Mapping Meso-Economic Impacts of Grid-Connected Solar PV Deployments in India: A Social Accounting Matrix Approach

Abstract

This chapter provides critical insights on developmental impacts of renewable energy scale-up for Indian economy by constructing a social accounting matrix (SAM). Taking a techno-economic perspective, impacts of grid-connected solar deployment as new production activity are estimated for two-established categories (DCR and Open) of solar deployment. This involved construction of independent solar IO blocks integration as a new sector in 35 × 35 national input–output table (2011) obtained from world input–output databases (WIOD). Wage incomes associated with installation of a unit of grid-connected ground-mounted photovoltaic solar power capacity in India is estimated in terms of skill-based labor compensation generation. The study compiles data from NSSO 68th round data (2011) on household consumption expenditure, employment and unemployment indicators and status of education and vocational training to create consumption and income distribution profile of the nine household categories. The analysis reveals greater wage generation for urban households associated with solar deployment and also highlights the fact that projects using domestically manufactured solar panels provide comparatively wider distribution of wages across the household categories and with better penetration in lower deciles of per capita expenditure indicative of superior developmental impacts.

Appendices

Appendix 1: Solar Block for DCR Projects

Products at purchasers’ price	Intermediate Industries
	Solar sector (36)	Basic and fab metal (12)	Paper (7)	Other non-metals (C11)	Chemicals (C9)	Maintenance (19)	Electricity (17)	Construction (18)	Electrical and optical equipment’s (14)	Financial intermediation (28)	Water travel (24)	Surface travel (23)	Total economy	Gross capital formation	Total industry output at base price
Solar silicon wafers (imported)	193.43	0	0	0	0	0	0	0	0	0	0	0	193.43	0	193.43
Back sheet, ribbon, frame, screen metal paste	0	103.79	0	0	0	0	0	0	0	0	0	0	103.79	0	103.79
Hot galvanized steel frames	0	21.9	0	0	0	0	0	0	0	0	0	0	21.9	0	21.9
Packaging	0	0	4.84	0	0	0	0	0	0	0	0	0	4.84	0	4.84
Glass	0	0	0	24.18	0	0	0	0	0	0	0	0	24.18	0	24.18
Chemicals	0	0	0	0	14.5	0	0	0	0	0	0	0	14.5	0	14.5
Maintenance	0	0	0	0	0	29.01	0	0	0	0	0	0	29.01	0	29.01
Electricity	0	0	0	0	0	0	14.5	0	0	0	0	0	14.5	0	14.5
Ground leveling and civil work	0	0	0	0	0	0	0	27.56	0	0	0	1.1	28.66	0	28.66
Wires and transmission, switches charge controller infrastructure	0	0	0	0	0	0	0	0	33.64	0	0	0	33.64	0	33.64
Invertors	0	0	0	0	0	0	0	0	26.5	0	0.55	0.34	26.84	0	26.84
Insurance	0	0	0	0	0	0	0	0	0	1.72	0	0	1.72	0	1.72
Contingency	0	0	0	0	0	0	0	0	0	5.16	0	0	5.16	0	5.16
Interest during construction	0	0	0	0	0	0	0	0	0	17.2	0	0	17.2	0	17.2
Project management	0	0	0	0	0	0	0	0	0	3.44	0	0	3.44	0	3.44
Financial cost	0	0	0	0	0	0	0	0	0	3.44	0	0	3.44	0	3.44
Pre-operative cost	0	0	0	0	0	0	0	0	0	3.44	0	0	3.44	0	3.44
Water transport	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Land transport	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Land cost	0	0	0	0	0	0	0	0	0	0	0	0	0	10.32	10.32
VAT	0	2.28	0.106	0.531	0.319	0	0	0	0	0	0	0	3.232	0	3.236
Net custom duty	0*	0	0	0	0	0	0	0	0.76	0	0	0	0.76	0	0.76
Subsidy	0	0	0	0	0	0	0	0	(−1.20)	0	0	0	−1.2	0	−1.2
Total output at base price	193.43	127.97	4.95	24.71	14.82	29.01	14.5	27.56	59.7	34.4	0.55	1.44	533.04	0	542.81

1. Net custom duty 5.5% and subsidy on panel import 4.2%, VAT@ 2.2% All values adjusted to Million USD (2011) exchange rate 46.42 (WIOD database), custom duty is wavered for solar grade semiconductors

