Inside India’s Race to Go Green — Documentary | The Long Answer by Zerodha

0:00 It's July 2024. A severe heat wave hits India, breaking all past temperature records. Air conditioners blast on full power, pushing an old electricity system that mostly runs on coal to its limits. Cities face frequent power cuts. Villages are left completely in the dark, waiting patiently for electricity. Cut to Rajasthan. Far from the crowded cities, endless fields of solar panels quietly soak in the hot sun, making clean and plentiful energy. This sharp contrast perfectly captures India's energy dilemma. India's hunger for energy is growing fast. We're already the world's third biggest electricity user and our needs will double by 2040. 24/7 electricity is now becoming a necessity like Roti, Capra or Macan. But this isn't just about numbers. Access to

0:46 energy is the foundation of development. No country in the history of humanity has grown rich without first powering up. Look at US, Europe, or more recently China. Every major leap in economic growth has been backed by massive rise in energy consumption. Factories, schools, hospitals, even the internet, none of them work without reliable electricity. So, as India aims to grow into a $5 trillion economy and lift millions of people out of poverty, energy isn't a luxury. It's a basic need. Here's the big problem now. Around 80% of our electricity still comes from the coal. Coal means pollution, environmental harm, and big risks for the climate change. The price isn't just money. It's people's health with millions suffering from breathing issues

1:31 and shorter lifespans. But recently, something important has shifted. People started noticing. Politicians, business leaders, and everyday citizens are suddenly talking about going green. At 2021 climate summit, Prime Minister Modi surprised the world promising India would reach net zero emissions by 2017. Around the same time, MKkesh Amani and Goautam Madani, famous for their oil and coal, announced billions in renewable energy projects. Think about it. When the kings of fossil fuels put their money into solar and wind, you know, things are really changing. Not forgetting the 500 gawatt of renewable energy target that the government wants to achieve by 2030. We are at 200 gawatt currently. And what's at stake? A lot. India isn't switching from coal to clean

2:17 energy just because it's a good thing to do. It's becoming essential. Renewable energy is getting cheaper. Technology is getting better and the whole world is pushing for cleaner air. Plus, going green helps India rely less on imported coal, which means more energy security. But can a growing country like India really keep expanding without coal? Is it possible to build an energy system the size of Europe's in just two decades powered by sunshine and winter? Well, we're about to find out. Hi guys, I'm Kash and welcome to the long answer where I go deep into kind of questions that don't really have easy answers. Questions that keep me up at night and I dig through reports, chase data, and pester experts until I finally get it. This time, I wanted to figure out India's big bet on green energy. not just whether we'll make the switch, but

3:03 how fast, how smooth, and what's it going to cost us. Along the way, I spoke to seven experts, be it fund managers, entrepreneurs, or policy folks, who spent decades working on this transition. I did this exercise over the span of 4 weeks. And here is what I have for you. Let's dive in. Before we dive deeper into India's green energy story, let's pause for a second. What exactly do we mean by green energy transition? At its core, it's about shifting away from coal, oil, and gas to cleaner energy sources like solar, wind, and hydro. On a smaller scale, think of replacing your diesel generator with a solar panel on your roof, or charging your EV with clean electricity instead of filling up your petrol tank. But here's something we often overlook. Energy and electricity aren't the same.

3:51 You see, energy is a broader term. It powers everything from cars and factories to homes. Electricity is just one form of it. We don't harvest electricity from nature directly. We generate it by converting coal, gas, sunlight, wind or water into power. That's why electricity is called a secondary form of energy. Now, understanding this distinction is very important because while electricity is a big part of the transition, it's not the whole story. Transport still depends heavily on petrol and diesel. So moving to EVs and charging them with clean electricity is a vital part of the puzzle. For this documentary, I've chosen to focus on few areas I could understand deeply, mainly around how electricity is generated, transmitted, and delivered. Now, this won't cover

4:36 everything in the energy transition, but it will give us a solid foundation. Let's start with a surprising fact. Electricity has to be used the moment it's made. There's no large scale buffer here. If demand spikes or supply drops, the system can get unstable. So even when you're asleep with your AC at 24°C and the fan on low, someone somewhere is generating electricity for you in real time. Storage options do exist, and we'll get to those later, but for now, just know that managing this balance between supply and demand is one of the biggest challenges in the energy world. To understand how we manage this, we break the system into three parts: generation transmission and distribution. First up, generation. Electricity is measured in watts, and a watt is a rate of doing electrical work.

5:22 A 100 W bulb uses 100 watt of electricity while it's on. But since electricity flows over a time, we often measure energy in kilowatt hours. If you run a 100 W bulb for 10 hours, you've used 100 into 10, that's 1,000 W hours or 1 kilowatt hour. That's one unit of electricity, the same unit you're built for at home. India's total installed capacity is of about 420 gawatt. Of this around 200 gawatt comes from coal. If we run all these coal plants at full capacity for 1 hour we get 200 gawatt hour of electricity. Now core plants provide what's called the base load which is consistent aroundthe-clock power. NTPC the biggest listed power producer in India runs many of these

6:09 plants. Renewables on the other hand have grown fast. Companies like Adani Green, Tatap Power Renewable and Renew Power, a major private player, are building massive solar and wind farms across Rajasthan, Gujarat and Tamil Nadu. But solar and wind aren't constant. A 100 megawatt of solar plant doesn't produce 100 megawatt all the time. It only works when the sun is out. So on an average, solar works at 18 to 22% efficiency called capacity utilization factor or CUF. That means 100 megawatt of installed solar delivers around 18 to 22 megawatt on average per day. Wind operates at around 20 to 35% CUF. Now CUF depends on things like weather downtime and even dust on panels. So a 100 megawatt coal plant

