US and India Cooperate on World’s Largest Solar Project

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by Lincoln Lin
As solar power efficiency climbs and costs decline, panels are going up across India, improving access to electricity in communities big and small. Image: USAID

In January of 2010, India’s then-Prime Minister Manmohan Singh announced the Jawaharlal Nehru National Solar Mission (NSM), an ambitious bid to increase India’s solar power capacity from under three gigawatts up to 20. Now, current Prime Minister Narendra Modi has invested further in NSM by announcing plans to quintuple their already ambitious solar program from 20 to 100 gigawatts by 2022. This project will increase India’s investment target to an estimated $100 billion, and increase their current solar power generation by over 2500%.

In addition to a $1 billion dollar investment promised by the US Export-Import Bank, NSM has also attracted several major US companies. Executives from US renewable energy companies First Solar and SunEdison Inc. met for the first time with Indian chief ministers and representatives from various Indian energy companies, such as Adani Enterprises and National Thermal Power Corporation. Together with local firms, they have thus far invested $6 billion in the development of Indian solar power, and Indian officials expect to receive $14 billion in average annual investment for the project from various sources through 2022.

Officials from the Indian Ministry of New and Renewable Energy said last month that solar power capacity has already surpassed wind in India, and will reach four gigawatts by the end of the year. In addition, the world’s largest solar power plant is scheduled to become operational in central India in August 2016. The plant is said to be capable of producing 750 megawatts of solar electricity, 200 more than the previous record holder in California’s Mojave Desert.

So far, the Indian government has given preference to domestic companies for the manufacture of solar cells despite major US investment pledges. The US lodged challenges against Indian solar incentives at the WTO in both 2013 and 2014, both of which focused on India’s implementation of exclusionary domestic production requirements for solar panel manufacturers that US Trade Representative Michael Froman said discriminates against US producers.  On August 27th, 2015, the WTO ruled against India in the dispute, requiring that a balanced playing field be offered to all solar panel manufacturers, both foreign and domestic, which should allow the US to be even further involved in the growing solar industry in India.

Cooperation on sustainable energy is important to both countries, as demonstrated by the establishment of the PACEsetter Fund in June, an agreement meant to finance joint efforts to bring power to Indian communities that have little or no access to the grid. Though some questions remain as to whether or not India can hit its lofty targets, the future looks bright for US-India solar power cooperation. 

Lincoln Lin is a Research Intern at the East-West Center in Washington and a graduate student at the Johns Hopkins School of Advanced International Studies.