Challenges of solar IPPs in India

Solar Energy in India

A pertinent question that has been raging in the field of renewable sector is: Is India’s 2022 solar target of 100 GW for real? It may be an ambitious number but definitely not unattainable. Solar fundamentals are so compelling in India that the sector is bound to grow gigantically with India likely to become one of the largest solar markets globally in the next 3 years. India is already well on its track to enter the top five solar markets globally. By changing RPO (Renewable Purchase Obligation) targets (solar specific) for the year 2022 to 10.5% from 3% of all consumption of power in India which is yet to be ratified as per the Electricity Act of 2003 provisions,  India has plans to raise its solar capacity to 100 GW by 2021 from 20 GW in 2020. The 100 GW target has been divided in a 60-40 ratio between utility scale and rooftop and small projects respectively.

Both state and central governments have released several policies and schemes for accelerating the development of solar projects. The Centre has taken the lead with the National Solar Mission (15 GW worth of projects by the year 2019) and other initiatives like the policy related to solar parks and an interest rate subvention scheme. Many states, such as Andhra Pradesh (5 GW), Telangana (5 GW), Maharashtra (7.5 GW), Tamil Nadu (3 GW) and Karnataka (2 GW) have followed with massive targets. There will be several challenges in the way of accomplishing these plans, including land acquisition, project financing and transmission woes. However, the biggest hurdle will center on the enforcement of RPOs and the poor bankability of India’s DISCOMs or distribution companies. Since electricity is a recurring topic of discussion, i.e., the center and the states both legislate on it, the states have the option to not take into account the central government directives.

Growth of rooftop solar power generation majorly depends on its financial competitiveness vis-a-vis grid power. The government has of late announced encouraging financing initiatives to improving availability and cost of debt financing to go along with wide ranging net-metering policies. But experts are of the belief that these measures may not be anywhere near sufficient to reach the rooftop solar target of 40 GW. However, keeping this in mind, the overall outlook for solar energy in India is immensely positive and it is further complemented by powerful underlying fundamentals such as the increasing cost of conventional power, environment based concerns, lowered costs of solar power overall, huge irradiation, a high power deficit and the ability of solar to quickly bring power generation capacity online. These factors coupled with several state and central government initiatives should contribute towards making India one of the largest solar markets in the world. 

Make in India and its impact on solar power

Prime Minister Modi launched the Make in India program in September 2014 as part of a larger set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. India’s power generation has struggled to keep pace with its rapid economic growth, rise in population, and rampant urbanization. Despite an installed capacity of over 260 GW, energy demand has always surpassed supply by a wide margin, and with the 12th Five Year Plan (2012-17) that targets an annual GDP growth of 7-8%, there has to be a considerable increment in energy supply to keep up with the ever-increasing requirement.

There has to be a substantial expansion in energy infrastructure, whereby solar energy in India can continue to be a key driving force of its economic policy. Though presently both wind and solar technologies are manufactured in India, the former is better established with a capacity of over 10 GW, while solar manufacturing has only about 800 MW on offer. As the country gears up to raise its renewable energy capacity, it is imperative to recognize the need for a skilled workforce. The current population growth is such that India needs to create 10 million new jobs every year. However, although the renewable energy sector promises to a high potential to create new jobs, it also brings with it the need for skilling, which is not only urgent but also alarmingly unmet.

As India hosted the first Make in India Week, focusing on increasing domestic manufacturing in India, Piyush Goyal, the minister for power, coal, and new and renewable energy, spoke about how the country needs to have end-to-end solar manufacturing. To fructify the national renewable energy projects, there has to be recognition of the importance of strengthening domestic manufacturing. Goyal has promised that in the 18 months, solar manufacturing in India was likely to get significantly cheaper. The objectives of the Make In India initiative can be furthered only by strengthening domestic manufacturing of solar panels and wind turbines, at competitive prices. Besides, it will also provide an impetus to the solar and wind industry.

It is high time for a transition to an energy future in which renewable energy is a significant component. The best part is the immense political support that is being extended to this sector. With access to high-quality and relevant training programmes, coupled with the support to the domestic solar and wind manufacturing market, it can be expected that the synergies have finally been identified, which will go a long way in determining the pace of the renewable energy scale-up in India. As a part of one of the fastest growing conglomerates in the country, Welspun Renewables is invested in a sector whose potential return on investment is expected to be one of the highest under the Make in India regime.

Can Solar Energy In India Target Be Achieved?

With multiple solar projects in India set to take off, India is set to almost double the generation capacity targets in the ongoing financial year and also exceed its target of contributing an additional 1.8 GW of extra capacity during this year. As per statistics, India will end the present financial year with total solar power generation capacities of an impressive 6 GW. In February 2015, operational capacity stood at just 5 GW for India. Performance of solar PV plants developed under the aegis of the National Solar Mission has exceeded expectations as well. This should boost the ministry of new and renewable energy (MNRE) that is targeting an addition of 100 GW of solar power by the year 2022 as part of the National Solar Mission. The Solar Mission had targeted an addition of 1.8 GW for the fiscal year which would take total capacity to approximately 5.5 GW. For the 2016-17 fiscal, the country has a target of 7.2 GW in extra capacity while this should go up to 10 GW for the 2017-18 fiscal.

Rooftop solar projects should add 40% of the 100 GW targeted by the year 2022 while 57% will be added through solar farms and other big ticket projects. This capacity addition will also encompasses solar thermal plants and dry or photovoltaic plants. Most installations till date have been created with the help of photovoltaic (PV) technology which does not require high maintenance owing to fewer moving components. The target of the National Solar Mission for the first year will be met due to several Solar Energy In India that have been kick started by private organizations.

Rajasthan is the leader in terms of overall solar power generation capacity in the country with 1.26 GW while Gujarat and Madhya Pradesh come second and third with 1 GW and 0.7 GW respectively. Maharashtra and Andhra Pradesh follow with 378 MW and 253 MW respectively. Andhra Pradesh should take second position in the next fiscal since it has already sanctioned subsidies for 3, 500 MW capacity from the Centre. Subsidies are also being given by the Government to big solar parks to the tune of INR 20 lakh per MW. The costs involved in building solar parks is approximately INR 5 crore which is one of the lowest globally. This has certainly contributed towards helping India meet the ambitious National Solar Mission target for this year and stay on course to meet the next batches of targets.

Welspun IPP is a leading player when it comes to solar and wind energy and has already developed a path breaking 151 MW plant at Neemuch. The company aims at being one of the frontrunners of India’s growth strategy in the sector.