Is India serious about 100GW of solar power by 2022?

17 Jan 2018

Ever since the solar tariffs started coming down drastically on account of aggressive reverse bidding coupled with several global factors, the unfolding scenes have not been very reassuring. On the one hand, there appears to be a sense of complacency (or is it overconfidence?) as far as the government is concerned. On the other, there are disquieting incidents such as utilities going back on negotiated power purchase agreements and imposition of duty on imported solar panels. That the indigenous solar industry must be encouraged cannot be overemphasised, if we were to draw maximum benefits from a programme of this scale. For this to happen, the country needs to graduate to policies that facilitate and incentivise the industry to acquire latest technologies, state-of-the-art manufacturing setup, and economic scales of operation. The key is to focus on the complete value chain, on components, balance of systems, and products as well.

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While we in India must feel proud having achieved a solar power capacity of over 15GW so far - and justifiably so - it would be useful to keep the goal of 100GW by 2022 too in sight.

Only a constant push to reach there would guide us which path to tread, and how.

At this juncture, there is a need, therefore, to take a brief pause, and reflect with a view if there was anything that could have been done better - had it been dealt with differently, would have brought the sector in altogether different trajectory?

Ever since the solar tariffs started coming down drastically on account of aggressive reverse bidding coupled with several global factors, the unfolding scenes have not been very reassuring. On the one hand, there appears to be a sense of complacency (or is it overconfidence?) as far as the government is concerned. On the other, there are disquieting incidents such as utilities going back on negotiated power purchase agreements and imposition of duty on imported solar panels. That the indigenous solar industry must be encouraged cannot be overemphasised, if we were to draw maximum benefits from a programme of this scale.

For this to happen, the country needs to graduate to policies that facilitate and incentivise the industry to acquire latest technologies, state-of-the-art manufacturing setup, and economic scales of operation. The key is to focus on the complete value chain, on components, balance of systems, and products as well.

Presently, the unease is due to sudden, and at times, seemingly, arbitrary reversal of stated policies. And this is the case when both proliferation of solar energy and ease of doing business in India have been accorded top priority by the prime minister. There is an urgent need to realise that. Forget about the ambitious targets, it would be difficult even to implement already approved projects on ground if such uncertainties persist. A perceived risk in consistency and long-term visibility of policies could prove detrimental to the further progress of the programme. The more worrying aspect pertains to apparent lack of coordination among different government ministries and departments.

And no, it is not Union versus state matter. Rather different central ministries seem to be working at cross-purpose. The case of import duty on solar panels is one such example where the Ministry of New and Renewable Energy has been trying to convince ministry of finance but post facto.

It also appears that the point of view of the project developers and investors are not being considered seriously. The fact is that the whole solar power programme has reached a stage, where it is today, due to the faith reposed by the private sector – from within and outside India –  in the government intentions and policy environment.

As per the Organisation for Economic Co-operation and Development (OECD), "Public governance is important for investors and their businesses. It helps build trust and provides rules and stability needed for planning investment in the medium and long term". The tariff biddings, for instance, are carried out on the basis of certain existing policy formulations. And we know how aggressively bidding is done nowadays. But what happens if after the award of projects at that tariff level some of the key conditions change? After agreeing to supply electricity at record low tariffs, the affected parties are left to fend for themselves, running from pillars to posts, and then to lengthy sojourns at tribunals and courts. Definitely not an encouraging signal.

The industry bought the grand vision of 175GW and a variety of players, including many start-ups, geared up accordingly. The overall endeavour, therefore, should be to ensure that we ourselves do not end up erecting the barriers where there were none.

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Solar energy
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