Appendix 2: Solar Block for Open Category Projects

Products at purchaser’s price	Solar sector (36)	Basic and Fab Metal (12)	Construction (18)	Electrical and optical equipment’s (14)	Financial intermediation (28)	Water travel (24)	Surface travel (23)	Total economy	Gross capital formation	Total industry output at base price
Solar panel (imported)	189.27	0	0	0	0	18.91	1.79	0	0	209.97
Hot galvanized steel frames	0	21.94	0	0	0	0	0	0	0	21.94
Ground levelling and civil work	0	0	27.56	0	0	0	1.10	0	0	28.66
Wires and transmission, switches charge controller infrastructure	0	0	0	33.64	0	0	0	0	0	33.64
Inverters	0	0	0	26.50	0	0.55	0.34	0	0	27.39
Insurance	0	0	0	0	1.72	0	0	0	0	1.72
Contingency	0	0	0	0	5.16	0	0	0	0	5.16
Interest during construction	0	0	0	0	17.20	0	0	0	0	17.20
Project management	0	0	0	0	3.44	0	0	0	0	3.44
Financing cost	0	0	0	0	3.44	0	0	0	0	3.44
Preoperative cost	0	0	0	0	3.44	0	0	0	0	3.44
Water transport	0	0	0	0	0	0	0	0	0	0
Land transport	0		0	0	0	0	0	0	0	0
Land cost	0	0	0	0	0	0	0	0	10.32	10.32
VAT	0	0.504	0	0.76	0	–	–	–	–	1.264
Nat custom duty	11.37	0	0	1.58	0	–	–	–	–	12.95
Net subsidy (−)	(−)9.27	0	0	−1.20	0	–	–	–	–	−10.47
Total output at base price	191.37	22.444	27.56	61.28	34.4	19.46	3.23	359.744	10.32	370.064

Appendix 3

Impacts of DCR and open category deployments are estimated in terms of total GDP output, household income, employment, and distributive efficiencies of income generation. Research models introduction of a new sector (solar PV) in Indian economy. The IO analysis maps relationship between expenditure generated during project deployment and its impacts on 35 + 1 sector Indian economy. The results are estimated in terms of either increased demand in the economy or total change in output of regional economy due to a final demand of the new sector j estimated using the equation:

$$\Delta X = {\text{OM}}_{j} \times \Delta {\text{FD}}_{j}$$

X :

total output of the regional economy,

OM:

output multiplier

FD:

final demand

The relationship between expenditure generated by a certain project $\Delta {\text{FD}}$ and its impacts in the economy in terms of increased demand of good and services $(\Delta X)$ is depicted in following relation

$$\Delta X = \left( {I - A} \right)^{ - 1} \Delta D$$

where I is the identity matrix, A is the matrix of technical coefficients (which reflects the percentage of production from each sector consumed by each of all productive sectors) and $\left( {I{-}A} \right)$ is Leontief inverse that represents the total (direct and indirect) requirements per unit of final demand.

Therefore change in output of total economy (35 sectors, WIOD National Input–Output table for India) where demand of n sectors change can be estimated as

$$\Delta X_{{\left( {1 \times 1} \right)}} = n_{{\left( {1 \times 35} \right)}} \times \left( {{\text{OM}}_{{\left( {35 \times 1} \right)}} \times {\text{FD}}_{{\left( {35 \times 1} \right)}} } \right)$$

The employment change in the economy due to given change in final demand of sector j is estimated as

$$\Delta E = {\text{TDIE}} \times \Delta {\text{FD}}_{j}$$

where E is the sectoral employment and TDIE is employment total direct and indirect employment coefficient or simple employment multiplier of sector j. The total change in the employment of the economy in case where final demand of n sectors changes is estimated by

$$\Delta E_{{\left( {1 \times 1} \right)}} = n_{{\left( {1 \times 35} \right)}} \times \left( {{\text{TDIE}}_{{\left( {35 \times 1} \right)}} \times {\text{FD}}_{{\left( {35 \times 1} \right)}} } \right)$$

The total household income change in the regional economy due to given change in final demand of sector j is estimated as

$$\Delta I = {\text{TDII}} \times \Delta {\text{FD}}_{j}$$

where I is household income and TDII is household direct and indirect income coefficient or income multiplier of sector. The total change in household income in the case where final demand of n sector changes is estimated by:

$$\Delta I_{{\left( {1 \times 1} \right)}} = n_{{\left( {1 \times 35} \right)}} \times \left( {{\text{TDII}}_{{\left( {35 \times 1} \right)}} \times {\text{FD}}_{{\left( {35 \times 1} \right)}} } \right)$$

