100 GW A leap in the dark

By announcing to achieve 100 GW of solar power by 2022, India hit the bull’s eye and projected itself as a key player at the Paris Agreement. Now, the world’s largest renewable energy expansion programme has put India on the road map to a solar future!

Government of India has set a target to achieve 40 GW of rooftop solar and 60 GW of medium and large scale power plants by 2022. The country added 3.01 GW of solar power capacity in 2015-2016 and 5.525 GW in 2016-2017, the highest of any year, with the average current price of solar electricity dropping to 18 per cent below the average price of its coal-fired counterpart. After a bumper Q1 2017, (end of FY17) when India added 3120 MW of utility scale solar power capacity, pace in Q2 2017 was relatively slow at 1,437 MW against a scheduled capacity addition of 3,300 MW.

Current Status on India’s target to achieve 100 GW of solar power generation by 2022
Girish Kumar Kadam, Sector Head, Corporate Ratings, ICRA Ltd says, “The long-term demand outlook for solar energy in India is favourable in ICRA’s view, given the regulatory and policy support as well as with the significantly improved tariff competitiveness of solar PV-based grid connected installations from the off-takers’ perspective. In ICRA’s estimates, if energy demand were to increase by 6 per cent annually, an additional solar capacity of 57 GW would be required over the 5-year period from FY 2018 to FY 2022 to achieve the revised solar RPO target of 8 per cent by FY 2022. Even under conservative assumptions of 5 per cent solar RPO target and demand growth of 5 per cent by FY 2022, incremental all-India solar capacity would stand at 31 GW over the same period. This would yield a healthy CAGR of 29 per cent in solar capacity addition. In this context, cumulative solar capacity installations are likely to reach at about 50-55 GW by end of FY 2022, against the 100 GW (which includes 40 GW for roof-top solar) as a cumulative target of solar capacity under the policy framework, also given the slow traction in roof-top solar segment.”

Aditya Handa, MD & CEO, Abellon CleanEnergy Limited says, “According to a report by the MNRE, it can be seen that the year-on-year capacity addition has doubled. In order to reach the 100 GW target by 2022, additional 78 GW needs to be added over the next four years or about 19 GW per year. The momentum gained must continue to achieve the target set by the government.”

Saurabh Srivastava, President – Marketing and Product Strategy, Eastman Auto and Power Ltd says, “India is in the right direction to achieve the desired target of 100GW of solar power by 2022. The target of 20 GW of solar power has already been achieved. According to the November 2017 report of Bloomberg New Energy Finance (BNEF), around 715 MW of capacity was added across the country in the last fiscal as compared to 227 MW in the previous year; taking the country’s total installed capacity to 1.3 GW. Indian solar installations registered a record 123 per cent growth to reach 9.6 GW in 2017, which was more than double the 4.3 GW installed in 2016.”

“The recent inaugural meeting of International Solar Alliance held at Gurugram is a step forward in encouraging the adoption of solar energy. Besides providing the opportunity to augment ties with numerous countries, the forum is expected to provide a fillip to the renewable energy segment, with India redefining itself as a technological hub for innovation in clean energy”, adds Srivastava.

Gajanan Nabar, CEO, CleanMax Solar says, “The renewable sector for the last few years has been power packed. While the solar industry is in the growth path and has the potential to achieve this ambitious targets, we need support from the government to ease some bottlenecks on net-metering, remove uncertainty in open access solar policy and help promote certain sectors like rooftop solar solutions for residential segment to make the target achievable.”

With the cumulative solar capacity going up to 22 GW and the government going ahead with its plans to double the target for large solar parks from 20 GW to 40 GW, the market sentiment is upbeat, so much so that the Union Power Minister has expressed optimism that the country will have a renewable energy capacity of 227 GW by March 2022, surpassing the 175-GW target.

Simarpreet Singh, Director, Hartek Group says, “While India is expected to register an addition of 8-10 GW of solar capacity this year, we could face a slowdown in the short term as not many tenders are being released. While the drastic reduction in tariffs will lead to more demand, it has nonetheless have left investors concerned.”

“In view of the renewed focus on mega solar projects, real volumes have started pouring in. With the trajectory of bidding for the remaining solar power capacity finalised as 20,000 MW for 2017-18, 30,000 MW for 2018-19 and 30,000 MW for 2019-20, achieving the 60-GW ground-mounted target should not be a problem. It is the 40 GW rooftop solar target which poses a real challenge”, adds Singh.

