Bridge India

Weekly Update: Impact of a new government on the solar industry in India: our take

India has begun voting for a new government today. This largest ever democratic exercise will involve up to 815m citizens. Energy and renewables have not featured prominently in the campaigns to date. Most political analysts believe that, come May, India’s primary opposition, the Bhartiya Janta Party (BJP), might come into power. As a thought experiment, we assess the likely effect such an outcome would have on the Indian solar market.

  • Solar bound to play a large role in India’s solar power sector in the coming years
  • The MNRE is considering to expand the target for National Solar Mission to 100 GW by 2027
  • Both parties- BJP and the Indian National Congress- are set to help solar grow in India

The challenges to India’s power sector are many and solar is bound to play a large role in it (see our recent analysis: refer). Consequently, the solar industry’s expectations from a BJP government are high and the BJP has signaled that it recognizes that (refer: link 1 and link 2). In its election manifesto released today (refer), BJP has said – somewhat vaguely – that it would “give a thrust to renewable sources of energy as an important component of India’s energy mix” and also “expand and strengthen the National Solar Mission”.

The Ministry of New and Renewable Energy (MNRE), under the current Congress-led government, is already considering to expand the targets for the National Solar Mission to 100 GW by 2027 or by 2030. Drafting of such a proposal was initiated by the current Prime Minister’s office. However, this plan has not found its way into the Congress’ election manifesto (refer). The Congress manifesto talks about accelerated implementation of the existing 20 GW target and that if the Congress government is formed, it will ensure that the target is met well in advance. The future of solar, given the current mindset, will continue to have its focus on utility scale projects. If a new government is able to pass the 100 GW proposal, it will considerably change the solar landscape in India. This will also result in an enlarged segment for distributed generation.

Both parties vying for power in Delhi are set to help solar grow but it is important to note that achieving the targets being discussed will not be easy. In India, electricity is a state subject, i.e., individual state governments have jurisdiction over electricity regulations and policies. Any central scheme such as a National Solar Mission will need to rely on state governments’ cooperation.