The distributive efficiencies of employment generation between high, medium and low-income jobs were estimated using year-wise socioeconomic accounts data made available by WIOD satellite accounts. The database provides sector-wise low-, high-, and medium-skilled labor share in the total income generated. The estimations involve

$$\Delta I = \Delta {\text{HSL}} + \Delta {\text{IMSL}} + \Delta {\text{ILSL }}$$

Total income generated can be classified into high-skilled income, medium-skilled income, and low-skilled income generation. The distributive efficiency of income generation when final demand change of all the n sectors in the economy are considered

$$\Delta {\text{IHSL}}_{{\left( {1 \times 1} \right)}} = n_{{\left( {1 \times 35} \right)}} \times \left( {{\text{TDIHSL}}_{{\left( {35 \times 1} \right)}} \times {\text{FD}}_{{\left( {35 \times 1} \right)}} } \right)$$

$$\Delta {\text{IMSL}}_{{\left( {1 \times 1} \right)}} = n_{{\left( {1 \times 35} \right)}} \times \left( {{\text{TDIMSL}}_{{\left( {35 \times 1} \right)}} \times {\text{FD}}_{{\left( {35 \times 1} \right)}} } \right)$$

$$\Delta {\text{ILSL}}_{{\left( {1 \times 1} \right)}} = n_{{\left( {1 \times 35} \right)}} \times \left( {{\text{TDILSL}}_{{\left( {35 \times 1} \right)}} \times {\text{FD}}_{{\left( {35 \times 1} \right)}} } \right)$$

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Appendix 4: Estimated Multipliers for DCR Projects

	Sector	Rank	Gross output	Rank	GDP multiplier	Rank	Income multiplier	Rank	Consumption multiplier
1	Agriculture, hunting, forestry, and fishing	2	3.416	1	1.271	2	0.655	1	4.215
2	Mining and quarrying	32	1.236	29	0.116	30	0.050	13	1.339
3	Food, beverages, and tobacco	14	2.205	24	0.187	22	0.076	9	1.676
4	Textiles and textile products	24	1.807	20	0.219	20	0.114	11	1.475
5	Leather, leather, and footwear	33	1.137	35	0.034	34	0.020	31	0.112
6	Wood and products of wood and cork	15	2.069	15	0.384	12	0.238	30	0.132
7	Pulp, paper, paper, printing, and publishing	16	2.067	22	0.194	19	0.126	27	0.369
8	Coke, refined petroleum, and nuclear fuel	18	2.016	32	0.075	35	0.018	7	1.904
9	Chemicals and chemical products	27	1.729	23	0.189	28	0.053	15	1.070
10	Rubber and plastics	30	1.436	31	0.081	32	0.036	26	0.384
11	Other non-metallic mineral	20	1.921	18	0.248	18	0.126	23	0.529
12	Basic metals and fabricated metal	12	2.384	21	0.204	23	0.076	4	2.533
13	Machinery, nec	29	1.503	27	0.125	27	0.054	20	0.747
14	Electrical and optical equipment	25	1.806	26	0.156	24	0.067	22	0.653
15	Transport equipment	19	1.957	25	0.185	26	0.059	18	0.898
16	Manufacturing, nec, recycling	28	1.697	28	0.119	29	0.052	12	1.469
17	Electricity, gas, and water supply	23	1.843	19	0.229	21	0.114	19	0.856
18	Construction	4	2.820	10	0.602	8	0.327	2	3.048
19	Sale, maintenance and repair of motor vehicles and motorcycles, retail sale of fuel	35	1.072	34	0.040	33	0.025	29	0.157
20	Wholesale trade and commission trade, except of motor vehicles and motorcycles	5	2.698	3	0.940	5	0.440	10	1.536
21	Retail trade, except of motor vehicles and motorcycles; repair of household goods	3	3.170	2	1.251	1	0.661	5	2.445
22	Hotels and restaurants	31	1.422	30	0.107	25	0.066	17	0.969
23	Inland transport	10	2.465	14	0.429	14	0.193	3	3.028
24	Water transport	36	1.036	36	0.016	36	0.007	33	0.066
25	Air transport	17	2.030	16	0.365	16	0.166	32	0.072
26	Other supporting and auxiliary transport activities; activities of travel agencies	9	2.508	9	0.604	10	0.275	28	0.225
27	Post and telecommunications	7	2.635	6	0.798	7	0.385	24	0.469
28	Financial intermediation	6	2.661	5	0.851	6	0.403	8	1.792
29	Real estate activities	22	1.851	13	0.479	17	0.158	6	2.190
30	Renting of M&Eq and other business activities	13	2.330	8	0.671	11	0.257	14	1.238
31	Public admin and defense; compulsory social security	8	2.542	4	0.932	3	0.483	36	0.001
32	Education	21	1.893	12	0.501	9	0.291	16	1.001
33	Health and social work	26	1.761	17	0.358	15	0.186	21	0.673
34	Other community, social and personal services	11	2.439	7	0.795	4	0.451	25	0.425
35	Private households with employed persons	34	1.132	33	0.069	31	0.039	34	0.034
36	Solar PV deployment	1	5.541	11	0.537	13	0.206	35	0.005

