Public Investment in Solar Power

All processes in our universe, from the sub-atomic to the super-galactic, involve the use of energy. The fundamental laws of thermodynamics attest to that. So it should come as no surprise that energy rests at the core of all human advancement and economic growth. The story of human civilization is principally that of an increasing ability to find and exploit energy sources. Until relatively recently in human history, animals and humans were the principle sources of energy. Slavery was an unfortunate consequence of that need for energy. Coal later powered the industrial revolution. The discovery of petroleum oil about 150 years ago literally fueled such phenomenal growth that it increased human population six-fold to its present over 6 billion.

But oil is an exhaustible resource and the supplies are diminishing even as the demand for energy is increasing. This leads to not just a steadily rising price but also an increase in global conflict induced by the fierce competition for the increasingly scarce resource. The advanced industrialized countries advanced and industrialized precisely because they developed the science and technology required to transform potential sources of energy into usable energy. Unfortunately, their legacy investment in what is now called conventional energy sources forces them into continued dependence primarily on oil and to some extent on nuclear fission power. They are prisoners of their own ingenuity in being the first to exploit non-renewable fossil fuels.

The greatest constraint that developing countries face is that of energy availability. Energy is the primary resource in the sense that all other resources – land, water – can be substituted to a considerable degree by energy. Yet billions of people cannot hope to satisfy their energy needs by emulating the developed countries simply because they are late in the game. Their only hope lies in exploiting energy sources that are secure and renewable. One such source is clear as broad daylight – solar. The annual solar energy incident on every square mile is approximately equivalent to 4 million barrels of oil. To capture that efficiently enough to make it commercially viable requires technologies that do not exist today.

India imports about 70 percent of its current oil needs. It can barely afford that, to say nothing of what it will be like when oil prices continue to hit higher peaks and its needs increase in pace with its growing economy. It lacks nuclear technology and nuclear fuels, and has to debase itself begging to be given access to them.

India cannot continue to ignore reality: its continued economic growth and development is predicated on it developing the technology to exploit solar energy, and base its industrial, transportation, commercial, and household energy needs to be met through the derived electrical energy. Every bit of modern technology India uses has been developed elsewhere. It would be a welcome change if it developed the technology that would be its lifeblood. Developing technology is a matter of will, vision, and sometimes dire necessity. The Manhattan project and manned missions to the moon are examples of what can be achieved within a short time if the will exists.

India cannot afford not to develop solar energy technology for these reasons. First, eventually someone will, and then once again India will have to perhaps grovel for access to it. Second, and conversely, if India develops the technology, not only will it have it for its own use, it would be able to sell that technology to other nations. Third, India does not have a very large legacy infrastructure system built on oil. It therefore has the opportunity to build its infrastructure that is electricity oriented. For instance, India’s transportation needs can be met more rationally primarily by a rail network backbone instead of roads, cars, airports, and airplanes.

Developing solar technology is not going to be cheap. But the alternative is going to be immeasurably more expensive. Here’s the scenario using ball-park figures. India somehow acquires the vision and the will to invest US$100 billion and within the next five years develops efficient solar energy technology. That investment reduces its dependence on foreign energy imports on average by US$100 billion every year for the foreseeable future. The returns on investment will be immense. Furthermore, if India were to be the leader of solar energy technology, it could earn from licensing that technology to other economies.

The question naturally arises: why aren’t others doing it if it is such a great idea. First, the private sector cannot match the funding ability of a large government. Second, other large governments do not face the immediate necessity that India faces and besides they are invested in their legacy systems. Another question relates to why the market cannot be depended upon to create the solution. It is well known that markets fail when there are very high fixed costs. Only a government has the ability to fund the high fixed costs and thus correct for the market failure. Later the fixed costs can be recovered through taxing the inevitable increase in the national income.

With the will to invest US$100 billion, India can acquire the best brains in the world to work on the problem. That spending will have important forward and backward linkages that will have multiplier effects throughout the economy. Research and development capacity will be built in the private sector and in educational institutions. Millions of productive jobs will be created by the need to develop the infrastructure required for the new industries that result from such a massive project.

India today is a large economy with a GDP of around US$ 1 trillion. The majority of its billion plus population is stuck at a subsistence level and faces an energy constraint. India’s economy cannot grow to US$ 10 trillion—what it minimally has to be if it is to be become a developed economy—without it having a secure, renewable, non-polluting, affordable source of energy. Investing US$100 billion may appear large but in the context of the Indian economy of the near future, it is small change. Per capita that investment works out around US$100, an amount that is well worth the thousands of dollars of returns it can generate every year.

The biggest challenge India faces is not a lack of ability to create the energy technology which will ensure a prosperous future. It is rather the lack of vision to foresee the future and then muster up the will to—for once—being the leader. India has to ask itself: isn’t it time for it to create, innovate, transform and lead instead of being a large country of followers in the field of science and technology?



This piece also appears in the Dec 07 issue of Pragati.

A previous post on solar energy from over 4 years ago (wow! it’s been a while): Solar power super power.

4 thoughts on “Public Investment in Solar Power

  1. The Rational Fool Tuesday December 4, 2007 / 11:58 am

    While the idea of solar energy for India as a mainstay for its development has merits, I am skeptical about some of the details. Storage is the most difficult problem to overcome in the use of solar energy. The availability factor for solar energy is very unfavorable (only a third of other conventional sources such as oil or nuclear, according to some studies). At its current state of the art, and in the foreseeable future, this practically rules out its use in most large, and even medium scale industries.

    Localized residential, agricultural, and small-scale industrial sectors present the best opportunities for solar energy. This decentralized model of generation and use is attractive in the Indian context, not merely from a technical perspective, but also from a political-economic perspective. The track record of governments in general, and the Indian government in particular, in industrial investment and innovation is abysmal, not withstanding success in an occasional Manhattan or Moon project. They are best left to their favorite vocation of generating a lot of hot air and nothing else.


  2. chandana Thursday December 6, 2007 / 1:25 am

    Nice to see a post on my favourite topic, solar power! It’s not a coincidence that there was a talk on renewable energy( on NPR y’day and one of the guests was from a solar thermal energy company.

    Hope our government realizes this and realizes soon! Atanu, could you suggest some effective ways to shake the Indian government?


  3. Notsure Thursday December 6, 2007 / 6:55 am

    $100B on this No Fing Way that should even be entertained.
    now thats some wacky gobar you are suggesting here.
    Lets start with the size of overall economy and not cash that goverment holds!
    That is misleading to say we hold that money.
    It was already known for a while that a nuclear weapon is feasible and so is space exploration.
    Add to the fact US had more brains and DID import them.
    What you are calling for is the Next central planning failure for India.


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