6:56 will almost always generate more electricity than a 100 megawatt solar or wind plant. That's why India still gets 78% of its actual electricity from coal even though we have 200 gawatt of coal and renewables in installed capacity. These generators of electricity whether through coal or renewables are called independent power producers or IPs. Next up is transmission. Once electricity is generated, it needs to be moved often over hundreds of kilometers to where it's needed. These are high voltage electricity highways. Power Grid Corporation of India that's PGCIL manages about 85% of India's interstate and inter regional transmission. Electricity is first stepped up to high voltage using transformers to reduce the

7:42 loss during travel. Then near your home another transformer brings the voltage down so your appliances can safely use it. This process is called evacuation. India's transmission network spans over 4 lak 50,000 circuit kilm. Setting up transmission lines isn't easy. It involves land acquisition, environmental clearances, and years of planning. Solar farm can come up in 12 to 18 months, but transmission lines can take 5 years or even more. That mismatch has led to situations where solar plant are ready, but there's no grid to carry the power. And finally, we come to distributions through discom. cable, the poles, and the substations that deliver electricity to your home or businesses and bill you for it. Discoms

8:29 manage this part. And this is where things get slightly tricky. They buy electricity from these IPs at rates fixed under a PPA, which is a power purchase agreement. Pay transmission companies to move the electricity across these regions and finally recover the money from consumers like you and me. But here's the catch. You see, electricity tariffs are regulated by the government and they are not marketdriven. Electricity falls under the concurrent list, meaning both state and central governments control it. This often turns electricity into a political tool used to win votes through subsidies and price controls. As a result, power is usually heavily subsidized. Tariffs are devised annually after long bureaucratic processes and not dynamically priced. Unlike surge pricing

9:14 for cabs, we don't have a time of the day tariff in most parts of India. Time of day tariffs mean electricity prices should vary. Higher when the demand is high and supply is low and lower when the demand is low. But in India, the rates stay the same whether you're turning on AC at 2 p.m. in the afternoon or 2:00 a.m. at night. Most discoms in India are stateowned and many operate at a loss. Why? you know a mix of free electricity for farmers, outdated building systems, sometimes even theft and political pressure to keep the rates low. You know look at these numbers the average ATNC which is aggregate technical and commercial losses across discoms is still about 15 to 20%. That means for every 100 units of electricity supplied only 80 to 85 units are build

10:01 and paid for. In some states losses are as high as 30 to 40%. You know that's a very big deal. Even if renewables generate cheap electricity, if discoms can't pay on time or upgrade their systems, the entire value chain suffers. Discoms also prefer coal PPS for reliability, you know, making them hesitant to bet big on renewables because renewable electricity supply it varies a lot. Discoms don't like that. To change this, the government has introduced an RPO, a renewable purchase obligation. These rules mandate that a portion of electricity must come from clean sources. For example, if a discount supplies 10,000 megawatt hours annually and the RPO is 25%, it must source at least 2,500 megawatt hours

10:46 from renewable energy. The Ministry of Power sets the policy, but enforcement is handled by state regulators. Summing up everything in short, generation. Well, coal is stable here, but polluting, and renewables are clean, but variable. Next up, transmissions needs heavy investments and forward planning. Finally, distribution which faces financial and technical stress and all of it needs to be work in sync every second of your day for your fan, fridge and phone to work smoothly. And that's why India's energy transition is as much a systems challenge as it is a technology challenge. Now, I understand this was just too much context honestly, but this will come handy and set the foundation for what's ahead. Now let's take a step back and look at the big picture. Why is this energy transition

11:33 such a big deal especially for India? And more importantly, why is everyone from politicians to business leaders talking about it right now? At first, I assumed the push for clean energy was driven by idealism that we're doing it because it's the right thing to do. But it looks like I was wrong. While ethics and climate concerns, they do matter, what's really powering this transition today is economics. The cost of producing electricity from renewables has fallen so much that it now makes financial sense. Consumers get cheaper electricity and producers can still make money. A useful concept here is levelized cost of electricity or LCOE. It measures the average cost per unit of electricity over the lifetime of a power generating asset factoring in capital

12:18 cost, maintenance, and fuel. Well, for solar and wind, the fuel cost is actually zero, which tilts the equation in their favor. If you track LCOE trends for solar energy globally over the last decade, the drop has been dramatic to say the least. In India, it's even more compelling. Solar power now costs around 2.6 rupees per unit to produce. Wind is 3.7 rupees to produce while coal cost anywhere between 4 to 5 rupees. >> What I would say is that you know primary it's cost. Okay. And cost is driven because of technology. There is actually no other reason why this has happened. Okay. Because self- sustainance in energy is what we are actually looking at. You know there is a significant decline in you know the cost of manufacturing that's come down by 50%. U that has translated into tariffs

13:05 coming down by almost 80%. Okay. So from the journey to 20 to2 was quite sharp when you look at different sources of electricity. So coal was quite stable at anywhere between 4 and a half to 5 1/2 bucks per unit. I'm talking about India particularly uh if you look at LG or any other fossil fuels again the range is anywhere between four to seven bucks okay this is the first time when you know this was challenged by solar when the cost came down to below three bucks and that is the reason you are seeing that you know the annual addition started going up because the consumers the incremental cost of energy that you're purchasing is less than what you're selling at if you look at from a discom point of view which is the

13:52 interface between a final consumer such as us and a generator. So it's a win-win situation for them that incremental energy they are purchasing it is at 20 30 40% lower than what they are supplying. So that has created you know a higher demand. >> Rahul pointed this out in a conversation too. The following cost of renewables especially solar has come from two big factors. Technological maturity and China's massive manufacturing push. In fact, China has flooded the market with solar panels to such an extent that people in Europe are literally using them as garden fences. Well, more on this later. Can prices get any cheaper? Maybe not much. If anything, prices might stabilize now, and that's a good thing. Shria had a good point about that along with a broader take on what's driving the shift. I think any

