will touch 69-70GW solar power capacity against 21.65GW now by fiscal 2022, says
a our report. India will not be able to achieve its ambitious target of
generating 100GW solar power by 2022. In a report, Softdisk research wing said
that in the best-case scenario, the country will touch 69-70GW, against the
current capacity of 21.65 GW.
We expect an additional 48-50 GW of solar
capacity addition between fiscals 2019 and 2022. While this is a vast
improvement from the 20GW added during 2014-18, it still falls short of the
National Solar Mission target by a fifth. A safeguard duty on solar modules from
China and Malaysia, which took effect this month and will continue for two
years, is expected to slow capacity addition.
"We are more confident that
projects with the Solar Energy Corp. of India (SECI) will be executed faster;
their projects are better able to deal with evacuation concerns (i.e. connection
to the national grid)," said Salil Chatterjee, head, Softdisk Research.
Individual states have also set aggressive targets under their respective solar
policies. While 7.3 GW is under construction, based on already allocated
schemes, another 1.7 GW is expected to be tendered and allocated over fiscal
2019 based on upcoming tenders under various state policies as on July, the
report shared exclusively with us said. "However, state government projects are
not as well-funded and they have less access to cheap financing.
A key area of
concern is the rooftop solar segment. The solar mission's target for the rooftop
segment-using the rooftops of commercial and industrial units to generate their
own power and depend less on the grid-is 40 GW by 2022. We expect this figure to
be not more than 7 GW by 2022, because the cost of power here is expected to be
far higher than from the grid.
"There are execution and counter-party risks to
the rooftop segment, and that's why we're expecting the big shortfall here,"
Salil said. "Unless the rooftop solar segment is supported with a firm battery
market and the legal enforcement of contracts because developers run the risk of
the host establishment not honoring a contract when tariffs change, the rooftop
market will struggle."
Industry experts believe that the safeguard duty will
raise capital costs by 15-20%, adding 30-40 paise per unit to bid tariffs so
developers can maintain the same rates of return on their investments.
achieved a record low solar power tariff of 2.44 per unit in May 2017. In July,
tariffs again touched 2.44 per unit in an auction conducted by SECI.
uncertainty regarding the duty is making developers wary. ACME Solar, which had
quoted the lowest tariff of 2.44 a unit, has about 2000 MW of projects where
construction is either underway or yet to begin. On 7 August, Acme said that it
would pull out of these projects if it has to bear the additional burden of the
States are also seeing tariffs rise. At a July auction by
Uttar Pradesh for 1,000MW, the lowest bid came in at 3.48 a unit. The state
cancelled these auctions. SECI also cancelled 950 MW of solar tenders in July,
unhappy with the tariffs that developers were bidding.
"The government must be
live with the outcome of bid price; it should go ahead with these projects even
if tariffs are higher than what they like," Salil said. "It's hard to say which
tariff is unreasonable; it's hard to predict whether module prices will go up or
down in the future. If bids are scrapped, you'll further delay the overall
programme." India is the world's third-largest energy consumer after the US and
China. Its renewable energy programme is ambitious where as it stands now.
India: 25% safeguard duty will threaten ongoing solar PV projects The two-year
period of the recommended safeguard duty is very short, discouraging any
investment in setting up new solar manufacturing capacity, say analysts and
companies Sofdisk spoke to. At the same time, for solar project developers, the
duty will impact tariffs to the tune of 12-15%, posing an immediate threat to
viability of projects under execution, they add.
Avaada Power, formerly
Welspun Energy, solar power plant in India. The company has almost 1 GW solar
portfolio in India, nothing in UP until now.
Solar PV industry analysts and
project developers in India feel that imposing a 25% safeguard duty on solar
cells and modules from China and Malaysia will be a negative step in the overall
goal for de-carbonizing the energy sector in India, where tremendous progress
has been made in the last four years.
Levying such duties will drastically
affect solar power developers and capacity addition targets set by the
government of India.
Softdisk feels that since the duty period (two years)
is very short, it will not encourage any new investment in setting up new solar
capacity. By the time a manufacturer comes online, it will not be able to reap
the benefits under safeguard duties. Under present recommendations, it is
completely unclear as to how domestic solar PV cells and module manufacturers
are going to be protected. "Almost 70% of manufacturers are located in the
special economic zone (SEZ) and the present findings have clearly mentioned that
decision of applicability of safeguard duty on domestic SEZ units is out of
their investigation purview and needs to be dealt by concerned authorities,"
adds Shekhar Dutt, director general, Solar Power Developers Association.
Gyanesh Chaudhary, Vikram Solar MD and CEO, says, "If safeguard duty is imposed
without exempting SEZ to domestic tariff area (DTA) removal, it will affect the
domestic manufacturing industry adversely, as 3,825 MW out of 8,898 MW installed
capacity for solar modules is based in SEZ and 2,000 MW out of 3,164 MW
installed capacity for solar cells is based in SEZ."
Solar project development
duty will impact tariffs to the tune of 12-15%, which will be harmful for solar
PV developers who have projects under execution, as they will face an immediate
risk to the viability of their projects. Even cases where a specific change in
law protection is available to developers, getting DISCOMs to negotiate and
agree pass-through on extra cost will be an uphill battle.
Mr Sohan Jain, MD,
Microsun Solar, feels 50 paise/kWh increase in electricity tariffs would deter
utilities to adopt renewable energy. Eventually, no one would benefit from this
order if the demand shrinks, contrary to the recommendation being in public
interest," he says.
Imports from other
Imports from other countries are bound to happen to some
extent, particularly as Chinese manufacturers have been setting up plants in
different countries around the world to overcome such challenges. But
manufacturing capacity in developing countries other than China and Malaysia is
still very small and here may shift in source of input.
