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Will India meet its #SolarPowerTarget by 2022?

Will India meet its #SolarPowerTarget by 2022?

Credit research agency, Crisil has thrown a dampener on the solar market. The agency has come out with a detailed report expressing its doubts that at the current pace of solar deployment, India would be able to meet its 100GW #solarpowertarget by 2022.

The country’s present installed capacity is 21.65GW. The maximum, says the report could be 78GW to 80GW in these four years. Let’s look at this assessment critically.

About 56GW to 58GW of solar power is expected to be added during the period between 2019 and 2023. This would be quite a significant leap over the 20GW of #solarcapacity added between 2014 and 2018. Unfortunately, this would still be short of the National Solar Mission’s tall target of 100GW.

The additional capacity addition is expected to slow down because of the safeguard duty on solar modules imposed by Malaysia and China, recently. According to industry watchers, this duty, if it lasts for two more years, is likely to raise capital costs of new installations by 20%, increasing the per unit price by Rs.0.30 to 0.40, as a consequence of which the return on investment (ROI) for #SolarDevelopmentCompanies may not happen as fast, or as much as is currently being hoped.  

Aggressive solar targets have been set for individual states too, but not all state government projects are funded adequately enough to achieve those targets. Crisil data indicates that 7.3 GW of solar power is already under construction under the allocated schemes. Furthermore, 1.7 GW will be tendered and allocated in 2019, if things move as planned.

However, the rooftop solar segment appears to be a major main concern area here. Around 40 GW of solar power has to be generated through this segment by 2022. But despite incentivizing commercial and industrial units to generate their solar power using their rooftops, it may not be possible to extract more than 8 GW from this route by the year 2023. The reason? #SolarDevelopmentCosts in India is still higher than that of the energy generated from the grid.

Considerable efforts have been made by the Indian government, the concerned agencies, and the regulatory commissions, to massively develop rooftop solar photovoltaic sector in the country. The basic framework is in place and the implementation of rooftop solar power plants has started. Nevertheless, there are still numerous barriers that need to be cleared before we can hope to meet the 40 GW target.

One country-wide survey conducted in November 2016 has revealed that 12 states and six Union Territories are yet to receive their grants for rooftop solar plant connectivity against their distribution licensees. While this should be done in the next three to four months, further delays are likely to be caused in getting the necessary approvals and clearances from multiple departments including the urban local bodies, the DISCOMs, the regulatory commissions and the state nodal agencies.

There are complexities anticipated from the consumer side too, as in order to get the project installed, they are required to obtain CFA, submit applications for grid connections and follow up with the distribution licensees for bill settlement. Further, the non-availability of trained and skilled manpower is a major challenge in the growth of this sector. Other anticipated hurdles are drafting rooftop leasing agreements and assigning clear-cut, well-differentiated roles to #SolarDevelopmentCompanies and the rooftop owners.

The #RESCO mode seems to be the most promising method of implementing rooftop solar systems. However, since developers are required to shoulder the risk of this mode, most are not willing to work with beneficiaries, if they don’t have a previous track record or an impeccable rating. As a result, systems under these mechanisms are getting installed only on big corporate houses, leaving out the larger segment of smaller consumers.

The solar scale-up targets were put in place about two years ago. Consideration the short span, implementation has been quite encouraging.  The momentum is in place. Public awareness and attention have reached a level where slowing down, looks unlikely.

The only question is how to reach an inflection point, where the #solardevelopment market can enter into a self-replicating phase, growing at an unprecedented rate, with more focus on solar rooftops.

At this point, it’s tough to predict when this sector will cross this inflection point, in four years or five, but one thing is for sure, the wheel of solar development once rolled, cannot be turned back.

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