RE Developers are Worried of Transmission Woes

RE Developers are Worried of Transmission Woes

Renewable Mirror News Detail

India's solar panel industry could be facing a dimmer future

22 Oct 2018

Solar protectionism

MNRE has taken several steps to fructify dream of a clean energy future for the ‘New India’. The largest renewable capacity expansion programme in the world is being taken up by India. The Govt. is aiming to increase share of clean energy through massive thrust in renewables. Core drivers for development & deployment of new & RE in India have been Energy security, Electricity shortages, Energy Access, Climate change etc. A capacity addition of 27.07 GW of RE has been reported during the last three & half years under Grid Connected Renewable Power, which include 12.87 GW from Solar Power, 11.70 GW from Wind Power, 0.59 from Small Hydro Power & 0.79 from Bio-power.   Confident by the growth rate in clean energy sector, the GoI in its submission to the UNFCCC on INDC has stated that India will achieve 40% cumulative Electric power capacity from non-fossil fuel based energy resources by 2030 with the help of transfer of technology & low cost International Finance including from Green Climate Fund. As on 30.11.2017, Solar Energy Projects with an aggregate capacity of over 16611.73 MW including 863.92 MW from Solar Roof Top projects has been installed in the country.
Govt. is playing an active role in promoting the adoption of RE resources by offering various incentives, such as GBIs, capital & interest subsidies, viability gap funding, concessional finance, fiscal incentives etc. The National Solar Mission aims to promote the development & use of solar energy for power generation & other uses, with the ultimate objective of making solar energy compete with fossil-based energy options. The objective of the National Solar Mission is to reduce the cost of solar power generation in the country through long-term policy, large scale deployment goals, aggressive R&D & the domestic production of critical raw materials, components & products. RE is becoming increasingly cost-competitive as compared to fossil fuel-based generation. In order to achieve the RE target of 175 GW by the year 2022, the major programmes/ schemes on implementation of Solar Park, Solar Roof Top Scheme, Solar Defence Scheme, Solar scheme for CPUs Solar PV power plants on Canal Bank & Canal Tops, Solar Pump, Solar Rooftop etc have been launched during the last two years.
Various policy measures have been initiated & special steps taken in addition to providing financial support to various schemes being implemented by the MNRE for achieving the target of RE capacity to 175 GW by the year 2022. These include, inter alia,  suitable amendments to the Electricity Act & Tariff Policy for strong enforcement of RPO & for providing RGO; setting up of exclusive solar parks; development of power transmission network through Green Energy Corridor project; guidelines for procurement of solar & wind power though tariff based competitive bidding process, National Offshore Wind Energy Policy notified, Repowering of Wind Power Projects, Standards for Deployment of Solar Photovoltaic systems/ devices, orders for waiving the Inter State Transmission System charges & losses for interstate sale of solar & wind power for projects to be commissioned by Mar’19; identification of large Govt. complexes/ buildings for rooftop projects; provision of roof top solar & 10 percent RE as mandatory under Mission Statement & Guidelines for development of smart cities; amendments in building bye-laws for mandatory provision of roof top solar for new construction or higher Floor Area Ratio; infrastructure status for solar projects; raising tax free solar bonds; providing long tenor loans; making roof top solar as a part of housing loan by banks/ NHB; incorporating measures in IPDS for encouraging distribution CoS & making net-metering compulsory & raising funds from bilateral & international donors as also the Green Climate Fund to achieve the target.