Softdisk emphasizes that tariff barriers, such as safeguard duties have never
helped any country in attracting investments into solar PV manufacturing.
Rather, he suggests, the Indian government should consider a fresh look at the
solar PV manufacturing policy, and implement policies to improve the
competitiveness of the Indian manufacturing - by way of tax breaks and lower
cost of capital - which can then attract new investments in this sector. The
immediate concerns are about thousands of MW whose import contracts are already
tied up and deliveries are expected in coming months. The same should be
excluded from impositions of any such duties, we strongly believe.
Feeling that the imposition of safeguard duties in the current manner will make
SEZ units uncompetitive and force them to shut their operations, Gyanesh
Chaudhary recommends the government to exempt SEZ to DTA clearance of solar
cells and modules from the ambit of safeguard duty.
Otherwise, it will lead to
counterproductive results and destroy the domestic manufacturing industry, which
is already in bad shape. The government should come out with a specific
exemption by restricting safeguard duties imposition to input costs (which is
subject to duties of safeguard) for all SEZ to DTA clearance, in order to accord
equal protection to units in SEZ and DTA.
"The safeguard duty will also cause
Indian panel manufacturers to stay away from investing in improving their
process and products. A safeguard only serves to maintain inefficiencies."
Government Efforts :
The Ministry of
New and Renewable Energy (MNRE) has taken several steps to fructify Prime
Minister Shri Narendra Modi's dream of clean energy. The largest renewable
capacity expansion program in the world is being taken up by India. The
government is aiming to increase share of clean energy through massive thrust in
renewables. Core drivers for development and deployment of new and renewable
energy in India have been Energy security, Electricity shortages, Energy Access,
Climate change etc.
A capacity addition of 14.30 GW of renewable energy has
been reported during the last two and half years under Grid Connected Renewable
Power, which include 5.8 GW from Solar Power, 7.04 GW from Wind Power, 0.53 from
Small Hydro Power and 0.93 from Bio-power. Confident by the growth rate in clean
energy sector, the Government of India in its submission to the United Nations
Frame Work Convention on Climate Change on Intended Nationally Determined
Contribution (INDC) has stated that India will achieve 40% cumulative Electric
power capacity from non-fossil fuel based energy resources by 2030 with the help
of transfer of technology and low cost International Finance including from
Green Climate Fund.
SOLAR PV MARKET IN INDIA
Solar market too
has become highly fragmented both product-wise as well as number of companies
jumping into the Solar bandwagon. Vikram Solar completed 50MW in Tamilnadu in a
record time. Vikram is working on the technology where by the DC to AC
conversion can take place module level itself. These module have been
successfully tested and are currently under going burn test at their own setups.
1500 Watt panel, which they say can be used as roof.
Adani Groups Mundra Solar PV Ltd. with a capacity to manufacture 1.2 GW of Solar
PV panels has emerged as a strong player in Solar PV Panel manufacturing arena.
Waaree Energies Ltd., a Mumbai based PV Manufacturer has taken huge projects in
Gujarat and have started acquiring smaller solar companies having strong Solar
Energy Systems Ltd, formerly Numeric Power Systems Ltd, a BSE listed company
sold of its UPS Business Unit for over 850 crores to concentrate on Renewable
Energy, space. In just a few months the company has set up and commissioned two
solar Power Plants and a Wind Power Plant and has over 2000 rooftop
installations to its credit. The company has acquired HHV Solar, a reputed SPV
Panel manufacturer and has invested heavily on increasing the plant capacity
from 35Mw to 100Mw and is looking forward to doubling its capacity.
Emmvee another panel manufacturer is planning for Solar cell manufacturing of
500Mw, Module expansion plan of 1000 Mw & project development and EPC
implementation by 1000 Mw by 2019. Innovative Solar is in the process expansion
as it has come up with 300 Watt modules which are very sturdy and have very high
yield these modules come up with IEC certifications
Softdisk by its
conservatives estimates, believes that 40 GW opportunity till 2020 is the most
likely scenario. The Indian solar market is a key future growth market for PV.
India's installed capacity as of as on 31st March 2018 was 19.64 GW, which is
still negligible as compared to more mature markets such as Germany.
According to Softdisk report in Solar PV Power Generation, Karnataka as on
31st March 2017, with a total installed capacity of 3657.52 MW has become the
state with largest installed capacity.
There are also external factors in
India challenging its solar industry, namely high inflation and consequently
high interest rates, slowdown in GDP growth, a several depreciated rupee and
relentless corruption scandals of the previous Govt. Low bids with high interest
rates in the range of 13 to 15 per cent make it challenging to borrow in India.
Most Indian Banks look at these projects as risky and look into it only after
land acquisition and registration & PPA.
Statutory approval are completed & the number of successfully executed quality
project that can last 25 years.
Softdisk believes that the Govt. &
regulators must :
- Develop renewable Energy Laws mandatory.
- Set-up standards for renewable energy.
- Conducting resource assessments.
- Supporting research and development activities thru investments.
- Early timing of policy announcements and ease of implementation.
- Addressing concerns relating to enforce-ability of PPAs.
- Banks to brought in loop for financing Solar projects with renewable
energy purchase obligation.
changes will allow make in India a Roaring Tiger.
The coming year will see
some movement and interest by market players to explore new business
models/segments within the solar industry in India. Further, the falling
cost of solar will lead to new projects in the captive commercial space as
solar tariffs become competitive with commercial and industrial grid prices
in various parts of the country.
The rating does not include major EPC
players such as BHEL, WELSPUN, BEL, CEL, TATA Solar, BOSCH, Solar
Semi-conductor & Moser Baer India Limited, LANCO, L&T, INDO SOLAR, Reliance
Power, Mahindra Power, Wipro-ECO which have diversified interest etc.