14:39 technology till it is still in the lab stages till it is undergoing like every 2 years cost comes down let's say 15% efficiency goes down goes up by a few percentage points when it is in that flux usually large scale deployment is resisted right so when the solar technology was in a much bigger pace of cost reduction technology improvement governments were putting up solar plants right because they it was new technology they had to go green and all of those reasons right once the technology maturity came and the economic maturity came that's when mass adoption started to happen uh I would say that right now there are like multiple factors I think the number one is that everybody wants to be energy independent like

15:26 right so everybody wants to be energy independent I think climate action is becoming more and more and more serious um I mean look at Beijing uh Shanghai there there was a time that their skies were gray right and Shanghai has built so much infrastructure in the you know in the previous decade they were undergoing so much development so much construction dust there was so much industry in those areas that I mean it took them a fairly long time after that to say we'll move away industries and they've actually reversed the AQI right everybody in Delhi is also hoping Shanghai India right but climate change is here it's at our doorstep people are feeling it vote bank is feeling it Right. I think in Australia, if I'm not wrong, the previous election was won largely on the back of the new party's

16:14 commitment to climate action because wildfires were very prevalent in Australia, right? when the vote bank starts asking for I mean what is our vote bank asking for right mtiji sibli right it's such a big vote matter right mtrashan such a big vote matter employment such a big vote matter what if clean air became a vote matter what if consumer what if the population the masses started demanding it I think we are reaching that tipping point where climate action will actually become a voting matter not just amongst the educated but amongst everybody because and you children are having ama up amir middle class daily wer you will demand climate action so I think the world is also reaching that point uh you

17:00 know that the vote bank is asking for it >> but there's another layer here that's often ignored energy security arvin and I spoke about this in detail >> so uh of course you're right that people had these goals uh you know in Europe US India everywhere that we have to reach this target of decarborizing things like that but precoid nothing moved it was all you know written but no one was actually following the mandates apart from few you know European countries and everyone knew that there is environmental goal that needs to be you know adhered to but somehow the cost dynamics just did not make sense and it is you know this time postco where people suddenly realize that energy security is very very important right

17:47 it's just not not about uh you know the cost it is also about if I'm dependent on Russia for something if I'm dependent on Middle East for something my energy should be produced within my country was a larger emotion that most of the countries realized postcoid because supply chain really you know created havocs around the world it coincided with the costs falling down as well so the technology was doing its own thing falling you know by 50 60 70% every 5 7 years but that was just not moving the needle because the adoption requires some shakeout and that shake out event was I guess postco realization of energy being a very primary thing which other nations can dominate you for and hence insecurity led to a lot of nations

18:34 eyeing uh that kind of a piece where the dominance of talk around countries was that how can we build more power or more energy within our country. The discussion was not around why clean energy. It was around how can we reach those goals? When can we reach them faster? And then the cost curve just you know came our way where the cost plummeted further 40 50% in the past 3 4 years and the adoption kind of just went through the roof because corporates were aligned, countries were aligned, consumers were aligned. Europe got a wakeup call when Russia invaded Ukraine. Most of Europe depended on Russian gas and when Russia turned off the tap, energy prices in Europe shot up by 20200% by early 2025. India doesn't want

19:22 to end up in that position. We import nearly 20% of our coal and a massive 88% of our crude oil. That leaves us exposed. One major geopolitical twist and we're stuck. Renewable gives us a way out. They're not just about cleaner energy. They're also about strategic independence. And if we can get that while cutting costs, then why not? And finally, this energy transition unlike previous other transitions is based on capex than OPEX. Arvin from Valuequest beautifully explained this dynamic to me. Unlike every previous energy transition, this is one which is based on capeex. Once those resources are created and upfronting is done, for example, a solar farm, it'll keep generating energy for 25 years with some

20:09 well-known degradation curve obviously. But unlike a coal plant, you don't need to keep thinking where will I get the coal for it from or unlike a gas plant and gas plants have their benefits. They can start up shut down rapidly. But the problem is where do I get the gas from? If one just has to go to torrent powers plant near me at the h it's turned into a mausoleium of gas power because getting gas when gas was expensive was very difficult for that object unlike previous energy or previous cases of the transition where you had to import the fuels from outside. Now it's available everywhere. So you don't have particular often grizzly undesirable elements controlling choke points of this energy

20:56 and then extracting excess economic rents from that. So power curves are flattened. So in many ways it upends the original world order. So with the changing of the guard in energy will also be a changing of the guard in geopolitics which is indeed what is happening now. And the last point to remember is that oil still has a role. But what will oil do? Will anybody be brave enough to put up capeex to discover new resources at this time? Or will the oil companies gracefully use their excess cash to try and seed other businesses? Will they quietly declare dividends and sublime away into non-existence? These are important

21:42 questions. But it is going to be a period of substantial turmoil as well. And precedents come, precedents go. But once a mega trend is established, it completely changes the way everything happens. Enough talk about what and why of energy transition. I think it's time to know the how behind this trend. And the star of the show who's leading India's green energy transition is solar energy. A decade ago, solar power was so expensive, it seemed like a hobby for the wealthy or an experiment for a scientist's lab. Today, solar lights up millions of homes and is the cheapest form of electricity you can produce. In just 10 short years, India's installed solar capacity surged from 2.82 gawatt in 2014 to an astonishing 100 gawatt in

22:30 2025. To put that in perspective, in 2024 alone, India added more solar capacity than the total solar capacity the United Kingdom has since it began installing panels. Think about that. What took UK years India achieved in just one. Clearly something very right is happening here. But how exactly did India get solar so right so fast? I had to know. So I reached out to experts and trust me they had a lot to share. Let's start at the beginning. How does solar actually work? Solar power revolves around a deceptively simple device, the solar panel. Now, I'm not an expert, but I'd go as far as saying that the solar panel is actually even simpler than a smartphone in your pocket with its countless tiny transistors and

