Drivers of Solar Deployment in India: A State-Level Econometric Analysis

Abstract

India has ambitious solar energy targets of 100GW by 2022, including 60GW at large-scale and 40GW at small-scale. While India has made considerable progress in meeting these targets, with 22GW of solar deployment in 2018, it has a long way to go. Given that solar deployment in India is now largely driven by states, this study strives to understand state-level drivers for solar deployment in India, so as to inform future policy making for reaching India’s solar targets. Using econometric techniques – a time series cross sectional regression with fixed effects – over a panel dataset over 11 years (2009-2019) of Indian states, it explores policy, economic, and structural drivers of solar deployment. The key results indicate the importance of two policies – the Renewable Purchase Obligations and Solar Parks – in reaching India’s solar target. We also postulate that these learnings would also be useful for other developing countries with significant solar ambitions. While we do not find further evidence of policy effectiveness, we expect more results to emerge as access to more and better data becomes available.