New Aspirations with New Year!

The New Year 2019 is ready to be kicked off with all new power promises and aspirations with the rising of the new sun. Everybody in the solar industry is also expecting that this New Year will achieve far greater milestones as compared to the previous year. They also hope, the New Year will bring some new surprises too for the industry which will help in further boosting the solar space in the country.

In continuing my journey of exploring further about the present state of affairs of the solar industry in India – its growth trends with respect to tariffs, impact of global issues such as Rupee depreciation and oil prices volatility on solar industry, bottlenecks related to the policies, its future as per government’s ambitious plans for the sector and on top of the above, efforts of state governments especially Andhra Pradesh’s in implementing energy efficiency programs as per the government directives.

A few among the well-known industry veterans – Sitapathy Chavali, Founder & CEO, Greenrays Enersol Pvt Ltd; Sachin Bhalla, Senior Vice President, Marketing, Luminous Power Technologies Pvt Ltd; Abhijeet Gupta, Director, Radite Group; Neelesh Garg, Director, Saatvik Green Energy Pvt Ltd; and Mehul Sharma, Director Sales – India, TBEA Xián Electric Technology Co. Ltd.; discussed extensively about the current scenario of the solar space in the country, their expectations and major concerns that they hope to be addressed by the policy makers in this New Year…

Solar tariffs saw upward trend post 25% safeguard duty imposition. Is this a positive sign for the domestic industry?

Sitapathy Chavali

Yes, definitely it’s a positive sign for viability of domestic solar industry as demand for domestic panels is on the rise. Tariffs has earlier fallen to very low levels where we have seen project viability and industry sustainability a key concern.

Sachin Bhalla

It is definitely a positive sign for the domestic industry. Since the imported modules are around 9% cheaper than the domestic ones, the safeguard duty will make the latter more competitive.

Abhijeet Gupta

Solar tariffs going up is a positive sign for the industry as due to low tariff which are not practical at this point was putting pressure on the project execution cost. This in turn project financing disbursements was getting delayed and cash flow management for the developers was hampered. To continue the project completion was becoming challenge for the developers.

Neelesh Garg

Viewing it from the macro perspective, lower tariff rates are useful only when the benefit is passed on to the ultimate consumer. The low tariff rates have only benefitted the distribution companies. Tariffs have not really increased after safeguard, as the module prices have already dropped to adjust for safeguard. The effect of safeguard has still not impacted the domestic industry, because the solar installations significantly dropped in Q3 over the confusion on SGD. Further, IPPs got permission to pass on SGD on already bid projects.

Mehul Sharma

Imposition of 25% Safeguard Duty have become a problem for Solar developers. In country like India, where 90% of Solar equipment used are imported, mostly from China & Malaysia and Indian Solar Market witnessing prices as low as Rs 2.44/ KwH, will surely make survival tough and will pump up the prices. Solar modules account for over half of a solar power project’s cost and a safeguard duty may affect 11-12 gigawatts of projects that are under construction and for future biddings.

The proposed safeguard duty is intended to protect domestic solar panel production from impacts due to increased imports. India’s solar industry is growing rapidly and is one of the cornerstones of a sustainable future for the country. However, the industry is still at a nascent age and requires constant policy support for a favourable environment for growth.

The present domestic manufacturing capacity of solar cells and solar modules is about 3.1 GW and 8.8 GW, respectively, according to MNRE. While the annual installation counts around 1.5 GW of solar cells and 2.0-3.0 GW of solar panels. Only 10% of the installations use domestic cells and modules.

The main reason for under utilisation of the installed domestic manufacturing capacities is the inability of domestic manufacturers to compete with foreign manufacturers due to lack of economies of scale, technology performance and higher cost of the capital borrowed from banks. So, the imposition of Safeguard duty will now allow the domestic solar panel manufacturers to grow & compete with international Solar Cells & Solar Panels manufacturers.

Will factors like Rupee depreciation and oil prices volatility in 2018, be able to shift India’s energy security needs towards renewable?

Sitapathy Chavali

We have seen India taking a big leap in last 5 years in renewables, and this will help country in securing energy needs against ever rising fossil fuel costs. We hope that with government pushing for big renewable capacity additions in next few years, our dependency on costly fossil fuels should reduce.

Sachin Bhalla

These factors are already influencing the policy makers to give more importance to renewable energy than ever before. The sustained push towards solar energy in particular is a testament to that fact.

Abhijeet Gupta

The world economy is in critical stage at present and rupee depreciation and oil prices volatility as always a concern for Indian economy. Renewable source of energy is the only option to save our future generation. Rupee depreciation and oil prices will be one of the catalyst but not the only reason to sift over renewables. This is need of time.

Neelesh Garg

Oil price volatility and dollar appreciation is a global factor that will not only affect the growth of India’s renewable energy but also other nations which are mostly dependent on oil. Though, this is a good window for countries like India to move to renewable energy sources, but this volatility should only be a learning to invest in renewable, but not the sole reason.

