At the end of July, India experienced a massive power outage when 300 million residents of northern India and particularly Delhi were left without electricity.
A day after the first instance of the outages, the grid failure got even worse, and the number of people affected doubled to 620 million, half of the nation's 1.2 billion people.
People were without hot water. Traffic lights were dark. And mass transit systems were out of commission. It has been considered the largest blackout in the world.
But smaller outages are not uncommon for the nation. Peak-hour power deficit is around 12% for India.
The nation is heavily reliant on coal, but delays and shortages have prevented it from getting enough. A nuclear power project is in the works, but it, too, has faced delays, particularly from protests after the fallout from the Fukushima disaster in Japan.
This latest outage, however, made officials reassess the nation's slow move to fix the power supply. And it didn't take long for some action.
Last week, First Solar (NASDAQ: FSLR) announced it would begin to build solar farms in India and sell power directly to businesses instead of through the government, which owns most electricity distribution companies. And they would do it without government subsidies.
India has realized it needs more backup power to protect against such devastating outages. Solar seems to be the answer.
Country officials have decided that 3,000 megawatts would be constructed by 2017, and just yesterday Tarun Kapoor, joint secretary at the Ministry of New and Renewable Energy, told Bloomberg that the first group of contracts for construction starting in 2013 would include up to 1,000 megawatts.
The nation's goals don't stop at 3,000 megawatts. Officials hope that by 2022, the country will have 20,000 megawatts of solar capacity. And this goal isn't that exaggerated, considering a huge portion of India's current 1,040 megawatts in capacity were built just this past year.
The new focus on solar power is good news for a number of Indian solar companies. Surana Ventures Ltd. (BOM: 533298), a Hyderabad-based photovoltaic panel maker, expects to see sales rise 38% this year to 1 billion rupees.
Since it went public in January of last year, Surana has seen shares slide 62%. This year, however, they're up 14% so far. And the increased focus on solar energy should help that even more.
From Bloomberg Businessweek:
“The shortage in coal supply is a great opportunity for us as more and more people are looking at solar energy as a viable alternative,” [Managing Director Narender] Surana said. “As India's energy needs rise, the shift towards solar power shall become more pronounced.”
Surana announced earlier this week that it plans to double its solar panel production to 30 megawatts this year and build a solar cell plant with an investment of roughly $4.5 million. Low panel prices from an oversupply of Chinese panels have enabled it to meet this goal.
Larger companies like Moser Baer India Ltd. (BOM: 517140) and Indosolar Ltd. (BOM: 533257) are still in control of the market, though lower prices have hurt them significantly more than Surana. And as the Indian Prime Minister Manmohan Singh has set a goal to increase panel manufacturing capacity to 5GW by 2020, Surana is set to grow even more.
India is likely to become one of the fastest growing solar markets, panel suppliers like Suntech Power Holdings Co. (NYSE: STP) and First Solar. have said.
Surana told Bloomberg Businessweek:
“With the cost of equipment coming down drastically, the cost of generating solar power has also fallen. Solar is more attractive than other forms of alternative energy and we expect state governments to encourage setting up of projects as well. That will provide a big boost to us.”
And with the government now so eager to auction of 1,000 megawatts of solar by next year and 3,000 in four years, that big boost is likely coming.
India could come forward as the world's new big solar market in the years to come. As other nations cut back on subsidies and renewable efforts shrink amid continued economic strife, India may be the place to turn.
That's all for now,
Energy & Capital's modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends. For more on Brianna, see her editor's page.