“RK Sharma, Executive Director-Marketing, Refex Energy Ltd says, We are left with only four years to achieve this target. India’s aggregate solar installations are evaluated to have achieved 20 GW as on end March 2018, four years ahead of the original target of 20 GW by 2022. This incorporates utility scale sun-based limit of 18.4 GW (93 per cent) and housetop sun powered limit of 1.6 GW (7 per cent). The four southern states alongside Rajasthan keep on leading with 68 per cent of aggregate introduced limit.”

While the grid-connected, ground-mounted solar power plants will be achieving the 60 GW, achieving 40 GW of roof top solar installations, including distributed generation, looks very challenging. Subsidies and incentives have not shown sign of revival. It would be rather wise to revise up the target of ground mounted projects and downsize the other, he adds.

Dhirendra Kannao, Chairman, NSOLAR Pvt. Ltd says, “India’s economy is growing at a rate which requires significant energy capacity addition to adhere the Paris climate agreement. This agreement compels India to cut down its reliance on fossil fuels such as coal. India has set a target of 100 GW of solar power by the year 2022. Looking back; India has managed to produce 5.526 GW of solar power in 2016-17, with a cumulative capacity of 12 GW. In 2017-18, the capacity increased to 10 GW and a cumulative capacity of 22 GW. However, the capacity addition is now on an exponential growth.”

Jeetendra Saraf, Founder, Newtronics Green Energy says, “India would achieve its target of 175 GW of installed renewable energy capacity well before 2022, if few changes are made in the RE policy as we have learnt a lot during this period of achieving 60 GW. International Solar Alliance (ISA) are yet to help mobilise sufficient funds for solar energy projects which has caused a slowdown. Also, there is Power Purchase Agreement issues which have been signed but not executed.”

Large-scale solar projects accounted for bulk installations in 2017, nabbing about 90 percent (8,634 MW) of the total, with the remaining 10 percent (995 MW) coming from rooftop solar installations.

“In terms of development through renewable energy, I believe that growth from RE is always positive and far more sustainable than coal or fossil fuels. Some of the measures which would help the growth of clean energy can be investor-friendly policy on wind-solar hybrid systems, repowering and increasing export incentives from 2 per cent to 5 per cent to promote ‘Make in India’”, Saraf further adds.

Krishnendu Mukherjee, COO, Sova Solar Ltd says, “Only a few constraints are there to give the 100 GW ambition a realistic shape. To materialize the idea of achieving it by 2022, an appropriate action plan is required to be framed and some major boost up is required.

N R Khushalani, Vice President-Marketing Business Development, Polycab Wires Pvt Ltd says, “The Government of India set an ambitious target of adding 100 GW of solar energy by 2022, out of which 40 GW solar power is to be generated through solar rooftop grid-tie projects.”

As per MNRE, the cumulative solar installed capacity in the country is around 20.8 GW from solar ground-mounted projects and 1.06 GW from solar rooftop projects, respectively till March 2018 against the target of 5 GW. There is huge gap between set target and actual installed capacity, the major issues behind the slow growth of the solar rooftop sector are:
• Almost every state has set its own solar policy, regulations and procedures to be followed for installation different states have different procedures to followed for documentation. So, in a nutshell, there is no uniform policy across the states which makes it difficult for managing the overall state of affairs.
• The solar project installer has to be empanelled with respective State Nodal Agencies to claim the subsidies for their clients. The overall documentation for approval and getting subsidies to their client account takes very long time.
• Another major issue delaying the solar project, especially, solar grid-tie rooftop segment across the country. Many solar projects are stuck due to delay in getting approvals from local DISCOM for solar net-metering.
• The project finance is key aspects for commercial or industrial solar rooftop projects viability. It’s very difficult to get the financial support or loan from a leading PSU banks and other lenders for a specific solar project without collateral. It’s a major problem faced by many customer(s) as well as solar installer(s).
• Lack of skilled manpower certainly impacts project execution. Presently, it is difficult to get skilled manpower at lower level for implementing the solar project at competitive prices.
• Most people are not aware about product quality, reliability, post-sale and service support, company background and future. Generally, they opt for the solar system (equipment) as suggested by EPC companies or system integrators. It’s import to bring awareness at micro level about solar system which would help the consumer choose the right products and company.
• To sum up the present scenario, it appears that unless these hurdles are not resolved, ease of business for both system integrators and EPC players does not become reality.