Mehul Sharma

India Rupee depreciation and hitting a record low breaching 70-mark to the dollar has been driven by the fact India is a net importer, and needs more dollars every year to import. The fall does not bode well for the import-driven Indian solar sector along with imposition of 25% safeguard duty, which is likely to lead to a jump in projects costs and may even derail the government’s plan to quickly ramp up solar power generation capacity. This has majorly effected players who are yet to place the orders for their modules as these are placed after the land and other clearances have been obtained and the basic infrastructure is in place. A sustained fall in the value of the Rupee had severely impacted import-centric solar industry, which will surely lead to increased need of energy security services.

India’s installed non-fossil fuel capacity to exceed 40% by the end of 2019. What is your take on this?

Sitapathy Chavali

While the target looks aggressive and encouraging, achieving the same on field may be difficult due to various factors related to rupee depreciation, govt policy changes and support for renewable industry.

Sachin Bhalla

Govt. is playing an active role in promoting the adoption of renewable energy resources by offering various incentives, such as generation-based incentives (GBIs), capital and interest subsidies, fiscal incentives etc. Even though we are on the right track, but the need of the hour is to sustain as well as enhance the on-going efforts if we have to achieve this target.

Abhijeet Gupta

This is most challenging task for the industry. Till date the total renewable energy capacity of India is 20% of the total energy production in the country. To double the capacity in one year will take lots of efforts from all stake holders. Land availability and fund disbursement will be key play for achieving the target.

Neelesh Garg

It is a step towards the growing economy of India, which shall encourage further efforts not only by government, but by individuals to adopt the new sources of energy. If India keeps growing at this pace, the target of 100GW can easily be achieved. Times have changed, and now people understand, or want to understand the working of renewable energy systems to be able to implement it in their own lives.

Mehul Sharma

India has a current installed renewable energy generation capacity of around 72,000 Megawatt. The government is working on a plan to ramp it up to 175,000 by 2022. This includes 100,000 Mw of solar power capacity. In fact all developing nations are now driving the world’s gradual shift towards renewable energy, and India has become one of the leaders of the pack. With increased investments and clean energy installations, as well as the world’s largest renewables auction market, India ranks 2nd after Chile in the 2018 Climatescope report by energy researcher Bloomberg NEF. The organisation studied over 80 indicators, such as clean energy policies, power sector structures, emissions and installed capacities, for 103 countries around the world.

The Narendra Modi government in India has set an ambitious goal of reaching 175GW of clean energy generation by March 2022. In June 2018, renewables accounted for 71GW of India’s installed generating capacity. India’s renewables auctioned capacity has also increased by 68% since 2017, and clean energy investments, mostly related to solar power projects, added up to $7.4 billion in the first half of 2018. The ambitious plans of Indian government shows a complete set of track to add 40% more renewable power by 2019.

Whether Andhra Pradesh’s efforts in implementing energy efficiency programmes can become a model for other states? Please explain.

Sitapathy Chavali

Andhra Pradesh has been in forefront in planning and implementing energy efficiency programmes, more so with new capital city of Amaravati being built as a model city. With a visionary Chief Minister, the state is moving in a very planned manner, and can be a model to be emulated by other progressive states.

Sachin Bhalla

AP is doing a phenomenal job in terms of implementing energy efficiency initiatives. The commitment and passion with which they are going about it is an example for other states to follow. Their LED street lighting drive is one such example. No wonder the Bureau of Energy Efficiency is asking for their help in order to roll out their programs across the nation effectively.

Abhijeet Gupta

AP is working with a passion towards implementing energy efficiency measures and has become a role model for other states by implementing programmes like LED Street Lights. The state has stood first in implementing the e-mobility and already introduced e-vehicles in various cities and also introduced policy to adopt e-vehicles. State has announced that it will adopt an Energy Conservation Building Code (ECBC) for large commercial and public buildings and major retrofits.

The ECBC is expected to dramatically reduce energy consumption by as much as 40-60%, increase electricity reliability, and enable consumers to save money. In fact, adopting the code in Andhra Pradesh could save the amount of energy by 2030 that’s needed to power 8.9 million Indian households annually over that time frame, according to a new analysis by the Natural Resources Defense Council (NRDC) and Administrative Staff College of India (ASCI).

Mehul Sharma

India’s demand for electricity has been growing by about 8% every year for the last 5 years. India has consistently faced an energy deficit of 8-10%. State level actors like the State Electricity Regulatory Commissions (SERC), DISCOMs, and the SDAs established by the state governments under the EC act have an important role to play in improving India’s energy efficiency. Every state is different with its own consumer mix, power purchase profile, load curve and other factors. Hence, it is necessary that each state develop its own action plan for energy efficiency with active involvement from all the actors. Also, most of the DISCOMs are unable to meet their peak demands and are burdened with financial losses.

Andhra Pradesh is working with a passion towards implementing energy efficiency measures and has become a role model for other states. In fact, Andhra Pradesh is the only State in the country which has completed 100 per cent LED street lighting in four districts. These key factors makes Andhra Pradesh to become a model for other states and can make other stated to implement energy efficiency programmes in more effective manner.