The politics of late late development in renewable energy sectors: Dependency and contradictory tensions in India's National Solar Mission. (February 2020)

• Record Type: Journal Article
• Authors: Behuria, Pritish
• Is Part Of: World development. Volume 126(2020)
• Publication Date: 2020-02
• Subjects: Solar -- Green industrial policy -- Green energy race -- India -- Narendra Modi -- National Solar Mission; Economic history -- 1990- -- Periodicals; Economic assistance -- Developing countries -- Periodicals; 330.9
• DOI: 10.1016/j.worlddev.2019.104726
• Languages: English
• ISSNs: 0305-750X

Abstract

Highlights: The installed capacity of solar energy has grown at an exponential rate. Prioritising low tariffs while increasing generation has increased import dependency. Transnational coalitions of firms block support to domestic manufacturers. Recent policies show that reviving manufacturing may be difficult. Prioritising deployment above manufacturing will lock in dependency on imports. Abstract: Renewable energy investments are expanding across the world at an astonishing rate. The United States and Europe obtained early advantages in renewable energy technologies. However, East Asian late industrializers have now extended substantial support to domestic renewable energy manufacturing firms alongside encouraging increased deployment of renewable energy projects. In the solar energy sector, Chinese companies now dominate global production of solar cells and panels. Other developing countries, in South Asia and Sub-Saharan Africa, have lagged in their support to manufacturing segments of renewable energy sectors. Yet many countries still aim to promote domestic production of solar panels and cells though such priorities are often secondary to increasing deployment of solar power projects. This paper argues that India's position as a late, late industrializer in the sector, combined with prevailing domestic political economy pressures, have made it extremely difficult to promote the manufacturing of solar panels and cells. The strategy of prioritising increasing installed capacity of solar energy while also attracting lower energy tariffs appears incompatible with the goal of increasing domestic manufacturing capacity. Initially established in 2010 and ramped up after Narendra Modi became Prime Minister in 2014, India's National Solar Mission (NSM) has received widespread praise for increasing the country's installed solar energy capacity and for attracting tariffs of Rs. 2.44 per unit (a reduction of 80% within the last six years). However, domestic manufacturing has received limited support, especially after the United States launched a complaint against the NSM's domestic content requirements, requiring energy developers to procure domestically-produced panels on specific projects. In 2018, the Indian government chose to refocus its attention on supporting manufacturers. However, the government chose a strategy that prioritised retaining a low minimum tariff on projects while increasing protection against imported panels, thereby forcing developers to buy panels at a higher cost. Since then, bidding processes have slowed down, highlighting the incompatibility of these goals. India's case shows that countries that fail to integrate a strategic focus on manufacturing in their renewable energy expansion strategies from the onset may remain dependent on foreign imports of renewable energy technologies in the long-term. Late late development without adequate attention to industrial policy in renewable energy sectors will inevitably cement a green division of labour, with most of the Global South locked in dependency on American, European and East Asian technologies.