Surging on Solar for a Brighter Future
While last year's slowdown can be attributed to uncertainties relating to auctions, land acquisition, BIS quality standards and GST, these problems will persist in the absence of effective and considered policy initiatives
The Indian solar juggernaut may be rolling, but its dream run has been interrupted by uncertainties triggered by declining tariffs, the imposition of safeguard duty, a steep fall of the rupee and transmission constraints. On an optimistic note, it may be a transitory slowdown, yet its fallouts can be upsetting if we do not act with a sense of urgency to address the problems confronting the solar industry.
The Ground level Reality
While solar capacity additions registered a sharp fall in 2018 as a result of the sluggish tender process in the previous two years, 2019 is expected to witness a revival as a result of the heavy tendering activity towards the end of 2017 and the beginning of 2018. After a slowdown in the second half of 2018, the tender process regained its momentum in December as the government announced its plans to issue tenders for 60-GW solar projects by March 2020, thus earmarking a two-year window to complete the projects within the target period. Despite multiple tender cancellations, 2018 witnessed a surge in auctions with 20,436-MW projects awarded in the calendar year, translating into an impressive 174 per cent year-on-year growth. While last year’s slowdown can be attributed to uncertainties relating to auctions, land acquisition, BIS quality standards and GST, these problems will persist in the absence of effective and considered policy initiatives.
While under-subscription and cancellation of tenders as a result of lack of planning, poor tender design, arbitrary tariff ceilings and poor coordination between various government agencies has eroded market confidence, transmission constraints also pose a formidable hindrance. The Solar Energy Corporation of India had to cancel a 2,000-MW tender in August last year after it was under-subscribed due to insufficient transmission infrastructure.
India’s installed solar capacity stands at 28 GW, but reaching the target of 100 GW by 2022 will take some doing. Driven by large-scale solar projects, solar capacity additions are expected to go up from 10,560 MW last year to 15,860 MW in 2019, an impressive jump of more than 50 per cent, but this will not be enough. The decision to issue tenders for 60-GW solar projects by March 2020 is expected to make all the difference, but it is practically implausible to execute large projects of this magnitude as it is neither consistent with the power demand-supply situation nor the availability of land or transmission infrastructure.
However, innovative projects like floating solar, which do away with the requirement for land, and initiatives to introduce the latest storage technologies under the National Storage Mission can provide the answer. The government has plans to issue 5-GW floating solar tenders in the near future. It will also come up with the country’s first utility-scale storage project of 3 MW in Leh this year.
Rooftop solar, on the other hand, has been witnessing steady growth over the past couple of years, though the residential category has not picked up so far. However, the implementation of Phase-II of the Grid Connected Rooftop Solar Programme with a total central financial support of Rs 11,814 crore is likely to provide a much-needed fillip to the rooftop solar segment, especially the residential category, for which central financial assistance up to 40 per cent will be provided for rooftop systems up to 3 kW and 20 per cent for projects with a capacity of 3-10 kW. The second phase of this ambitious programme will also concentrate on increasing the involvement of DISCOM through performance-based incentives based on the rooftop solar capacity added in a financial year.
The Plan to Success
The successful implementation of Saubhagya scheme will also give impetus to DISCOMs to fast-track renewable energy tenders. However, since DISCOMs are reluctant to sacrifice premium customers who pay high tariffs, states are not inclined to provide a robust policy environment for net metering. The lengthy net metering approval process in some states and lack of financing options has further impeded the growth of rooftop solar in the residential segment.
The government should emulate the example of China by creating a platform for domestic manufacturing through a reduction in import duties and incentives for indigenous solar equipment manufacturers. We direly need a universal anti-dumping policy and a more stringent safeguard duty to instil confidence in Indian companies. Investing in domestic manufacturing can help build the supply chain, control prices and earn foreign exchange through exports. It will also create jobs, enhance the country’s GDP and correct the adverse balance of payments. India should leverage its position in the 121-nation International Solar Alliance by assuming a leadership role to make way for greater growth through favourable policies and coordinated efforts. As a global solar superpower in the making, we ought to wrest this initiative.