India may fall well short of its 100 GW solar by 2022 target as it visages short-term ambiguity due to the obligation of various taxes, as per research and consultancy firm Wood Mackenzie.
Renewables accounted for 9.7 GW of the total increase of 13 GW, stressing on the considerable investment flowing into the sector, it said in a memorandum adding that India is, and will be, the third largest solar market globally in 2018 and 2019, respectively.
“As bid prices alleviates and costs continue to drop, long-term development remains positive but still not sufficient to meet the 100-GW solar target by 2022,” said Rishab Shreshta, solar analyst at Wood Mackenzie. “India faces short-term uncertainty due to the imposing of various taxes and levies on solar products, the cancellation of tenders and tariff renegotiations,” he added.
The Y-o-Y growth rate of annual solar install capacity is estimated to reduce from 63 percent in 2017 to just over 1 percent in 2018 before rebounding to over 12 percent in 2019.
“Despite strong domestic demand and safeguard duties on imported solar modules, domestic solar manufacturers still struggle to compete with foreign suppliers,” it said.
Wood Mackenzie said India’s power sector is going through significant changes with the government focusing on attaining ‘power for all’ and streamlining distressed distribution companies and power plants.
In September 2018, a draft modification to the Electricity Act, 2003 was introduced to separate content and carriage, directly transfer subsidy benefits, obligate 24×7 power supply, penalize power purchase agreement violations, and set up smart prepaid meters along with regulations related to these matters.
“If implemented, these policies would change the composition of the power sector and bring much-needed efficiencies into the system,” it said. “We may not see full benefits accumulating in 2019, but the revision is long overdue and has been postponed several times. It is a critical step towards spiraling power sector reforms.”
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