Appendix 5: Estimated Multipliers for Open Category Projects

	Sector	Rank	Gross output	Rank	GDP multiplier	Rank	Income multiplier	Rank	Consumption multiplier
1	Agriculture, hunting, forestry and fishing	10	2.272	9	0.559	18	0.089	1	3.736
2	Mining and quarrying	33	1.222	31	0.100	30	0.035	13	1.160
3	Food, beverages and tobacco	8	2.400	19	0.270	14	0.136	10	1.462
4	Textiles and textile products	27	1.609	32	0.096	34	0.016	9	1.602
5	Leather, leather, and footwear	34	1.200	34	0.062	27	0.041	30	0.119
6	Wood and products of wood and cork	18	2.091	13	0.346	11	0.198	31	0.113
7	Pulp, paper, paper, printing, and publishing	22	1.904	33	0.087	28	0.039	26	0.346
8	Coke, refined petroleum, and nuclear fuel	17	2.097	29	0.114	24	0.047	7	1.663
9	Chemicals and chemical products	26	1.691	25	0.159	32	0.028	15	1.006
10	Rubber and plastics	30	1.528	28	0.121	20	0.064	27	0.344
11	Other non-metallic mineral	13	2.141	14	0.335	12	0.185	24	0.416
12	Basic metals and fabricated metal	9	2.376	22	0.185	21	0.058	5	2.090
13	machinery, nec	31	1.474	30	0.100	31	0.033	20	0.645
14	Electrical and optical equipment	25	1.797	27	0.140	23	0.052	22	0.580
15	Transport equipment	21	1.971	23	0.181	22	0.054	18	0.764
16	Manufacturing, nec; recycling	24	1.817	24	0.170	19	0.088	12	1.288
17	Electricity, gas and water supply	5	3.757	4	1.195	3	0.838	19	0.735
18	Construction	12	2.235	20	0.239	29	0.039	3	2.383
19	Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of fuel	32	1.300	26	0.152	16	0.108	29	0.130
20	Wholesale trade and commission trade, except of motor vehicles and motorcycles	2	5.298	1	2.191	1	1.362	11	1.379
21	Retail trade, except of motor vehicles s	20	2.021	11	0.536	17	0.092	4	2.196
22	Hotels and restaurants	23	1.848	15	0.310	9	0.215	17	0.910
23	Inland transport	16	2.120	21	0.215	33	0.023	2	2.492
24	Water transport	36	1.036	36	0.014	36	0.006	34	0.066
25	Air transport	6	2.927	6	0.790	5	0.478	33	0.067
26	Other supporting and auxiliary transport activities; activities of travel agencies	4	4.000	3	1.310	4	0.793	28	0.208
27	Post and telecommunications	3	4.696	2	1.793	2	1.119	23	0.422
28	Financial intermediation	11	2.270	8	0.578	13	0.180	8	1.609
29	Real estate activities	19	2.063	10	0.558	10	0.211	6	2.082
30	Renting of M&Eq and other business activities	7	2.898	5	0.925	6	0.440	14	1.137
31	Public admin and defense; compulsory social security	14	2.132	7	0.633	8	0.235	36	0.001
32	Education	29	1.572	16	0.284	15	0.115	16	0.951
33	Health and social work	15	2.126	12	0.516	7	0.297	21	0.639
34	Other community, social and personal services	28	1.601	17	0.280	26	0.042	25	0.392
35	Private households with employed persons		1.066	35	0.028	35	0.006	35	0.031
36	Solar PV deployment	1	5.789	18	0.274	25	0.042	32	0.091

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