have touched atleast 60-65 GW of Solar Power capacity against 25.21GW as on end
of March 2019. India need to increase Solar Power by commissioning 70-75 GW to
reach the capacity of 100 GW by fiscal 2022, says our report.
around 20GW during 2014-18, it still falls short of the National Solar Mission
target by a huge margin. We expect an additional 45-50 GW of solar capacity
addition between fiscals 2019 mid and 2022 December. Which makes the total
capacity to around 70-75 GW. Well short of Prime Ministers set target.
Things are not easy even for reaching 70 - 75 GW. A safeguard duty on solar
modules from China and Malaysia, which took effect and will continue for two
years, is expected to slow capacity additionally.
And more importantly the PPP negotiated with various Governments should redo
and allow higher PPP. The rates such as Rs 2.44 per unit as these will never
allow the 500 MW plant to recover its money in and 15 years time leave alone
profits, by that time maintenance and reduced yield will become focus area.
India will not be able to achieve its ambitious target of generating 100 GW
Solar Power by 2022. In a report, Softdisk research wing said that in the
best-case scenario, the country will touch 65-70 GW, against the current
capacity of 25.21 GW.
"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,
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 2.41 GW is expected to be tendered and allocated over fiscal
2019 based on upcoming tenders under various state policies as on September, 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 10 to 15 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
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. India achieved a record low solar
power tariff of Rs. 2.44 per unit in May 2017. In July, tariffs again touched Rs.
2.44 per unit in an auction conducted by SECI.
However, 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
2018, ACME said that it would pull out of these projects if it has to bear the
additional burden of the safeguard duty.
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 program."India is the world's third-largest
energy consumer after the US and China. Its renewable energy program is
ambitious where as it stands now.
India's 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
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.
Solar cell/module manufacturing : Exempting SEZ
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
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
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
The 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,
Imports from other countries
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. But Safeguard duty and American Chinese trade
war has resulted in depreciation of Chinese currency has its own repercussions.
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 for want of
completion and commissioning of projects are already tied up and deliveries are
expected any time now. 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.
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 renewable. 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
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 last year. 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
Waaree Energies Ltd., a Mumbai based PV Manufacturer has taken huge projects
in Gujarat and have started acquiring smaller solar companies having strong
Swelect 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 already over
3000 rooftop installations to its credit till now. The company has acquired HHV
Solar, a reputed SPV Panel manufacturer and has invested heavily on increasing
the plant capacity from 35MW to 150 MW and is looking forward to doubling its
capacity. They are first company in India to commission a 100 kw floating Solar
Plant in Kolam Kerala.
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 2020.
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.
by its conservatives estimates, believes that 30 GW opportunity till 2020 is the
most likely scenario. The Indian solar market is a key future growth market for
India's installed capacity as of as on 31st March 2019 was 25.21 GW, which
is still negligible as compared to more mature markets such as Germany. And far
below Hon. Prime Ministers target 100 GW of SPV Power by the year 2022.
There are also external factors in India challenging its solar industry,
namely high inflation and consequently high interest rates, slowdown in GDP
growth, a severely 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
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.