Solar power is a strategic need for India as solar power can potentially save around USD 20 bn. in fossil fuel imports annually by 2030. A sustainable domestic manufacturing industry can save USD 42 bn. in equipment imports by 2030 & create 50,000 direct jobs & at least 125,000 indirect jobs in the next 5 years, besides providing equipment supply security. At the end of this year, India will end its “domestic content requirement” for solar projects that are part of its National Solar Mission, a component of the country’s National Action Plan on Climate Change. A World Trade Organization ruling from last year is to blame. India will continue to expand on solar, but nearly all of those panels might soon be imported from other countries. This is a problem because a key part of India’s enthusiasm for solar was tied to the a desire to develop a new high-tech industry. Instead, as India expands its solar capacity, it could end up reliant on China, which exports panels at bargain-basement prices, to meet its energy needs. Both Indian Prime Minister Narendra Modi & his predecessor, Manmohan Singh, championed solar as a way to connect the hundreds of mns of Indians who remain without electricity to the country’s rapidly expanding grid. In 2015, Modi announced his intention to add 100 GW of solar by 2022, a goal that was initially seen as lofty but that has been helped along by plummeting solar prices. India hasn’t hit its annual targets each year, but has expanded solar rapidly enough that the 100 gigawatt goal remains within reach. The country is now pondering a new target of 175 GW. 
GoI’s embrace of solar has helped the country begin to decrease its reliance on coal. That, in turn, has helped international efforts to confront climate change maintain their momentum; even as the US has abandoned the Paris Agreement. The fact that relatively poor, populous & coal-reliant countries like India & China are increasingly turning to renewables despite the US’s refusal to cooperate are encouraging successes in the face of a major setback.
As originally conceived by Singh’s & Modi’s Govt.s, India’s solar effort would involve mandates that a percentage of the solar panels come from manufacturers based in India; these mandates were the “domestic content requirements” (DCRs) that the WTO found to be overly protectionist. The plan, under the Solar Mission, was that India’s solar industry would grow to meet the demand created by the DCRs, & would eventually be able to make panels that could compete with the cheap & abundant ones manufactured in China, or the technologically advanced ones manufactured in the US. India’s growing solar industry would then create jobs for Indian workers, & a potential export for the country. But in announcing its intention to build a robust solar industry, India became a target for China & the US, the world’s two dominant producers of solar panels who had for years been lobbing complaints back & forth at one another through the WTO, each trying to slap down the other’s policies aimed at protecting their domestic solar manufacturers from international competition. In 2014, the US Govt., under pressure from its own domestic solar manufacturers & green tech investors, filed a complaint against India’s DCRs with the WTO. In 2016, the WTO ruled against India. At the time, India’s joint secretary of new & RE told the trade publication PV Tech that the ruling would “not affect the future course of action”; India’s ambitious plans for ramping up solar generation would move ahead, with or without the DCRs.
But when, in December, the DCRs disappear, the country’s domestic solar manufacturers will have to operate for the first time without Govt. protection assuring a certain amount of demand for Indian-produced panels, & some are worried that this could spell the end of the Indian solar industry. A lot of local CoS, local solar panel manufacturers are going to die out. MNRE is still weighing other policies that could help protect the domestic solar industry but that would not be struck down by the WTO, but they haven’t yet arrived. These Chinese panels are so cheap that they make solar a more affordable option than coal; Indians accuse China of selling solar panels at artificially low prices; prices that are even lower than the cost of producing the panels; in order to maintain its near monopoly on India’s solar market, a practice called dumping. Ultimately, the end of India’s solar protectionism could prove another small step forward for China as it seeks to become a dominant player in providing solutions to climate change; & claims the profits & influence that come along with that dominance. China’s cornering of the solar market is both good & bad news as countries around the world work to meet their commitments under the Paris Agreement. The good news is that China’s solar panels are cheap & abundant, & able to compete with coal in many developing countries. More than any other country, China has been able to turn the fight to avert global catastrophe into an economic opportunity. Increasingly, China is enjoying a virtual monopoly on solar in developing countries, with the ability to control the price of panels, the supply of panels, the type of panels manufactured & the rate at which the technologies in those panels improve. India, an enormous market, could become the latest e.g..

