China and India Launch New Solar Energy Projects

China and India have begun to look ahead with new government investmentpolicies that rapidly expand solar power capacity in each country,while the U.S. mires itself in controversy over the weakenedcap-and-trade bill working its way through Congress

While the US mires itself in controversy overthe weakened cap-and-trade bill working its way through Congress, Chinaand India have begun to look ahead with new government investmentpolicies that rapidly expand solar power capacity in each country.

China recently announceda dramatic increase in its expected solar capacity target for 2011,planning to reach 2 GW within the next two years. Already, China’s newrenewable energy stimulus plan has expanded the nation’s 2020 targetfrom 1.8 GW to 20 GW–that’s more than triple the amount of PV solar power installed in the entire world during 2008, the industry’s best year ever.

The higher targets will be met by enhancing government subsidies andother deployment incentives, which currently stand at US $2.93/wattcapacity for roof-mounted systems greater than 50 kW. Governmentofficials have suggested that the current US $.16 per kWH feed-intariff for ground-mounted PV systems may be adjusted in order to makesolar power production profitable.

Last month, India also signaled that it sees solar as a crucialcomponent of a future clean energy economy, when its New and RenewableEnergy Committee announced a massive National Solar Mission.In what one Greenpeace India representative called "the most ambitioussolar plan that any country has laid out so far," the National SolarMission matches China by setting a new target of 20 GW solar capacityby 2020. What’s more, India estimates that the plan could bring thenow-prohibitive cost of solar down to US $.08-.10 per kWh by 2017-2020,making it cost-competitive with fossil fuels.

The cost of building rooftop systems and increasing localmanufacturing capacity on the scale India has proposed would run about$20 billion over 30 years, economists say. India’s solar plan will meetthis cost by levying taxes on gasoline and diesel, as well asimplementing other measures like a feed-in tariff, solar power purchaseobligations, tax breaks for manufacturers, exemptions on tariffs forimported equipment, and a national renewable energy standard thatmandates a certain percentage of India’s power be generated from solar.

One part of the plan in particular has been making headlines:the provision that the Indian government will provide $100 billion insubsidies over 20 years to utilities for buying solar-generated power.

There are two lessons for the US as developing Asian economiescontinue to expand solar capacity. First, it’s a clear opportunity forAmerican investment. The Indian government will likely need help fromdeveloped countries to finance its huge subsidies plan; through USgovernment investment and foreign direct investment in solar powerplants, the US stands to profit while also contributing to India’sclean development and the reduction of global GHG emissions. Such amutually beneficial arrangement could be a focal point for a productivetreaty between developed and developing nations in Copenhagen.

Second, in addition to facilitating international cooperation, thesolar push by Asian nations should spark a sense of competitiveness forUS domestic energy policy. Direct government investment in solarR&D, as well as subsidies and incentives for deployment of solarenergy, could put the US in step with India and China as leaders in thedeployment of this vital renewable energy technology. Despite a steadily growingsolar PV industry with a current capacity of about 9000 mW, the USneeds more solar deployment, and we need it to happen fast. China andIndia have shown us a model of how to do it.
By Johanna Peace, Breakthrough Fellow

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