Do you think India ever has a chance to go 100 per cent solar in the years to come?
India has contributed immensely to the energy mix when it comes to the solar segment. Prime Minister Narendra Modi's energy agenda has set an ambitious target for renewables. The aim is to increase renewable capacity on the grid to 175 GW by the end of 2022. Around 100 GW of that capacity is expected to come from solar photovoltaics (PV). It is difficult to comment as of now on India converting to 100 per cent solar in the years to come. But definitely, it can contribute largely in the energy mix, once storage becomes a reality with a viable commercial business model.
Is the current level of fund generation capable of supporting solar energy goals?
The solar sector has shown an incredible growth in the recent years. The country became the world's third biggest solar market, defeating Japan in 2017, with the help of the government's support. India needs at least USD 125 billion to fund the 175 GW renewable mission, of which 100 GW is supposed to come from solar by 2022. Most of the financing received for renewable energy development comes from the domestic banks. However, with the current level of fund generation, it is difficult to sustain solar energy goals.
According to a recent survey, indicating 65 per cent fall in corporate funding within the solar industry from Q4 2017 to Q1 2018 may indicate limitations for solar growth. The Government of India needs to take it up on a priority to support the funding to the solar project. Currently, the Indian currency is weakening to an unpredictable level, therefore, the ECB financing also became unviable for the future solar growth.
What are the key barriers and bottlenecks faced by the solar power developers in achieving the target? How has GST impacted the solar sector?
Solar power capacity addition and the development of the solar sector suffers because of a number of issues prevalent in the current policy and the environmental framework. Some of which are-
- There is no single policy statement for solar energy in the country because policies have been issued in India as and when necessary to accelerate the growth of solar power
- The other biggest issue that all the solar developers face is that the Renewable Purchase Obligation (RPO) is not legally enforceable at the federal level as well as at the state level. Developers think that there must be a common RPO for all the SERCs, which is untrue
- The solar technology in India is quite a new change and therefore, the risk associated with it is high. There is a lack of R&D facilities for setting up a large scale solar plant. India has been continuously trying to increase its manufacturing facilities but due to the lack of policies and financial support, all is in vain
- Land acquisition process is another barrier faced by the solar developers. It requires a lot of clearance from various departments like the forest department, National Green Tribunal (NGT), the Ministry of Rural Development, etc. on account of which the project gets delayed or moves to some other locations
- No commitment on evacuation infrastructure facility under ISTS scheme
- Sudden changes in policies by the MNRE with respect to the tariff cap, a timeline for commissioning the plant, etc.
- Safeguard duty and anti-dumping duty applicability and clear refund policies are other bottlenecks for the growth of this industry
After more than a year of GST coming into force, there are still uncertainties surrounding the solar sector. The bitterness among the solar companies is not only due to the delayed reimbursements but a complete lack in clarity regarding applicable GST rates. Complete clarity is essential in terms of fair costs and tariffs.
How has India achieved to attract big solar players around the world to invest in the country? What's your take on the proposed introduction to safeguard duties on imported solar panels?
India's leadership role in the International Solar Alliance, the initiative proposed by PM Modi in a speech in November 2015 was with an objective to focus on solar power utilisation, which will make the solar sector continue to receive favourable policy momentum. With this initiative, investments in the solar energy sector in the country rose to over USD 10 billion in 2017.
According to the Annual India Solar Market Update report released by Mercom Capital Group, project financing in 2017 rose to about USD 6.4 billion on the back of 9.6 GW in solar installations, compared to USD 3.5 billion and 4 GW in 2016. The alliance has been committed USD 1 trillion as an investment and for making the costs of solar power more affordable for remote and inaccessible communities. It will further help India in achieving its goal of generating 100 GW of solar energy and 175 GW of renewable energy by 2022. Different countries shall support each other in R&D as well as in other high-level activities.
Investment in the power sector in India is important to maintain economic growth and also to improve the livelihoods of large sections of the population which are still without electricity. The imposition of 25 per cent safeguard duty on solar cell imports will benefit only a small section of the domestic industry because a much larger proportion of the capacity to manufacture solar equipment in India is located inside export-oriented Special Economic Zones (SEZs) and will not be exempt from the payment of safeguard duty thus, creating a challenge for the solar sector. 80 per cent of the module demand will still be imported with extra capex to the developer, which will be inbuilt in all the future bids. Therefore, there will be an increase in tariff which needs to be paid by the DISCOM and ultimately, it will be a pass through to the consumer. It means, the final loser is the consumer and no one else.
For all the existing projects, which were bid out, the developers will approach regulatory commission for an increase in tariff, if not exempted by the Finance Ministry on the request of the MNRE and the developers. It will be a long process to get the extra tariff as a pass through from the regulators. A lot of projects will be impacted; delay in project may happen and finally, the ultimate goal of achieving 100 GW by 2022 may be affected.
What are some of the recent technology trends that you have observed in the utility scale solar segment?
Higher-rated central inverters is one such recent technology trend that has been observed in utility scale projects. They are suitable for utility-scale projects as one central inverter can support a number of module strings of solar panels to give more consistent and controlled generation. Multiple module strings are connected to a combiner box and DC power is carried from this combiner box to the central inverter, where it is converted to AC power. As each module string is not connected to the inverter directly, only a pad and a combiner box are required to connect the module strings to the central inverter, thus, reducing the number of connections.
"The bitterness among the solar companies is not only due to the delayed reimbursements but a complete lack in clarity regarding applicable GST rates."
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- Rahul Kamat