Burgeoning greenhouse gas emissions have pushed India to make a commitment at Paris to reduce its carbon footprint by a third by 2030. As a part of this, Indian energy sector has been witnessing a shift from conventional energy to clean, renewable energy. In renewables, solar photovoltaic (PV) energy is making rapid strides with installed capacity of 25 GW as of August 2018. Indian solar sector has observed a growth momentum of 75 per cent in 2017-18 with 10 GW of solar capacity installation that was higher than that of all other energy sources.
The Ministry of New and Renewable Energy (MNRE) is expected to commission about 11-12 GW of solar power capacity in the financial year 2018-19. Tenders close to 12 GW are expected, mostly under central schemes from Solar Energy Corporation of India (SECI). This generates great opportunities to all solar players due to lower off-take risk. Under the MNRE’s Solar Cities program, 60 solar cities will be developed thereby adding to the overall capacity of the country.
The World Bank notes that India is having among the best conditions in the world to capture and use solar energy. Moreover, due to Central and state governments’ congenial policies, India is on its way to become a solar energy hub for mega solar parks. Huge solar power projects are being developed due to provoking interest of domestic and foreign investments in the sector as a result of ease in land acquisition and other legal approvals from the government. Indian solar sector achieved the successful commissioning of then the world’s largest solar project of 648 MW in Kamuthi, Tamil Nadu in September 2016. The 2,225 MW Bhadla solar project in Rajasthan will be the world’s largest solar installation when completed. In April 2018, Chief Minister of Gujarat Vijay Rupani gave approval for setting up a 5,000 MW capacity solar park on 11,000 hectares at the Dholera Special Investment Region (SIR) with an investment of Rs 25,000 crore.
India fulfils its requirements for solar modules or cells through imports from China and Malaysia. In order to encourage the domestic solar module manufactures, the government had in July imposed a 25 per cent safeguard duty for a year from July 30, 20 per cent for the following six months and 15 per cent for six months after that. However, it can be a deterrent for capacity additions.
According to Sunil Rathi, Director, Waaree Energies, “The implementation of the duty has provided a level playing field to domestic manufacturers and allowing them to showcase their capabilities of offering quality products. It also allows flow of investments, which would provide an impetus to manufacturers and aid in bringing to the sector latest technologies and R&D.”
The safeguard duty imposition has been counterproductive to the units set up in Special Economic Zones (SEZs), as these units were also made liable to pay safeguard duty. 60-70 per cent of the domestic solar manufacturing capacity is situated in SEZs. Amit Gupta, Director, Legal & Corporate Affairs, Vikram Solar, says, “It is pertinent to note that the safeguard duty has been levied for two years and during this period, solar panels for already bid out projects will be procured mostly, for which pass through of duty under the change in law provision of the Power Purchase Agreement has been provided. This has negated the impact of safeguard duty.” The prices of solar modules of domestic manufacturers and importers are nearly competitive, but as the pass through of duty is available for imported modules, developers prefer procurement of imported modules over domestic ones. Thus, safeguard duty has failed to accord intended protection to the domestic manufacturers rather it is promoting imports, he adds.
Manoj Gupta, Vice President – Solar Business, Fortum India says, “Uncertainties regarding Government policies regarding the sector with respect to GST rate, Safeguard duty, ISTS project, grid approvals, cancellation of various bids, timelines of new solar parks etc still loom over the future of the sector. Clarity on all these issues will greatly boost the annual rate of installation and India can emerge as second largest solar player globally after China.”
Growth Drivers
There are a lot of factors driving the Indian solar PV industry. One of the factors that is contributing to the growth of the sector is decline in the cost of solar PV modules across the globe.
According to the International Renewable Energy Agency (IRENA), by 2020 the price of energy production in large solar power plants could fall to around three US cents per kWh in many regions of the world. Photovoltaic has, therefore, become more accessible. In 2017, costs continued to fall for solar panels due to various factors related to the manufacturing cost of modules price, various new technology advancement in PV sector and not least the change in policy by China which created the oversupply of module, according to Manoj Gupta of Fortum India.
Stiff competition among solar power developers leading to reduced tariffs pushed Acme Solar Holdings to win the Bhadla bid at Rs 2.44 a unit. It again bid the same price for 600 MW in a 3,000 MW auction held by the Solar Energy Corporation of India (SECI).
The decline is usually attributed to increase in efficiency of material, optimisation of production and ability to achieve economies of scale.
Capital costs are expected to decline further in the next few years as old technologies continue to be replaced by new ones. The more cost effective and efficient the technology is, the better the chances of it driving mass production.
Going ahead, Crisil Research expects solar power capacity additions to ramp up to 44-46 GW over the next five years (FY 2018-22) as compared to 11.4 GW over the last five years (FY2013-2017).
The capacity augmentation will be due to state solar policies. With the thrust from the Central Government for the growth of the sector, states have rolled out conducive policies for achievement of targets by 2022. Government focus on intra-state transmission is also going to be positive in terms of supporting infrastructure for upcoming capacities, according to Crisil. Further, the government’s push for cash rich PSUs for setting up of renewable energy projects has helped NTPC for commissioning of a total of over 870 MW of capacity. Moreover, Indian railways has committed to generate 5 GW of solar power by 2025.