How progressive it is going to be for solar in 2018

Indian solar industry witnessed huge capacity additions & expansions in 2017 globally. Not only China which led the growth in solar with 52 GW, but US, India, Japan, & Germany showed incredible growth trajectory. New solar markets like South Korea, Chile, & Turkey came forward & became GW markets in 2017. Growing awareness & interest in solar within developing countries as well as dominant countries are est. to show even a better result in 2018. In 2018, China is est. to continue to lead the growth; however, US’s present stance (dubious because of US president Mr. Donald Trump) may reduce America’s growth milestones in the New Year. Developing countries investing (more than developing countries-$131bn in 2016) in RE will surely aid RE (mainly solar) to account for more than 30% of total global energy generation by 2022. Although, coal will still be the primary energy source in 2018, RE continuously growing is a strong sign that illustrates future energy scenario. India has already claimed the mantle of third top solar market by overtaking japan. & the country is poised to overtake solar growth in EU by 2022. To reach that milestone, India is focusing on solar parks (more than 50 solar parks are going to be developed), which will add to Indian solar capacity immensely. Policies & initiatives have made India an attractive business platform for the future (India reached 100th place in the list of Business ready countries). With focus on green energy & solar market, business in solar will increase in the country, leading to solar growth. GoI has also announced plans to beef up solar capacity through introducing 20 GW solar capacity projects. Even the tender process is also planned involving 3-6 GW capacity project introduction in Jan-March. New plans from MNRE to award 77 GW solar contract in the year 2018 are est. to give Indian solar industry an incredible boost. Indian solar industry desperately needs focus on project introduction & reducing the time lag between auctioning & awarding the projects. In such a scenario, GoI focusing on projects will bring positive impact for the industry.
Not just utility scale solar development, Indian solar industry is est. to witness improvement in the rooftop solar sector as well. New investment coming in, & Govt. seeking to boost residential rooftop solar growth in 2018, will raise awareness in favor of solar. Estimations of anti-dumping duty imposition on imported solar modules (results are due in 2018) will certainly offer domestic manufacturers in India a level playing field & allow India to control its own solar energy future, thus show incredible growth trajectory in 2018. With the US hesitant to go all in solar (due to US president Mr. Donald Trump’s convictions), India can make a decisive move to claim a larger portion of the solar export market in 2018. With anti-dumping duty imposition in effect (hopefully in 2018) & US slowing down, It is truly a great opportunity for India to focus on domestic manufacturing capacity enhancement, which will establish India as a leader in solar export market again (in FY13-14 solar export stood at $282.58 mn, & in FY16-17- $69.10 mn). As the data & initiatives point, 2018 is going to be a great year for solar. However, there are still challenges to be tackled to unleash & utilize Indian solar potential. Improving the policy landscape & adding new bits to favour domestic solar capacity enhancement, clearing out confusion regarding DCR projects, clarifying GST, stopping PPA re-negotiation, mandating RPO fulfilment, & stabilizing solar tariff will surely help India to harvest on the opportunities that 2018 is here with. Global solar growth clearly explains the future of energy. Moreover, it is the right moment for India to make bold decisions to adopt solar, securing the future of the country.

Indian solar cells & modules manufacture 'obsolete', says MNRE

At a time when the GoI is trying to decide on whether or not the Indian solar cells & modules manufacturers deserve protection by way of anti-dumping duty, the MNRE has said that the cell/module manufacturing capacity in the country is “obsolete”. In a ‘concept note’ for supporting solar manufacture in India, the Ministry speaks of a “direct financial support” of Rs 11,000 Cr & a ‘technology upgradation fund’, for solar manufacture. The Ministry notes that the country has installed capacity for producing 3.1 GW of cells & 8.8 GW of modules (cells are used to make modules). However, “even this capacity is not being fully exploited because of obsolete technology,” the concept note says. Only 1.5 GW of cell manufacture & 3 GW of module manufacture is used. It adds that the existing capacity is mainly of the conventional technology of multi-crystalline Al-BSF (Aluminium-Back Surface Field) solar cells, which have efficiency limitations & that very few players have ventured into the superior PERC (Passivated Emitter Rear Cell) technology. PER cells, which have a light reflecting layer on the rear, are more efficient & cost-effective.
The Ministry has said it would bring in a ‘Technology Upgradation Fund’, borrowing the concept from a scheme of the same name for textile industry. The TUF could be an interest subvention scheme (as it is for the textile industry) or capital subsidy for technology upgradation projects. Apart from providing financial incentives for solar manufacture, the Ministry also proposes to “revive” the ‘domestic content requirement (DCR)’ scheme, which reserved a slice of the market for locally made cells & modules. The scheme was adjudged violative of global trade rules by the World Trade Organization. Today, 1,436 MW of solar projects have been commissioned under the DCR & another 1,000 MW are under construction, but there won’t be any more. However, the Govt. proposes to get central Govt.-owned CoS to set up 12,000 MW of projects using local-made products. The concept note also speaks of capital subsidies to those who set up solar manufacturing capacities, with subsidies indexed to the levels of value addition. Conversely, they could also set up solar power plants to supply the electricity needed for the manufacture, with facilities to bank the power with the grid for later withdrawal. Manufacture of solar panels (also called modules) start with polysilicon, which is made from silicon. Polysilicon is made into ingots, which are cut into wafers. Cells are made with wafers & a string of cells is a module. Today, only modules & cells are made in India, with imported material. At present, the only incentives available for manufacturing these is the Modified-Special Incentive Package Scheme, which is available to all electronic goods manufacturers & implemented by the Ministry of Electronics & Information Technology, but there have been few takers for the scheme.
However, a few CoS have expressed desire to set up manufacturing facilities in India—notably, Trina Solar & Longi, both of China. “If these incentives are seriously implemented & there is clear market visibility of the next five years, then more manufacturers may decide to establish manufacturing units in India,” says Mercom, a RE consultancy.