23:15 semiconductor chips. Solar panels convert sunlight directly into electricity. No moving parts, no fuel, nothing complicated. It all begins with polysilicon, a refined type of silicon extracted from sand. Yes, the same sand you walk on at the beach. Polysilicon is melted down and formed into large cylindrical blocks called ingots. These ingots are then sliced thinly to create wafers which become the basis for a solar cell. Now here comes the critical part. Transforming these wafers into functioning solar cells known technically as the P and junction. This step is key. It's where sunlight actually becomes electricity. And after they're ready, these solar cells are arranged neatly into panels or modules

24:01 prepared to harness the sun's rays. If you place these very panels on your rooftop, you have rooftop solar directly powering your home or your building. But when you line up thousands of these exact same panels together, you create massive solar farms capable of lighting up entire cities and communities. Whether it's a giant solar plant or few panels on your rooftop, the fundamental building block of the solar panel remains the same. This very crucial idea is known as modularity and it's central to understanding solar energy's rapid growth. Arind explained this concept beautifully. Here's what he had to say. So the modularity concept if we talk about it solar if I am having one module I make 550 megawatt of energy to 700

24:48 from one module or I pile them all together to make several hundreds of gigawatt with connected solar farms. The building block of that is the same and there is no bespokeness to it. a solar module whether I build one a 10 a 100 a thousand and how I assemble them there is no built to uniqueness kind of logic with any of these entities if I now go to wind for example a wind turbine is more tailored to the environment it'll operate in by that I mean the height of the hub the geometry of the blades themselves and if I'm going offshore what kind of pylon structure I need depending on the geology of the surface this thing is going to stand up. All of these are bespoke. As a result, wind is

25:34 more expensive. Learning rates of wind are lower than that of solar. Now, coal or thermal coal or anything with a boiler is a wellestablished thing, but it takes 5 years to put it up. So, if something is modular that it is built up of the same building blocks and can be built in a very short time, it's a very powerful thing. Now, coming to nuclear, it would be at the other end of the scale. Each power plant is a bespoke entity built by highly skilled workforce operated and maintained by a highly skilled workforce built over a very long period of time. So does it add to the technological repository of a country? Most definitely which is why they are usually enshrined along with your weapons programs. On the other hand, will they ever be able to provide cheap power the way solar does?

26:22 No. Now we understand that solar power is not only modular, it's incredibly quick to set up. Combine that ease with India's unique geographical advantage. As a tropical country, we are blessed with abundant sunshine and extremely high radiance. It's almost like sitting on a gold mine of limitless energy that's been right under our noses all along, waiting to be tapped. Today, this potential is finally turning into reality as multiple pieces of the puzzle fall perfectly into place. Why I would say India is bigger on solar than let's say even a US or many other countries is I think one we are a tropical country so I think just the amount of solar electricity that can be made in India compared to other countries of the world is higher in a Germany you know you make

27:08 like a 1,000 units of electricity per kilowatt of rooftop solar in India you make 1400 units of electricity per kilowatt so it's 40% higher production and solar cost is you know the the everything inside it right the cost doesn't vary too much you know some subsidization by government you know it could vary a little bit but to get 40% higher power production that is you know uh really India can benefit from that now coming back to the value chain we know how solar panel works but who actually makes it when you look at the data it becomes clear that China dominates the entire solar PV value chain from polysilicon to cells to finished modules in fact China is responsible for more than 80% of global production across these stages. And this

27:55 didn't happen just by accident. Over the past decade, Chinese companies scaled rapidly powered by state subsidies, smart industrial policies, and sheer manufacturing muscle. So what does this mean for the rest of the world? Simply put, if you're planning a solar transition, you are heavily dependent on China. Europe, for example, remained the largest importer of Chinese solar modules, accounting for nearly 46% of exports. The Netherlands alone imported a record 47.2 gawatt. Other major importers include Brazil, Spain, and of course, India. India is now among the fastest growing countries when it comes to adding solar capacity. But interestingly, we still don't import as much solar gear as Europe does. That's because we are largely becoming

28:40 self-sufficient when it comes to solar modules. Now technically speaking a solar module is just 10 to 20% of the entire value chain. What we mostly do here is import solar cell which still comes from China and then assemble it locally adding wires, mounting hardware and so on. There are thousands of such solar PV manufacturers or you know more accurately assemblers in India. But the actual value addition happening here it's pretty limited. The bulk of the value still lies in the cells and wafers and those are still heavily dependent on China. We do have companies like Tata Power Solar, Adani Solar, Vari Energies, Vikram Solar and Premier Energies doing solid work in the space. The big goal now is to climb further up the value chain and start making solar cells in

29:26 India too instead of importing them. But we've still got a long way to go. So how did China come to dominate this space in the first place? That's the real question. And what did they get right and where does India stand today? Arvind breaks it down for us. >> So China accidentally caught this trade. I was uh you know just mentioning this somewhere that they actually wanted to manufacture a lot of solar panels for Germany because there were policies that were you know favorable over there and this uh technology they thought that we'll make a lot of money if we supply to the Germans and things like that and that completely faded off because the Germans completely did away with that policy and that resulted into huge losses in fact in the Chinese uh you

30:12 know solar cell manufacturers but Then they kind of built that ecosystem and China because it was a large manufacturing powerhouse they required energy to be at a lower cost and that is where year after year they realized that if we can bring down the cost of energy that can be a winning uh proposition for them to become competitive in the whole world and that is where they continued with uh uh you know development into the renewable energy space across so many years and that has resulted in their dominance. If you look at the supply chain be solar module, solar cells everywhere 70 to 80% supply in the whole world is currently from China and that equation cannot change materially in a decade or so. But there are strides that