It is further estimated that Rooftop Solar projects will add 8 GW of rooftop projects by 2022. Further, the capacity additions would be supported by improvement in the discoms infrastructure, continuation of net metering regulations or benefits and other regulatory incentives.
Further, the government of India’s declaration at Paris through Intended National Determined Contribution (INDC) is a positive driver for the growth of renewable energy.
The Government of India has declared at Paris Agreement in 2015 to achieve 30 per cent of the total energy demand through renewable energy by 2030. Renewable energy transition in India is inevitable with clean energy becoming available at below average procurement price of power in India. Therefore, switching to renewables along with storage is the future of energy in India. New capacity addition in power is being ensure through renewable energy solution, says Amit Gupta of Vikram Solar.
Technology
The solar sector is dynamic with constant focus on developing new emerging technologies. Cost-effective technology and efficient manufacturing processes are the main factors driving the mass production. Industry players are giving due emphasis to technological advancement and innovation to continuously improve their products. It is the innovative technology that makes a difference to sustainability and cost effectiveness of solutions and products.
The solar market is prospering at a great pace. According to the latest report by the International Energy Agency (IEA), it is expected that the photovoltaic sector will drive the renewable energy market in the coming years, beating hydroelectric and wind sector.
Waaree Energies was the first company in the sector to bring floating solar and Merlin technology to India. Sunil Rathi of Waaree Energies elaborates, “We are continuously striving to better our offerings and develop indigenous products and solutions, whether it is flexible Module technologies or D-I-Y kits (Pronto). We also need to keep ourselves aligned to the latest technologies which are changing the growth curve in the industry. The advent of mono PERC technology is aiding the evolution of solar power in India.”
Keeping in line with Vikram Solar’s focus on adopting pioneering and innovative technologies, the manufacturing facility of the company has the finest machinery and equipment imported from United States, Switzerland, Germany and Japan.
Amit Gupta informs, “The company introduced mono-crystalline module line with higher energy generation capacity (at least 10 per cent more than poly crystalline modules) and the product is named ‘SOMERA’ in 2017. In June 2018, we launched Tigo Integrated Smart Module – Solivo – at Intersolar Munich 2018. In September 2018, we launched half-cut cell module at REI 2018.”
Vikram Solar also intends to start production of AC Modules and Bi-facial modules by Q3 FY18-19. “We have also introduced automated silicon glue sealed junction boxes for enhanced durability and made a transition from 4-busbar to 5-busbar in module manufacturing,” he adds.
Outlook
Solar energy is all set to change the energy landscape of India. Industry players envisage the potential for solar industry in India as the country is already the second most attractive market for solar equipment globally with rising RE share in energy mix. As per the Ministry of Power, India’s energy mix is evolving slowly with fossil fuels meeting 82 per cent of demand; coal remaining the dominant fuel with a 57.9 per cent share of total production in 2018. In order to bring about a clean energy revolution, India needs to focus and implement strategies for the long-term growth besides succeeding in achieving current solar deployment targets.
Indigenous solar panel and cell manufacturers should take the imposition of safeguard duty as an opportunity to step up their R&D to come up with more cost-effective and efficient technologies that give them an edge over their Chinese counterparts.
Investing in domestic manufacturing can help in building supply chain, control prices, and earn foreign exchange through exports besides creating jobs, increasing GDP for the country and stabilising adverse balance of payments.
Investing in power evacuation and dispersion infrastructure building is also needed to attain last mile connectivity in the farthest corners of the country. Indian Government commitment at international level and progress on the ground show potential for India to become a global leader in renewable energy, especially with the Government initiatives like establishment of International Solar Alliance, suggests Gupta of Vikram Solar.
India can function on a fully renewable electricity system by 2050 due to an abundance of renewable resources, according to a new research by Lappeenranta University of Technology (LUT). Manoj Gupta of Fortum India states, the future of the industry can be bright if right investments happen in this sector. India is currently emerging as the most preferred destination for investments in solar energy.
Sunil Rathi of Waaree Energies foresees an expedited adoption of solar power as the dominant power source in India. In addition, the industry would witness more stability and sustainable business models, spurred by the various initiatives and policies from the Government. The current safeguard duty will also help bring domestic solar manufacturers to the forefront, and we will see a robust manufacturing hub in India for solar equipment. The solar sector is on the right track to enhancing its capacity to 100 GW installations. However, ambiguity over its achievement within the proposed timeline still looms large. With solar prices reaching an optimum level, Indian solar will continue to attract new players. Players with large and cheaper capital, especially, global players, can give tough competition to domestic and medium and small players.
Bloomberg New Energy Outlook 2018 also predicts that by 2050, wind and solar technology provide almost 50 per cent of total electricity globally – ‘50 by 50’ – with hydro, nuclear and other renewables taking total zero-carbon electricity up to 71 per cent.
