Constructing the Solar Future: SBICAPS Report on Financing Transformations in India’s Solar Expansion

The recent report titled “Building the Solar System: Revolutions in the Funding Space” by SBICAPS highlights the rapid growth of solar energy in India and its increasing importance in meeting the country’s future energy demands. The report outlines several key factors driving this growth, along with the challenges that need to be addressed to sustain it.

India’s electricity consumption has been on the rise, exceeding estimates in the financial year 2024. During this period, about 32 gigawatts of new capacity were added, with solar energy leading the way by contributing a record 15 gigawatts. However, to meet the ambitious target of around 293 gigawatts by 2030, the current rate of solar capacity additions needs to double. This growth is supported by various government initiatives and favorable tendering trends, suggesting that between 50 to 60 gigawatts of new solar capacity will be added over the next two years.

The report emphasizes that while utility-scale solar installations have been the primary contributors to capacity growth, new sources like commercial and industrial (C&I) projects and rooftop solar systems are becoming increasingly important. These segments currently make up about 30% of the total solar capacity in India. The report forecasts that around 4 gigawatts per year will be added in each of these segments over the next few years. The C&I segment, in particular, is expected to grow significantly as companies form group captive arrangements to benefit from tariff waivers. This allows them to secure reliable and cost-effective power compared to the rates charged by state distribution companies.

In conclusion, the report paints a picture of a rapidly growing solar sector in India that is poised to play a critical role in the country’s energy future. While there are significant challenges to be addressed, particularly in terms of building domestic manufacturing capacity and securing the necessary funding, the growth opportunities are immense. With strong government support and a favorable regulatory environment, India’s solar sector is well-positioned to achieve its ambitious targets and contribute significantly to the country’s energy security and climate goals.