Nimish Jain, Head of Global Sales-Modules, Vikram Solar says, “Policy reforms in India have helped the country rank higher in the list of business-ready countries, jumping 32 places up from last year and acquiring 100th place in the list has huge implications for the growing solar industry.”

Not just utility scale, but focus on rooftop solar in India has also shown incredible growth trajectory in the both the sectors nationwide. And all of this development that led to India having 21 GW of installed solar capacity.

If we have to achieve 100 GW of solar deployment by 2022, we have to deploy 20 GW every year till 2022. India achieved adding 9 GW of solar installation in FY 2017-18 but due to uncertainties like Safeguard duty, GST, ADD, auctions slowing down and according to some reports, deployment is expected to decrease by 35-40 per cent in FY 2018-19. Ambiguity over the tax rate attracted by solar based EPC power projects still prevails with contradictory ruling from various advance ruling authorities.

So, if the solar sector remains clouded by these ambiguities, it is very difficult to achieve even 100 GW target by 2022. The government has announced trajectory of renewable projects, which will be out for auction during FY 2018-19 and 2019-20. Targets can only be achieved if there is clarity and predictability in the policy ecosystem and these critical issues are addressed.

Challenges:
• Lack of projects auctioning or awarding- We must highlight that a total of 1,456 MW of solar power was tendered and 1,232 MW of solar was auctioned in the third quarter of 2017. This is a considerable decrease from the second quarter of 2017 when 3,408 MW of solar projects were tendered and 2,505 MW projects were auctioned.
• Cancelation of projects- Additionally, some tenders have also been cancelled such as 250 mw solar project by NTPC (auctioned in Oct 2017), because of them breaching the WTO regulation of not selling power to state DISCOMs when the project has a DCR clause. Increasing tenders and awarding more projects without cancelation has to be considered if targets need to be met.
• However, more than 80% of the module demand in the country has been met by imported modules, presenting a bill of $3bn in 2017. This has been going on for years, and it has pushed the domestic manufacturers out of the Indian market allowing foreign suppliers 80 per cent of industry share. The delay in imposing anti-dumping duties on imported solar modules has created confusion in the sector and scaring the investors.

Roadmap beyond 2022
Abellon CleanEnergy Limited says, “If the 2022 targets are met, then, undoubtedly, India will become one of the largest solar energy generators in the world after US and China. In my opinion, this will create a market for ancillary services and will incentivise innovators to come up with technology, tools, and business models to ensure grid stability while optimizing the use of infirm renewable energy.”

The International Solar Alliance is expected to provide a fillip to the renewable energy segment, with India redefining itself as a technological hub for innovation in clean energy.
Saurabh Srivstava,
President – Marketing and Product Strategy, Eastman Auto and Power Ltd

In order to reach the 100 GW target by 2022, additional 78 GW needs to be added over the next four years or about 19 GW per year.
Aditya Handa, MD & CEO,
Abellon CleanEnergy Limited

We need support from the government to ease some bottlenecks on net-metering and remove uncertainty in open access solar policy.
Gajanan Nabar,
CEO, CleanMax Solar

While the ground-mounted solar power plant will achieve 60 GW, achieving 40 GW of rooftop solar looks challenging.
RK Sharma, Executive Director-Marketing,
Refex Energy Ltd

The long-term demand outlook for solar energy in India is favourable in ICRA’s view, given the regulatory and policy support.
Girish Kumar Kadam,
Sector Head, Corporate Ratings, ICRA Ltd

Renewable Energy ministry needs to impress the states to have user friendly policy and dole out subsidies which get paid through the savings in monthly power bill. Initially, the end customer installs the system at their cost.
N R Khushalani,
Vice President-Marketing Business Development, Polycab Wires Pvt.Ltd

Ambiguity over the tax rate attracted by solar based EPC power projects still prevails with contradictory ruling from various advance ruling authorities
Nimish Jain,
Head of Global Sales-Modules, Vikram Solar

While the drastic reduction in tariffs will lead to more demand, it has nonetheless have left investors concerned.
Simarpreet Singh,
Director, Hartek Group

India’s economy is growing at a rate which requires significant energy capacity addition to adhere the Paris climate agreement.
Dhirendra Kannao,
Chairman, NSOLAR Pvt. Ltd

In terms of development through renewable energy, I believe that growth from RE is always positive and far more sustainable than coal or fossil fuels.
Jeetendra Saraf,
Founder, Newtronics Green Energy

Year 2022 is a target timeline. This has been set as an indicative land mark but that does not mean it is the end.
Krishnendu Mukherjee, COO,
Sova Solar Ltd