30:59 our country is also making. If you look at you know the requirements within our country maybe the whole solar module which is the end product almost 95% was being imported to now being almost 70 75% inhouse. Now in India we have the ecosystem that 75% of our requirement of panels is completely ours. Maybe in a year or so we'll be 100% of our requirement. We'll be exporting we'll be net net exporter of solar panels that the ecosystem on the panel side we have made. Government in our countries also realized that this ecosystem we also want to develop in our country. we cannot let China dominance be there and hence they made these policy changes where they had a policy called approved lift list of equipment manufacturers and there the solar panel you know industry

31:45 took off now they have a policy of approved list of cell manufacturers so now they're saying that technology curve or important chain develop India to come 2026 we have now cell manufacturing which will take off and large announcement ments have already been made by Radanis of the world, varies of the world, alliances of the world and now we are moving towards self-sufficiency of the most critical part of the technology which is solar cell. Now think about if a US wants a non-Chinese supply chain. It cannot have uh it developed by not having India that the whole world is talking about tariff and the problems and this that. But if US is thinking about energy being a very big problem in that country because the

32:30 hyperscalers are there which require this huge energy they cannot think that without India now because we have prominent suppliers of a lot of those equipments from our country now right from a very simple you know distribution structure up you know steel structures which distribute power to transformer to a lot of these equipments. So we believe there's a huge scope for not just being selfdependent but also to be a supplier to these large economies if they plan to have a diversified source of because ecosystem us will be there and that is where we have that opportunity to grab. So yeah, India

33:17 is not just becoming self-sufficient in solar, we're also turning into a solid alternative for any country that wants to steer clear of Chinese solar tech. But let's be real, competing with China is a whole different ballgame. They're just too good at what they do. Or at least that's how the government has designed it. There's massive overcapacity in Chinese solar market and the prices of their panels. They've got very little to do with the actual production costs. It's more to do with what the market can handle. And right now things aren't exactly great over there. I was in China just 6 months ago. So they have this huge conference uh every year every player around the world who is in solar they attend that. And we met a lot of these Chinese players and they were making 20% a losses forget

34:02 about profits. And we were just startled was why are you then producing cash loss? What is the game over here? So what they were saying is that we built this capacity and the government gave this free land to us and free infrastructure to us just so that we can put up capacity and we have this export target and we have this manufacturing target achieved to all this thing could be taken away from us. So they're not thinking every cash loss for them if they want to save their infrastructure that is what their whole you know mindset is that what I need to produce this as I'm gone now you know what this whole Chinese involvement has done it's kind of a mixed bag it's definitely bad for them but maybe but honestly great

34:49 for the rest of the world they've made solar panels super cheap and since the biggest cost in solar power is the upfront investment in panels cheaper panels means means the overall cost of solar power comes down. Now that's a huge for adoption. It makes switching to solar much easier and so much more faster. In fact, out of all the energy sources we've ever had, solar has scaled the fastest. And while there are many reasons for that, falling costs are definitely one of the biggest. But here's the thing, there's more to the prices drop than just Chinese over capacity, it's actually a bigger story. And the big question now is, can the costs fall even further? So see obviously over the last 5 to seven years technologies you know have come in new newer technologies have come in and that

35:36 has led to a significant decline in you know prices or tariffs that we are looking at but the current technology that we are you know working with which is topcon technology um I think a decent amount of correction has happened so what I feel is that we've bottomed out in terms of tariffs and pricing in solar now what can help is cost of capital okay So when we are building in a 2 and a half rupees of you know tariff in India there the cost of capital is upwards of almost 8%. If we go to the west or you know where interest rates are much lower you know actually tariffs can be even further lower. So from a technology standpoint today I don't see further correction in prices. Cost of

36:22 capital will be a key. However, new technologies such as HJT etc where you know China and couple of Indian companies are also working once that comes on scale there is an opportunity where we improve efficiency and hence reduce cost. So when we looking at cost it's basically a levelized cost of energy okay over a period of time so you know again so cost of capital and efficiency will be two critical parameters. So I think the current technology where we are working we've sort of bottomed out uh over the last couple of quarters or you know more we've seen Chinese dumping which happened and below cost uh you know was you know modules were sold in India and other countries below the cost of

37:09 production that is possible when their manufacturing uh you know the countries and the governments actually subsidize their production. So I think there uh you know the sustainability may be a question mark beyond a point and you will see capacity cuts coming through and hence prices would either stabilize at current levels or slightly inch up that's what we've seen in terms of solar it's inched up a bit uh storage also has sort of inched up a bit over the last 3 to four months but I think with new technologies coming in there is scope but solar within the renewable space solar is where you will see the most R&D happening and in the further scope of reduction. So I'm looking at cost is a three-way thing obviously efficiency you said one which is a function of how technologically advanced do we get cost

37:54 of capital remains second but that's more a function of interest rates and how much investor interest comes in third thing was also the fact of over capacity let's say that China has 1,000 gawatt of capacity world requires 500 gaw if I'm not wrong that's what I read uh so what you're saying is key that the third pillar of over capacity that no more will bother them because we'll eventually see uh the benefits of over capacity we've reaped so far to sort of stabilize on technology and advancement front that remains an opportunity where things can go better but obviously it just like trees don't grow to the sky similarly prices won't go down to zero there's only incremental efficiency we can achieve and third on the cost of capital front what do you what did you

38:40 say again if I was to ask you to summarize >> cost of capital what I was saying that India for example still you know we are getting capital at 8% % you know it's it's almost half if we go westwards right so there is a scope of uh you know increasing uh reducing cost of capital secondly you know obviously the access to cheap capital uh due to you know foreign exchange risks etc has not you know played out well for us yet despite you know our capacities actually having almost 45% in terms of renewable on a total installed base right so when we signed the Paris accord in 2015 post that we've given a 2017 net zero targets etc. One of the uh you know I would not say conditions but it was an expectation