India Transforms Market for Rooftop Solar

India has a massive need for energy. Its per capita consumption of electricity is less than one third the world average. To meet its target of generating 100 GW of solar energy by 2022, India has installed solar parks on large tracts of unused land across the country. Now, thanks to a new partnership between the World Bank & the State Bank of India (SBI), India’s largest bank, the market for rooftop solar has also begun to take off. Sometimes change comes so quickly it takes time to get to grips with it. One such change is now beginning to take hold in India. Endowed with more than 300 days of sunshine a year, India is making strides towards becoming a global solar superpower. Since 2009, when the country first launched the National Solar Mission, it has installed solar parks on large tracts of unused land across the country. But solar parks need land, & land is scarce in a densely-populated country. Rooftops, on the other hand, hold huge potential. Today, thanks to a new partnership between the World Bank & the SBI, India’s largest bank, the market for rooftop solar has also begun to take off. Tapping the rooftop solar market will be essential for India to meet its massive energy needs. The country has a lot of catching up to do - its per capita consumption of electricity is less than one third the world average. To meet these energy needs, India has set itself the ambitious target of generating 100 GW of solar energy by 2022, forty percent of which is to come from rooftop solar. 

Getting the Financing

Until now, however, it was difficult to breakthrough into the rooftop solar market. Although the business case was strong, & the costs of solar panels were falling dramatically, financing was difficult to come by. In solar plants, the largest capital investment goes toward the installation of solar panels, & must be made upfront. At today’s prices, this amounts to an investment of about Rs. 5 Cr (approx. $ 760,000) to produce one megawatt of power. But banks had no models for such new forms of lending. And even where financing was available, the costs were just too high. Things have now begun to turn around very quickly. Since Jun’17, when the World Bank announced a $625 mn loan to SBI to provide discounted finance for rooftop solar installations on factories & institutions, market response has been overwhelming. In the past six months alone, SBI has approved 575 MW of rooftop solar installations, giving a huge boost to India’s nascent solar rooftop program. SBI has developed financing models that will provide loans at a very competitive pricing with long tenor. Several capacity building measures & awareness programs are also being undertaken to sensitize operating functionaries. One of SBI’s first borrowers was Amplus Energy Solutions, a private RE developer, & an early mover in the field. World Bank-SBI financing has enabled us to borrow at 8.25 percent – down from 12 percent before. This has helped us lower the cost of solar energy we provide our customers. Today, Amplus has around 250 MW of solar plants – either installed or under construction - serving more than 70 customers across 20 states of India. One of Amplus’s first customers was the India Yamaha Motor plant in the Noida industrial belt, across the river from Delhi. The motorcycle manufacturer first began installing solar panels on its Noida rooftops in 2016 to comply with the company’s global energy policy. Today, Yamaha’s Noida facility is one of the largest manufacturing plants in India with a ‘captive’ solar rooftop facility of more than 20,000 solar panels which generate 6.3 MW of power. The change is now beginning to catch on. While large multinational CoS have begun to blaze the trail, others are lining up to follow. Until now, it’s been a hard sell, because changing mindsets takes time. But now I think the market is ready to take off. There may be blips in between, but I expect that in 3-5 years’ time the cost of rooftop solar power will fall to Rs. 2 to Rs. 3 per unit. After all, this is the first time in history that every person can generate her own clean renewable electricity – be it the smallest tea shop or the largest factory or institution. With strong sunshine beating down on rooftops across most of this tropical country, the future of solar power in India is bright indeed.

