In May 2018, Guwahati railway station became the India’s first solar-powered railway station. The station, which is a major railway thoroughfare in India’s northeastern region and handles around 20,000 passengers every day, commissioned the project in 2017 and now has the capacity to generate 700 kWp from around a power generation setup comprising 2352 solar modules. The path-breaking project:
1. cost around 6.7 crore and will save around 67 lakh worth of electricity every year; and,
2. cut off around 6.3 lakh kg of carbon dioxide emissions between April 12 last year to May 10 this year.
In other initiatives, many states have come up with their own policies to promote the generation and use of solar power. The Haryana government launched the Manohar Jyoti in October 2017 to incentivise the use of solar energy by providing subsidies of 15,000 to those who install solar-power systems at home. The scheme’s ambitious target is to set up one lakh solar lighting systems in the state.
Manohar Jyoti, along with other similar schemes, is an examples of how both state and central governments are focusing on promoting the use of green energy. As of September 2018, the country’s total solar capacity stood out at 27.4 GW—comprising 23.2 GW utility-scale solar, 3.4 GW rooftop solar and 0.8 GW off-grid solar—says solar consultant Bridge to India in its annual report on the state of renewable energy in the country.
The Ministry of New and Renewable Energy (MNRE) has set a target of 175 GW of renewable energy capacity by 2022 of which about 100 GW will be solar electricity. According to the Bloomberg NEF 2018 report, India has become second-largest destination globally for investment in clean energy projects and had attracted $9.4 billion worth of investment in the sector in 2017. These numbers are impressive but India has a long way to go if it has to achieve the ambitious MNRE target, and central and state governments need to scale up the growth rate in the coming three years.
According to Kolkata-based Vikram Solar Limited—the second largest clean energy consultant in India by revenue—infrastructural development, rooftop solar, new projects and export opportunities of solar modules and panels in India started growing at the end of 2017. Policy support has resulted in a conducive environment for green energy proponents, says Rajendra Kumar Parakh, the company’s Chief Financial Officer. According to him, “Solar parks in India have recorded 103 per cent year-on-year growth by generating 8.54 billion kilowatt per hour of electricity in the first quarter of 2018. And, as compared with the Q4 2017, solar production in India was 31 per cent higher in Q1 2018. Several large-scale solar parks were being commissioned in the first quarter of 2018, boosting solar generation capacity in India.” He also informs that MNRE has plans to add 77 GW solar power projects by 2020, along with plans for auctioning 5–10 GW of solar power.
Pune-based KSolare Energy, which manufactures solar-based inverters and solar water-pumps, stresses on innovative designs and techniques to increase its share of the clean-energy market. “India has lots of opportunity in the solar sector, if you have certain innovations or products definitely this will help a lot in making mark in the market. We at Ksolare try to make each product innovative. In my opinion, as the sector is booming, solar startups and companies can have fair share in the solar market,” says Sunil Sinnarkar, the company’s Managing Director.
Despite the positive outlook for clean energy in India, the government certainly needs to further ramp up its efforts and increase speed of execution of solar projects as India has slipped two ranks to become the fourth in the Renewable Energy Country Attractiveness Index (RECAI), with China, the US and Germany currently ranking first, second and third, respectively, according to Ernst and Young. Currently, challenges such as confusion regarding goods and service tax and lack of protection for domestic manufacturers against solar-module oversupply from China need to be addressed on an urgent basis because they are slowing down India solar push.
Speaking about the slowdown, Vinay Rustagi, Managing Director at Bridge to India, said that "Indian solar market has grown spectacularly over last four years but is struggling to sustain because of policy and execution challenges. The slowdown is worrying for all stakeholders.” He continued that India is witnessing increasing volatility in tender issuance, auctions and capacity addition because of poor coordination between different government agencies and constraints in transmission capacity and land acquisition. The MNRE has not helped matters by failing to decisively address GST and safeguard duty issues. Arbitrary ceiling tariffs and poor tender design have resulted in tenders getting routinely cancelled and/or undersubscribed.
Rustagi concluded by saying that "As a result, gap between tenders issued and auctions completed has been widening for a year. Our revised best-case estimate for solar capacity by March 2022 is 67 GW, well short of the 100 GW target unless decisive remedial steps are taken immediately.”
However, the Bridge to India report says that one bright spot in the solar market is rooftop solar, which is growing at a robust pace of 70 per cent annually. Unaffected by policy uncertainty and not reliant on land or transmission infrastructure, this market is benefiting from the sharp 30 per cent fall in solar module prices, according to the Bridge to India annual report.
A steady import of solar modules has stunted Indian domestic solar capacity development, thus reducing job creation opportunities. “Importing is a challenge, more than 80 per cent of the module demand in the country has been met by imported modules, presenting a bill of $3 billion in 2017. This has been going on for years and it has pushed the domestic manufacturers out of the Indian market allowing foreign suppliers more or less 80 per cent of industry share,” informs Parakh.
Another challenge is the Safeguard duty on solar modules manufactured in special economic zones (SEZ),which is meant to protect local manufacturers against the predatory pricing of foreign products. The safeguard duty notification issued by the Ministry of Finance (MoF) does not provide exemption to the projects that have already been auctioned out and these add up to approximately 20–25 gigawatt. To add to that, the notification does not provide any relief to solar cells and modules manufactured in SEZs and domestic tariff areas, where 40 per cent of solar module manufacturing units and 60 per cent of solar cells manufacturing units are located currently.
“In the light of the SEZ issue, the notification defeats the very purpose of safeguard duty, which is to protect and promote domestic industry. While it may seem logical that SEZs should be exempted, considering that the whole purpose of applying safeguard duty is to protect domestic industry against imports so why should they pay these duties? Unfortunately, the policymakers seem to be in a dilemma,” says Parakh.
The Bloomberg New Energy Outlook 2017 states that by the 2040, around 49 per cent of the total electricity generated globally will be green as more efficient batteries are developed, and this will further cut the cost of generating solar energy cost 66 per cent. The use of green energy will then save India 54,000 crore ($8.43 billion) annually.
Overall, the renewable sector is going to witness a strong growth and favourable policy support as investments in the power sector are rising. According to a recent HSBC report, the solar sector will continue to receive favourable policy momentum, given India’s leadership role in the International Solar Alliance. Thermal electricity currently accounts one-third of total installed generation capacity, but many projects are unable to sustain themselves due to issues including the non-availability of fuel, lack of purchase agreements and tariff disputes, the report states.
“We think the economics will continue to shift in favour of lower carbon power in India, especially as it promotes solar,” the report adds and also says that an additional 12 GW of renewables (mostly wind and solar) were installed between April 2017 and May 2018, more than double that of coal power plants.
Renewable installations have been outpacing coal largely because the price of solar power has declined by over 40 per cent over the past few years, making it more competitive against coal and more attractive for new projects. Also, solar electricity could play an important role in improving the living standards of the section of our population that still live without electricity.