39:26 that we get access to cheaper capital but that's not a reality despite that due to our efficiencies or you know inefficiencies whatever we may call it we are still maintaining a low tariff and it is lower than what the west purchases at. So obviously we are blessed with much better resources in terms of irradiation levels. Uh but you know I think we've sort of bottomed out in terms of the uh you know cost of manufacturing. I would say capital we've got good scope. >> I really liked how Rahul put it and honestly I agree with a lot of what he's saying about bringing costs down. Unless there's some breakthrough tech that's on the horizon we might have hit the ceiling in terms of how efficient a solar cell can get. and the Chinese over capacity. It's not going anywhere anytime soon. But what really caught my

40:13 attention, and I didn't think about this much until I spoke to some experts, is the cost of capital. It's a huge deal. Take a look at this chart. As the cost of capital rises from 8% to 14%, the LCO, that's cost of energy for solar climbs from 2 rupees to 3 rupees per unit. I mean, that's a big jump, 50% almost. And it's not just about higher costs. The cost of capital has ripple effects across the board. In fact, Ember Energy crunched some numbers on this and what they found honestly surprised me. >> So, what we see is through our research uh that if if if your cost of capital goes down by 200 basis points uh then you can deploy over 50 gawatt of so uh renewables above the 500 gawatt target.

40:59 So if your target was 500 by uh 2030, if your cost of capital goes down by 200 uh basis points or 2 percentage uh you can actually uh deploy 550 gawatt of solar right and if your cost of capital stays high uh let's say your cost of capital goes above by 4% or 400 basis points uh then you might build less solar right so you might be building 400 gawatt of uh solar which is way lesser than what your targets are >> but we'll dive deeper into this whole cost of capital story a bit later. For now, let's get back to costs. So yeah, falling costs definitely made it easier for Indians to adopt solar, but it didn't happen on its own. There was a real push behind it, a push from the government. The government has been using policy toolkit to steer

41:44 investments and businesses in a particular direction. And solar, it's been right at the heart of a lot of recent renewable energy policies. Now there was a lot going on here so I figured I better call the experts to help me break it all down for me. >> I think one policy in the green transition especially that has made a lot of impact is uh the national solar mission. Now that's a mission within which there were multiple policies that came about uh and schemes that came about over the years but that kind of set the direction that India is going to go big on solar. uh it came uh in the early 2010s uh but then the ambition got ramped up significantly around 2015 20145 uh the earlier target was that India will do 20

42:31 gawatt like 20,000 megawatt but when u the government change happened the target was ramped up to 100 gawatt suddenly a 5x jump in the target and India was not even close to achieving 20 by back then right now that gave a very clear market signal to the investors to the private sector to the financials that okay India is going big on renewables uh and that has led to and of course that was one target setting uh along with it there were conducive policies there were policies in terms and policies evolved based on how the market situation was evolving like when the tariffs were let's say the price of the technology was high uh there were different kinds of incentives that have been provided accelerated depreciation

43:16 right uh of the asset so that someone can get a tax benefit. Uh or when the prices started becoming stable and more attractive, government removed those incentives and simply move towards a regime of what we call a uh reverse bidding. So it became completely market competitive. There is no now additional incentive that the government provides on renewables in India. Uh they are have mostly become market competitive because the prices in the global market for renewables have come down quite a bit. So in that way the policy has remained very responsive uh to the evolving market realities but the direction of a large ambition has set the course uh that has given the certaintity to market participants that okay it's here for the long run so the overall direction really

44:01 got set with the launch of national solar mission but what actually followed on the ground what were the specific policies that came after Shrea breaks it really down well for me >> so there are three legs to how government is doing Right. One is giving direct benefit transfer to the end customer. So every home, every housing society looking to switch to solar gets subsidy straight in the bank account. It's a direct benefit transfer. This is the prahanantri suroja. Then there is production linked incentives. So to manufacturers who are setting up you know solar solar cell, solar panel manufacturing capacity. Then there are protectionist policies that pro that give Indian manufacturers the protection from Chinese you know the unfair trade practices the unreasonably low prices because if you don't give them protection the Indian manufacturers can never come up and never actually truly

44:47 compete with China on a global scale. So I think those are the those are the custom duties that are there on imported panels. Also there are restrictions to using imported panels for certain type of projects. So if you want a subsidy in India the residential solar customer has to buy a made in India panel. That's the DCR domestic content requirement mandate that the government of India has. Similarly for any sort of government projects large scale solar power plants you cannot put put up imported panels. So those are the protectionist policies import duties and stuff like that that give Indian manufacturing you know the ability and time to grow. The fourth thing is ease of doing business. I would say that amongst all of these things the best thing that India has done especially in case of residential solar is the launch of the national solar portal. The national solar portal is one window for any home any housing society

45:33 anywhere in India looking to switch to solar where through one window they apply for their solar permits they submit their bank details they get their subsidy in their bank account so it's an end to-end single window it is a mammoth of a project for a country that has more than 70 discom 70 you know utilities across our states and union territories exist each state has its own ERP each state used to have its own physical paperwork requirement ment for you know like one home is looking to switch to solar it could take us as much as 45 days to do all the paperwork before a family solar journey could even start and today you know in the day and age of Amazon I mean you order a refrigerator it's at your doorstep the next day right uh so people you know in that sort of a scenario for it just the documentation

46:18 and government permits and paperwork there could be a lot of red tapism bureaucracy etc etc they've cut through all of that through this national solar portal uh and this is like done with this has been done with an iron fist right every state has had to adopt it there has been seamless integration with the state uh you know uh you the the the ERPs of different states as a solar company like solar square works across nine states of India and 20 cities literally 3 years back every state would have a different paperwork process we would have to have these lots of these army of you know government permit me you know people on the ground who would go collect documents then go to one daftar then the other daftar uh and all of that has now changed with one single

