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India: Solar pros and cons from austerity drive

With an austerity regime in full swing in India, attempts to trim the national deficit – which looks set to fall short by some margin – are set to be a double edged sword for solar.

The cost of subsidized diesel for large-scale consumers is set to rise, thus helping solar become more competitive.

Gujarat Solar Park

Subsidies for solar competitor fuel diesel are being cut as part of the bid to balance the books. But development funding for the latest tranche of solar schemes announced under the Jawaharlal Nehru National Solar Mission (NSM) is being held back for an, as yet unidentified, period as part of the same government economy drive.

Consultants at Bridge to India report that the Indian government has announced that its contribution to development funding for the latest NSM solar plants, due online by the end of March, will be held back, which could hit developers as well as module and component suppliers that have made capital expenditure on the back of NSM orders.

The cost of subsidized diesel for large-scale consumers, such as hospitals and schools, is set to rise by up to 20%, or INR10 (US$0.19) per liter, thus helping solar become a more competitively priced source of energy in the sub-continent.