2018 was a year full of surprises, challenges and opportunities for the renewable energy sector in India. Till August 2018, India added more renewable energy and solar capacity than thermal and coal based capacity for a fourth consecutive quarter. 62 per cent of this capacity was contributed by solar alone, making it the leading renewable energy segment by some margin. As of 30th September 2018, the country’s total solar installed capacity reached 26 GW which is about 1/4th of the targeted 100 GW by 2022.
The 100 GW target may look ambitious considering the world’s total installed solar-power capacity stood at 303 GW in 2017. However, with the rate at which solar power is making inroads combined with the steady retirement of conventional fuel options, such as coal reserves, there is a strong case for solar in India. From a regional perspective, Southern India has dominated the number of solar installations so far. However, accounting for major projects planned till 2022, specifically pertaining to solar PV capacity, Northern India looks set to become the primary contributor to the sector.
From a technological point of view, with the development of cell technology with monocrystalline silicon modules and increased cell efficiency of photovoltaic modules, the capacity of individual plant energy utilization has gone up significantly. Enterprises have recognized the substantial cost reduction offered by implementing solar systems, and factories are one of the major clients in this segment.
A few dark clouds
However, some bottlenecks had a sobering effect on the solid growth trajectory that the sector was treading on. At the heart of this lies a conflicting attitude of the government. While on one hand it wants to expand the solar sector to contribute at least three-quarters of the total power consumption of the country, imposition of import duties has increased the initial capital investment considerably, thereby reducing returns. Other operational challenges such as Net-Metering have also acted as a hindrance, with its acceptance still being a slow and arduous process barring few exceptional states. In comparison, the tariffs for electricity produced at utility-scale projects touched an all-time low of INR 2.44 per KwH earlier this year. With higher costs and lower returns, the solar energy domain has not generated the revenue it was expected to. The import duties led to a subdued performance of the sector during the latter part of 2018 and the segment has failed to meet the investor’s expectations.
Additionally, lack of financing opportunities for customers, at least in the retail segment, translates to lesser sales as clients are not ready to block a lot of money first-up. Also, due to non-standardization of net-metering across states, many solar power consumers expect solar to be provided at rock-bottom prices. Existing DISCOMs are yet to arrive at an optimized revenue sharing model, which further complicates the ‘solarisation’ process.
The future of solar
The Indian government is undoubtedly focusing on solar as a big part of its comprehensive power strategy. In addition to its large-scale grid-connected solar initiative, India has used solar to develop off-grid solar power for local energy needs. For instance, solar lanterns, solar cookers and solar home lighting systems were provided to a large number of families under various national programs.
Even the International Solar Alliance initiated by India and France has promoted the exchange of solar products, ideas and resources between the two countries. However, an immediate rethinking of on-ground policies needs to be done to facilitate the ‘realization’ of solar. While domestic producers of solar-cells need to be protected and their interests promoted, it cannot be done at the cost of increasing the product cost for the end-user, thereby jeopardizing the future of the entire industry. The falling currency rates have definitely not helped the matters either. Furthermore, industry insiders are of the opinion that the 25 per cent is hardly any protection for local producers, as they still cannot compete with the extremely low prices in China and other regions.
Solar is crucial to India’s future energy needs, and in order to achieve the target of 100 GW energy production by 2022, four-fold growth of the entire structural framework, resources, investment is needed. BNEF estimates that by 2050, 75 per cent of its electricity will be from renewables, and solar energy will contribute a major portion to the same. Such a goal can only be achieved through consistent policies and by keeping the interest of the entire industry in perspective.
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