47:03 window online permit to tell you how big this is uh in the United States of America it could still in a few states take you as many as 3 months 90 days to get all your solar permits it is still bureaucratic there is still no one single window online paperwork available in India 2 years back I remember one of our only markets was Madhya Pradesh for a family to switch to solar In Jabalpur we had to get 45 papers signed then submitted in one office then by post it would go to the next office then by post it would come back to the first office then they would sign and then you know a family was allowed to go solar this could take like months so from there like today we're looking at a single window across every state in union territory of the country and in India

47:49 now from start to finish a family could go solar in 30 days the better the best states which are really really smooth it could happen in as little as 15 days. But I do believe that this is a this is like a big achievement for India. The online you know paperless permits and I think this the same happened to DMAT account opening for the country as well right like Nithan always talks about it you know the day it became paperless like the number of stock traders in India like it went on a hockey stick. So I think just the ease of permits is a huge huge uh you know thing that government has done. Has this ease of permits also been a case for corporates who are trying to let's say put up captive power plants? Is is that >> so for commercial solar the national solar portal does not is not currently

48:36 being used for commercial solar applications. However, I do understand that there's a lot of sort of advocacy by the industry to say that portal it is integrated everywhere. So let it be a home housing society factory warehouse school college anybody looks to go solar, let let it all be through this one single window. And I do believe that you know sooner or later it will happen. Uh but right now no uh the commercial solar permits work differently. Uh they are not online and paperless like the residential solar permits. >> Now look, all this government push is fine, but I've always seen myself as a free market capitalist. I believed the market should decide where the capital must go that the government shouldn't really step in because no one can allocate resources better than millions of individuals making decisions through

49:22 the individual hand of the market. I also felt that this kind of intervention distorts the market. It can artificially inflate the value of certain companies putting them in positions they might not have reached without policy support. And when that support vanishes the whole thing could collapse like a bubble. Now my intentions here were good but maybe just maybe I took this argument and thinking a little too extreme. So I got curious. I asked Arbent why isn't this policy push a bad idea? And why can't pure free market capitalism do the job here? Free market capitalism is as much a hypothesis as Marxism. It doesn't exist. All right. If if free market capitalism existed, lobbying and advertising would not exist. So yes

50:09 there is policy governments also and ideally speaking you want a government which is looking at the longer benefit of everyone around a government for profit would be a dystopian nightmare. It would only look for terminal value and because everyone dies someday they'll say nobody has any value which is indeed the problem. So yes, coming back to this, yes, there has been policy support, but a lot of Chinese policy support has not only been for the environment, it has also been heavily of a geopolitical nature to further Chinese agendas and India has reacted to it by for example anti-dumping ALM, ALCM going forward which we alluded to earlier. Uh so that is going to

50:56 continue. Now the other point of distorting the entire demand scenario. Now valuation is a separate point. Uncle markets can occasionally go mad or he can be very despondent and everything in the middle uh over various periods of time. But let's look at the demand side. Renewable energy when in the 1980s a push was made under uh Nixon which was eventually nixed by Reagan. Renewable energy push was created back then as well but it didn't succeed because the economics didn't work based on the technologies available at that time. Now even someone like Trump who's a climate denier etc term maybe at least the amount last term the amount of installations still doubled. Regulations

51:42 are accelerating demand but it's not as if it is the regulations which are creating the demand. The demand is driven by the fact that solar energy in areas of availability is the cheapest form of energy ever available to people and then it is geopolitically useful that you don't have to depend on whoever is your f favorite oil oligarch out here. So people cannot utilize your current account deficit as a weapon to bring you to heal with energy cost. So it's again a fairly complicated uh confluence. So pure capitalism whatever it is does not only apply. >> Now after all this talk about solar and especially the kind of government push we are seeing one thing really stood out for me. The Indian solar ecosystem isn't

52:28 trying to crack the tech behind the solar. It's focused on the manufacturing behind it. We're not solving for lab goats. We're solving for hard hats. Solar isn't a tech problem. It's a manufacturing problem. And that's something Arvind really helped me understand. >> See, let's put it this way. The the science in the sector is already done largely. Unless you're talking about some exotic solar cells like perovskites which the Canadians were doing or desensitized devices or quantum multi-junction devices which are used in space applications but on the earth I mean if I want more energy I'll just put up two more rows of panels. Barring Mumbai and living here we've got got spoiled land is not that expensive

53:14 particularly if you go to the run of Kach. Now returning to your question solar as we know it today is also on the backbone of silicon and the semiconductor revolution taught us William Shockley Bardin and that entire bunch of scientists followed by the traitorous 7 who put up all the fab shops in America. The kind of work that is done on silicon for semiconductor quality is far in excess of what is required for solar. By no means is this a dirty operation. But of course the purity levels that are required for computing devices are significantly higher. So what China has done is that they have done enough R&D to keep gently increasing the efficiency of these

54:01 devices. Now will India require that kind of R&D? probably not unless we are developing some completely new set of solar cells. Now, as far as in the solar ecosystem, allow me to focus on that for a moment. So, you have to first take sand and refine it into silica, then cut it into wafers and then dope the wafers to create a P and junction. Now to create this P and junction of course that is the hardest part of this whole process but it's a well-known process as long as you're sticking to silicon. So then it becomes one of manufacturing ingenuity almost as a tribal knowledge of manufacturing than actually doing any R&D there anymore which is why India is

54:47 doing it. Now as far as Indian R&D is concerned with the cost structures that Indian companies face with the interest costs that Indian companies face it would be extremely difficult for anyone to actually do the kind of research endeavors that a Longi or one of these entities are carrying out in India. That's just the blunt reality of it. >> Again help me understand if that is the case. If that is the case, uh how how is it that China still dominates most of it even though most of it is let's say open source. Everybody knows how to do it. >> No, no, no, no, no, no. That's like saying you can buy a pizza oven, he can buy a pizza oven, I can buy a pizza oven. I bake a pizza, it'll look like a tire. You bake a pizza, it'll look like something else. Perhaps one of the three is edible.

