Get ready to foot the bill for India’s electricity, as the Obama administration has pledged billions of dollars to fund solar energy development to help the country meet its goals to push green energy and fight global warming.
The funding announcement comes despite Prime Minister Narendra Modi’s rejection of a proposed global warming deal between the two countries. Modi rejected calls to peak India’s carbon dioxide emissions by 2030, instead focusing on bringing power to the hundreds of millions of Indians that lack access to electricity.
“We very much support India’s ambitious goal for solar energy, and stand ready to speed this expansion with additional financing,” Obama said during his visit to India.
“We discussed our ambitious national efforts and goals to increase the use of clean and renewable energy,” echoed Modi. “I asked him (Obama) to lead international efforts in making renewable energy more accessible and affordable to the world.”
U.S. agencies committed some $4 billion last week for solar energy companies to build up green energy in India. The U.S. Trade and Development Agency said it will leverage $2 billion in loans for solar energy along with $1 billion in lending from the U.S. Overseas Private Investment Corporation. The U.S. Export-Import Bank will also lend out $1 billion to subsidize India’s solar development.
India has been looking for $100 billion in solar energy investments over the next 6 to 7 years to build up their green energy capacity. It’s all part of Modi’s $160 billion plan to bring green energy to rural Indians who lack access to reliable electricity.
Instead of reducing greenhouse gas emissions, Modi’s government plans on generating 100,000 megawatts of solar power and 55,000 megawatts of wind power to fight global warming. Modi also plans on saving 20,000 megawatts of power through energy efficiency mandates.
The Business Standard reports that India’s wind turbines are mostly domestically produced, but the country gets 70 percent of its solar energy capacity from panels imported from China and the U.S.
Obama’s announcement sent solar energy stocks surging, but critics of the deal have already found evidence of cronyism in the announced solar subsidies.
One solar Arizona-based company, First Solar, has come under fire for being a top contender for getting part of the $1 billion in financing from the Export-Import Bank. Indeed, after Obama announced billions in new solar financing, First Solar’s stock soared 4.1 percent.
Critics have also pointed out that Diane Farrell, a former Democratic candidate and former Ex-Im board member, has been hired by Azure Power, a solar company contending for financing.
Farrell was hired by Azure just days before Obama announced $4 billion in solar financing for India. Azure likely hopes that hiring Farrell can get them access to taxpayer dollars. Indeed, Farrell was able to get Azure $16 million in Ex-Im financing while she was served on its board.
The agreement between Obama and Modi to subsidize solar development is starkly different from where the two nations were a year ago when a green energy trade battle was brewing. India sought to impose tariffs on imported solar cells, including those from the U.S., to boost domestic green energy manufacturing.
But the effort met tough resistance and India dropped plans to impose tariffs on imported cells in August. India expects the U.S. to also withdraw its solar trade complaint against India’s government in the near future.