Rooftop solar market on fire

The country added more rooftop solar power capacity in the last financial year than in the previous four years combined, making it the fastest-growing segment in the country’s clean energy space. During the financial year 2017, some 715 MW of systems were added, up from 227 MW in the previous year, taking the country’s total installed capacity to 1.3 GW (GW, 1 GW = 1,000 MW) according to a report by BNEF. By 2022, the report estimates that the country will have around 9.5 GW of rooftop solar capacity- but that is still substantially short of the Narendra Modi Govt.’s target of 40 GW. This has happened largely because rooftop solar power is now cheaper than commercial & industrial power in all major Indian states, according to BNEF. Besides, costs have halved over the last five years. Overall, because of increased competition & low solar panel prices, setting up rooftop systems have become cheaper than the global average by between 39% & 50% in India. If a mall is purchasing power from (a) grid at Rs8-9 (per unit), going by (the) rooftop model, the power cost will be half of that. So it is a viable proposition. Govt. incentives & policies to push rooftop solar installations have also contributed to the growth over the last year. For instance, the Govt. has held auctions to have CoS set up over 1 GW of rooftop projects in the first nine months of 2017. Meanwhile, the size of installations is getting bigger as well. The average size of a rooftop system has increased from 250 kilowatts (kW) in 2015 to 855 kW in 2018, according to BNEF. This is due to better utilisation of rooftop space & consumers’ willingness to use power generated from their own buildings rather than purchase the power from elsewhere, the report said.

Lagging behind

So far, only 3% of the Govt.’s 40 GW target has been achieved, & more than half the market is concentrated in just six states, BNEF pointed out in its report. Among the reasons for this is a lack of clarity on the “net metering” programme, which allows users to sell surplus power generated from their rooftop systems back to the electricity utility. Today, most of the growth in the rooftop segment is driven by commercial & industrial users. The economics work for them even without net metering, given the fall in costs of installation & reduction in energy prices. On the other hand, the residential segment hasn’t taken off. “The high upfront capital expenditure compared to commercial & industrial (C&I) consumers, a lack of financing options, & cheaper grid electricity for residential consumers with low consumption currently make rooftop PV (photo voltaic) less attractive for residential consumers than their C&I counterparts,” BNEF said.
Net metering is important for residential consumers as their panels create a lot of surplus power during the day when the households themselves draw less power. While net metering is mandatory in many states, it is unregulated in states like Andhra Pradesh, Odisha, Tamil Nadu, & West Bengal, where they only have legally non-binding guidelines. Though the Govt. has come out with net metering policy at lots of states, at the same time, practically, there are challenges in implementing. India’s power distribution CoS, or discoms, aren’t keen on promoting rooftop solar power as that would hurt their finances. Most Indian discoms are owned by the Govt. & suffered cumulative losses of $67 bn at the end of financial year 2015, as per BNEF. There are technological challenges, too. Not many discoms have the systems to allow feeding the power grid with electricity generated on rooftops. During the day, there’ll be sudden spikes of generation; in the evenings, there’ll be a reverse flow. So till (power) storage comes in a much larger way, utilities might find it difficult to manage this.