55:33 So there is a significant learning curve in actually learning and doing it. Cell manufacturing facilities at full uh tilt run at about 95 to 98% utilizations unlike module facilities and yet recently VIA had put up their put up their uh cell facility. It has taken about a year and a half a little more than that even for it to come fully to start coming online. So it's not that easy that you buy the equipment and it's a fairly because you're finally doping on silicon with other atoms and through a combination of temperature and process conditions controlling how deep it goes and therefore how the conductivity characteristics of the device are altered which in turn will decide what are the voltages and what are the efficiencies you'll get out of it. So

56:20 the process is something which has to be done very carefully. That is where it lies. Just because you've got the equipment doesn't mean that you can do it. Another thing that really fascinated me about solar is just how decentralized it is. Unlike traditional sources like coal or even wind, to an extent, solar gives you the option to not depend on anyone else for your energy. You can produce it for yourself. You can't exactly set up a coal plant or a wind turbine next to your house, but a solar panel on your rooftop. That's totally possible. And that's changed the way we as individuals understand energy. It's given people more power literally and a whole lot more agency. See I think uh again electricity had remained something

57:06 where people were dependent on political leaders government for the access right for the most part and anywhere in the globe not just in India grid infrastructure has been developed by the governments by the public sector uh it's almost like a public good right and stretching a wire to every nook and corner of this country was not easy we have managed to do that but uh it has come at a huge cost Um and still in rural areas you may have now a wire at your home but not necessarily in your farm where you need let's say some pumping energy and so on and so forth right so and what solar does it sort of crosscuts all that bureaucracy all that hierarchy all that knocking at the door you can generate power where you need it right as much as you need it as long as

57:53 you have resources to and u a provider who can come in and install this for you and so on and now as you travel through rural India across the road you see solar panels are getting sold um in rural retail markets right so that has made almost democratized energy access uh which was not the case just because technology was so centralized for all these years you had to have these large thermal plants running on coal or other fossil fuels and they will then send electricity hundreds of kilometers away and so on but now you can generate where you want to use it so that gives uh especially in the rural areas per very urban areas a lot of agency for economic activity as well. Uh most of

58:38 our value addition got concentrated to urban centers and one of the reason was access to electricity. uh one of the survey government survey I looked upon now about 5 years ago which was around MSMES in the country right and they asked lot of the microenterprises what are the top challenges that you're facing in your business and it could be any challenge like not having enough capital not having good uh work skills uh or skilled work workforce or not having a good market etc etc in that open-ended question 14% of Indian MSME says that access to reliable energy is the top challenge, one of the top challenge, top two challenge. Now once you see that you realize like how critical energy access is for economic activity and to my

59:26 surprise these were not the enterprises which you would expect them to be in typical areas with poor energy access. These were in states like Hana, Maharashtra, Gujarat uh which are supposedly better energy access states in the country. And I then realized that it's only in these areas where now decent energy access is there enterprises have emerged which are dependent on electricity. But in your Bihar and Jarhand until 5 7 years ago those enterprises have not even emerged which are dependent on electricity. So this is how critical electricity access can be or how binding it can be for economic activity for value addition. So yeah, and then decentralized access to energy through solar really just solves this. Like you can now put a solar and

1:00:12 run a oil expeller or run a milling machine and so on. And this is where rooftop solar becomes a big part of the conversation. Out of the 105 gawatt of solar capacity India has installed so far about 17 gawatt comes from rooftop solar. Now sure that's very small compared to the utility scale solar the big solar farm set up by the IPS but it's still a very meaningful number because what this really shows us is the possibility that every home in India could become its own power producer and if I push this idea to an extreme you could even argue that the whole need for transmission might start to fade. If enough people generate their own electricity their dependence on the grid could drop dramatically. But of course, I mean, I needed more context. I

1:00:59 couldn't think all alone. How has the rooftop solar worked out in other countries? And more importantly, how does this stack up against the utility scale solar in terms of cost and effectiveness? Abishek had some interesting takes on that. >> No, I think when it comes to rooftop solar, the poster child example is Germany. Most of their renewables uh is actually rooftop solar. it is decentralized renewables and they did it way before any other country sort of started doing this. So it when solar prices were even a lot higher they started their transition. Uh and that has been a poster child story for many many other countries to follow. U we have now seen Bangladesh doing a lot of rooftop solar as well. uh recently I was

1:01:47 hearing that Pakistan is picking up rooftop solar quite a bit but in these context it is happening because the grid electricity is not sufficiently available not reliable and so on so it's more a response to a need whereas Germany did it because they wanted to transition to uh solar or renewables right so we have seen interesting different kinds of success stories or interesting stories emerging India also slowly seeing the growth of rooftop solar But a lot of it happened in our commercial and industrial consumers not in our residential consumers. And that happened purely because of economic gains like industrial and commercial consumers in India end up paying a very steep price when it comes to discom electricity. Uh and moving to rooftop solar helps them sort of do net

1:02:34 metering and shave off those many units from their bill. So that's why you see a lot of pickup happening there. uh and now for the last year or so because of the renewed thrust by the policy on rooftops for residential we are seeing things picking up in the residential sector as well where there is a capital subsidy available for small uh uh households who want to put rooftop solar uh you're getting that capital subsidy but if you ask me like okay what is going to be a bigger market and so on and so forth uh in terms of gigawatt just the amount of solar that you would install all and so on. Uh the utility scale is going to be much bigger than rooftop solar at least the way things have played out so far in India if I were to sort of extrapolate those. But

1:03:21 if you ask me how it should be, it should be a lot more decentralized than utility scale in my view. Uh because decentralized one gives agency to people a lot more. They can be very active participants in the energy system rather than being a passive consumer.

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