased fuel-efficiency in automobiles to more-efficient consumer appliances.
Write to Amol Sharma at amol.sharma@wsj.com