Solar Manufacturing Scenario

India’s energy imports have risen sharply from USD 43 bn. in 2005-06 to USD 167 bn. in 2013-14. In comparison India’s trade deficit in 2013-14 was USD 139 bn (table 1). Solar power is a strategic need for the country as solar power can potentially save USD 20 bn in fossil fuel imports annually by 2030 & domestic manufacturing can save USD 42 bn in equipment imports by 2030. In the absence of manufacturing, India will need to import USD 42 bn. of solar equipment by 2030 corresponding to 100 GW of installed capacity. Solar manufacturing can also create direct employment of more than 50,000 in the next 5 years assuming local manufacturing captures 50% domestic market share & 10% global market share. Another at least 125,000 indirect jobs will be created in the supply chain India may not be able to utilize its large solar energy resources, if imports of solar panels get impacted due to. Major exporters using their production for their domestic use.. Sudden jump in prices in the future due to supply shortages. Dispute with major suppliers (as evidenced in case of China’s rare earth supply to Japan or supply of gas by Russia to European nations)
Economies of scale results in lower cost & brand building. Skilled manpower gets developed with passage of time. Overall strategy for innovation & exports are developed at an early stage. Appreciation of industry & competitive dynamics. Large domestic market helps in expanding capacity. Capabilities are built to compete effectively in competitive global markets. Strong ancillary industry is created. Clusters for knowledge & infrastructure sharing are developed. Research institutions develop industry linkages & support innovation.
Globally, there are examples of countries providing strategic support to solar energy also supporting solar manufacturing. China has developed ‘solar champions’ in a systematic manner through massive subsidies, low interest loans, grants & easy access to land & utilities. Globally, manufacturing bases are being planned as integrated solar industrial clusters with strong Govt. support. India’s Manufacturing Policy recognizes solar manufacturing as an industry with ‘strategic importance’. However, the policy is yet to have the intended effect:. 40% of the Indian solar cell manufacturers have shut down with industry utilization at only 21%. The industry has suffered due to sudden & sharp price declines due to global over-supply & lack of a level playing field Indian manufacturing costs are higher due to three major reasons:. Lack of scale -Indian factory sizes are only one-fifth the size of a typical Asian factory. Insufficient Govt. support -Other countries have provided massive loans, tax holidays, subsidized utility services, easy access to land & technology support. Underdeveloped supply chain –Indian manufacturers have no access to domestic upstream raw material supplies of polysilicon & wafers The Indian Govt. would be a net beneficiary by encouraging solar manufacturing as jobs would be created & taxes will increase. The Potential Impact by 2024 on NPV basis will be:. Potential loss due to higher prices = USD 851 mn. Direct taxes on manufacturing: Domestic capacity of about 10GW by 2024 = USD 870 mn. Direct taxes on Salaries: Employment generation of about 75,000 by 2024 = USD 90 mn. Impact on taxes owing to GDP increase & factoring tax/ GDP ratio = USD 980 mn The Indian Govt. would be a net beneficiary by encouraging solar manufacturing as jobs would be created & taxes will increase.

Top Ten Solar Panel Brands in India

With rising costs of electricity, reduction in prices of Solar PV Panels & lots of Govt. policy support, buying a Solar PV system has become very lucrative in many parts of India. The interest in buying Solar PV is increasing; however, there is still some lack of awareness about technology, brands, & prices amongst the consumers in the country. Below is the list of top ten solar panel brands available in India. Please note that there are both Indian as well as International brands of Solar Panels available in India. If you are looking for subsidy on your Solar project then you have to go for a brand that is Made in India. Some international brands are selling really high-quality Solar Panels in India, but if you consider some of the top brands in India, then they are quite comparable in quality to the international brands. The list does not include any subjectivity (our personal preferences) but is purely based on data. The data that is from MNRE website which lists the Installed capacity (or in other terms the size of solar panels installed in the country) of various manufacturers. The assumption here is that a brand that has done more work has a better experience & makes better quality panels.
Some of our Indian manufacturers also list in top global manufacturers. The list of top global manufacturers is available via Bloomberg. Vikram & Waaree that are on top of Indian list will also figure in the top global list (as per Wikipedia data). However, it is only the beginning for Solar PV sector in India, & in coming years, we will surely see some more shuffle. In case you are looking for international brands then here are some top international brands that we know are available in India:

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