The Role of Public-Private Partnerships in Solar Growth in India

By Shreyas Gowda

India's journey towards sustainable energy has seen remarkable progress, particularly in the solar energy sector. The country has emerged as a global leader in solar power generation, driven by a combination of government initiatives, private sector investments and the collaborative efforts of public-private partnerships (PPPs). These partnerships have been pivotal in accelerating solar growth, addressing infrastructure challenges and fostering innovation.

Solar Energy Landscape in India
India's solar energy sector has experienced exponential growth over the past decade. As of 2023, the country's installed solar capacity stands at approximately 63.3 GW, a significant leap from just 2.6 GW in 2014. The National Solar Mission, launched in 2010, set an ambitious target of achieving 100 GW of solar capacity by 2022 and while the country fell slightly short of this goal, the progress made is nonetheless commendable. The government's commitment to renewable energy is further underscored by its target of 450 GW of renewable energy capacity by 2030, with solar power expected to contribute a substantial share.

Public-Private Partnerships: A catalyst for growth 
Bloomberg highlights that PPA as a model has played a significant role in increasing solar in India. Such partnerships involve organizing the government sector’s policy backing, the procurement of premises, and facilitating the necessary permits, with the efficiency, capital, and skills of the private sector. This produces a combination which maximizes project advancement and application efficiency.

Policy and Regulatory Support
1.    The Department of Solar Energy, Government of India has promoted the PPP model to work effectively in the solar sector. There are targets such as the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) plan has set objectives to bring solar power generation into decentralized structures. This scheme makes farmer’s shift from the normal grid electricity and diesel as the primary source of power to pump and run solar pumps and panels. PPP is the mode of implementation of the scheme meaning that it employs aspects of both the private sector and the public sector.

2.    Financial Innovation and Investment
Solar System investment needed for funding large-scale projects so this kind of investment is relatively larger than public funds can offer. By so doing, PPPs ease the movement of private capital thus offloading the financial pressures from the government side. For instance, when conducting auctions for the generation projects such as the Solar Energy Corporation of India (SECI), effective competitive bidding and pricing among different players has been achieved. SECI set a record low tariff in its 2 GW auctions in year 2020; PPPs can therefore be regarded as efficient ways of practising cost leadership.

3.    Technological Advancements and Innovation
The role played by the private sector firms in partnership with the government through PPPs helps in development of new technologies in the solar industry. Research and development is an important area that firms apply resources to enhance the efficiency and productivity of solar panels, better battery systems, and integration of solar power in the power grid. These are the advancements that are so vital for the viability and, in fact, the feasibility of solar energy. For instance, the first floating photovoltaic solar energy farm that was established in India can be associated with PPPs as its main strategy. They are installed on the water and have the advantage of occupying less land space and being more efficient in terms of generation because water cools the panels.

4.    Capacity Building and Skill Development
To that end, there is need to capacity build particularly in terms of skill development.
They also contribute to the capacity building and skills in varying degrees depending on the complexity of the projects awarded. Private entities usually mean introducing new ideas and skill sets to the existing system, which is important for the growth of the local employees. Technical skills, performance standards, and human resource development provided through PPP initiatives covering training and development workshops help in meeting the qualified and competent human resources required for solar projects in India.

Case Studies on the Best Practices of PPPs
Some successful PPPs illustrate the effectiveness of such cooperation. Some of the known projects include the Rewa Ultra Mega Solar Power Project in Madhya Pradesh with the project capacity of 750MW. Unfathomed by the Madhya Pradesh government in cooperation with some private players, the project exemplified successful PPPs, good for scale efficiencies and setting a record for low solar tariffs.

A prime example of a larger scale solar project is the Gujarat Solar Park which is currently one of the largest solar projects within the Asian continent. Emerging from the PPP structure, it has been largely capitalized through the private sector and is seen has a blueprint for other states to emulate.

Challenges and the way forward
As highlighted by the case study of Indian state Gujarat, there are matters of concern in implementing PPPs. There are some factors that may slow development include Land acquisition – this where the government or other players in the industry face challenges in acquiring land to develop. However, such challenges can be overcome by consistent policy support, formalisation of the policies involved and by providing new methodologies of financing the green initiatives.

Therefore, the privatised sector partnerships have already been and will continue to remain as key players for the development of solar energy in India. Thus, while PPPs serve the potential of reaching targets for solar energy production and consumption in India, decreasing the carbon intensity of the economy and contributing to the welfare of its inhabitants, as all sectors need to maximise the benefits created by the PPP schemes. 

The Author is the Senior Vice President of Oorjan Cleantech Private Limited