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.

GST- How will the renewable sector deal with it?

India has been increasingly focusing on renewable energy, which has garnered considerable global interest; however, according to latest findings, there is a high probability that the new GST (Goods and Services Tax Bill) regime will raise the cost of setting up renewable energy projects in the country by up to 20%. It has been learnt that the Ministry of New & Renewable Energy (MNRE) will share the findings of the report with the Department of Revenue, requesting an exemption. The study commissioned by the ministry compiles findings that lead to the revelation that the implementation of the GST will increase the cost of setting up of all categories of renewable energy systems, be it solar, wind, or biomass, or even small hydro power projects.

The draft findings, which have been reviewed by Economic Times, serve to show that the cost of Solar PV-Grid could rise by 12-16% and that of Off-Grid systems by 16-20%. