Sun's Shining Bright on the Solar Industry in India

The solar industry in India is worth over INR 30,000 crores

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The Indian solar industry has been growing at a tremendous pace with the country aiming to be a global power in that context. The world's third biggest solar power, India has already achieved the target of 20 GW it had set for 2022. Renewing the vows for solar dominance, India has now set a target of achieving of 100 GW in the next four years.

Prime Minister Narendra Modi Official Twitter

There have been major changes in the Indian scenario like change in the pricing of energy, private companies taking ownership in renewable energy business and both, favourable and not-so favourable behavior of the banks in lending funds to the energy businesses, believes Ravi Kailas, Chairman, Mytrah Energy. "From the time we started till now we have seen significant changes taking place in the renewable energy space," he said.

The solar industry in India is worth over INR 30,000 crores but it also faces its own set of challenges. From the threat of China's growing dominance in the manufacturing of solar modules to the increased taxation, players in the solar space have had to face many hurdles in the recent past.

"Currently, the biggest challenge is the total confusion around the customs duty, anti-dumping duty, and safeguard duty. The confusion has made the business very uncertain. Moreover, if you look at it from the product perspective, almost 85 per cent of the solar modules are imported from China which is not a good sign," Sundeep Gupta, Vice Chairman & Managing Director, Jakson had said in an earlier interview with Entrepreneur India.

However, things are about to get better, believes industry experts. Indian Prime Minister Narendra Modi's ambitious International Solar Alliance (ISA), a treaty-based alliance, is set to promote solar energy in 121 countries. The organization's main goal is to lower the cost of finance and spur investments across the supply chain, including manufacturing, project development and storage, which will be beneficial for countries receiving the maximum sun light.

Recently, taking forward the promises made at the launch of the International Solar Alliance, Indian Prime Minister Narendra Modi co-hosted the International Solar Alliance Summit along with French President Emmanuel Macron. The duo also inaugurated Uttar Pradesh's biggest solar power plant in Mirzapur district's Chhanvey block.

But that's not it. India is also home to the world's largest solar park. The 2000 MW Pavagada Solar Park in Karnataka covers over a total area of 13,000 acres.

Entrepreneur India spoke to experts about how the solar industry is expected to grow in the coming years and why it needs to be wary of China.

ISA – A Ray of Hope for the Indian Solar Industry

Industry experts believe that the ISA (International Solar Alliance) not only gives a lot of business opportunities to the Indian solar players in India, Africa, Gulf, etc but also boosts the overall business sentiment. "The global funds and VCs will derive a lot of comfort as they will see the Indian government's long term commitment towards solar," said Gagan Vermani, Founder & CEO, MYSUN. Vermani further added that the industry has already seen positive developments in the last few weeks with the controversy around the anti-dumping duty petition being laid to rest.

According to Sunil Rathi, Director, Waaree Energies, ISA is considered a game changer because of its partnership with developing countries. The ISA can be considered an enabler and facilitator, whose sole aim is to make green energy accessible to all, he added. "With capital being one of the biggest obstacles, ISA's agenda of affordable financing will also benefit the domestic solar industry. The alliance can be considered a platform where technology can meet the expectation of the country," said Rathi.

Rathi also added that with the ISA, India has been recognised as an emerging major power player for harnessing solar energy in the Indian Ocean region, along with a strong backing from France.

Private Players Jump on the Opportunity

During the summit, Prime Minister Modi stated that the ISA will facilitate affordable finance, access to appropriate, clean and environment-friendly technology. "The heightened interest and scope should open up various avenues and funding opportunities for private companies and new players in the space. Also, it will open up new markets like the African countries for the Indian players," said Vermani.

Meanwhile, French President Emmanuel Macron said that under the ISA, 100 centres for excellences would train 10,000 technicians to achieve the target of 1,000 GW of solar energy that needs $1,000 billion. Rathi believes that it will definitely help small enterprises in developing countries in organising projects and finances in the solar space. "The Indian solar sector will get the desired boost in funding, and new players will enter the industry, to help it to grow further," he said.

China – The Threat

One of the major challenges faced by Indian solar industry is the dominance of China in the sector. China is the world's biggest market for photovoltaics and solar thermal energy. China was also the first country to pass 100 GW of cumulative and installed PV capacity in 2017.

The increasing growth of Chinese imports is posing as a threat for the domestic manufacturers, believes Rathi. Hence, it is extremely important for the Government to follow the footsteps of USA and impose safeguard duty on foreign products, he added.

According to Rathi another challenge for the industry that could hinder or delay the 100 GW target by 2022 is the lack of long term financing, inadequate budget allocation and insufficient transmission and distribution. "It is necessary for the Government to look into these things to achieve the ambitious target," he said.