Asia begins embarking on solar power

Governments are more willing to promote alternative energies and the costs are falling

Last year, the Indian government approved an ambitious National Solar Mission, which seeks a huge increase in the country’s solar-energy capabilities. Bangladesh, with the support of the World Bank, is aiming to have one million remote rural homes supplied with solar panels by the end of 2012.

And in India, where nearly 40 per cent of households have no access to electricity, companies like Selco Solar and Orb Energy have helped tens of thousands of families and small entrepreneurs purchase solar panels.

All worthy causes. So worthy and sensible, in fact, that you may well ask why on earth they did not take off much earlier.

The answer, as is so often the case, is political support — or, until relatively recently, the lack of it — and, inevitably, cost.

“The upfront costs of installing solar-electricity-generating farms, plus high borrowing costs and the fact that developing nations struggle to access long-term capital, have inhibited the growth of solar energy until recently,” said Seethapathy Chander, chairman of the committee on energy issues at the Asian Development Bank in Manila.
“It takes a long time before investment costs are recouped, and you need long-term financing until that stage is reached.”

That also applies to small, single-household roof panels that provide enough electricity for a few extra hours of lighting, which can make a huge difference — adding study time for children and extra hours for making and selling goods.

Rooftop solar energy can replace kerosene, which generates smoke and poor-quality light and eats heavily into the scarce resources of the poor. “A street vendor in India might make Rs 800 a month — that’s about $16,” said Harish Hande, founder of Selco Solar in Bangalore. “But he might have to spend as much as Rs 210 of that on kerosene or candles.”

By contrast, the modest electricity produced by rooftop panels is effectively free, recouping the initial investment after a few years. But even a 15 per cent down payment on a loan for a small solar home lighting system — which typically costs 8,500 to 11,000 rupees — is beyond the reach of many families, Hande said.

Making it affordable

In developing nations like Sri Lanka or India, said Damian Miller, an American-British citizen who set up Orb Energy in 2006, the cost of a panel can be 20 per cent of the annual income of a poor off-grid household.

In terms of the scale of the investment, he said, “it’s similar to a Western household buying a car.”

Banks were long reluctant to lend to the poor. Increasingly, however, companies like Selco and Orb Energy have been able to convince some local banks that low-income earners are creditworthy and that solar-related credits bring in solid business in much the same way that car financing does.

“The trick to making it work commercially is to make it affordable: To allow for bite-size financing that the poor can pay for, on a monthly basis, rather than in large chunks,” said Miller.

On the large-scale level — big solar farms that feed the overall electricity grid — activity also is picking up. “Many parts of Asia have three or four times the amount of sun that Germany gets,” said  Chander of the Asian Development Bank. “It makes a lot of sense to deploy solar-based electricity generation facilities here.”

At the same time, governments have become more willing to promote alternative energies and, because of falling costs, more able to do so.
Over the years, technological advances have made panels cheaper and more efficient, while the global financial crisis created a glut of panels as many projects in Western countries stalled. China has become a major manufacturer and exporter of solar energy equipment, though it has yet to generate solar power on a large scale.

Cheaper panels, combined with lower interest rates since the financial crisis, have helped put solar energy systems within the financial reach of poorer nations, said Anil Cabraal, an alternative energy expert who, until his retirement from the World Bank in April, got many of the bank’s solar projects in Asia and Africa under way over the past decade.
Under the solar initiative it announced this year, the Asian Development Bank hopes to help put in place solar power projects with a total capacity of 3,000 megawatts by 2013.
The total operating capacity now is less than 500 megawatts. (One megawatt is enough to cover the power demand of about 200 homes, or 1,000 people, in developing Asia.)
The solar mission in India aims to have 20,000 megawatts of grid-connected solar energy by 2022, up from only about 2 megawatts now.

It also wants to help increase off-grid solar energy, currently at about 20 megawatts a year, to 10 times that amount by 2013, and to 2,000 megawatts by 2022.

The government has committed $20 billion to the programme and is hoping it will attract additional investments from the private and financial sectors, said Gauri Singh, a senior official at the Ministry of New and Renewable Energy in New Delhi.

Vast as those numbers are, the combined target will still make up only a tiny fraction of the overall energy mix in India, Ms Singh acknowledged. What is more important, she said, was that the initiative will help utility operators and manufacturers expand their knowledge of solar technology.

Of course, solar energy will never be able to wean the world fully from its reliance on fossil fuels. Right now, solar energy accounts for less than a quarter of a per cent of overall energy demand in Asia, and only 1 per cent or 2 per cent in the United States, according to  Chander at the Asian Development Bank.

Once the various solar initiatives start operating in Asia, however, solar energy could contribute 3 per cent to 5 perent in the region, he said. That may not seem like a lot — but it will make a big difference to a lot of people.

The New York Times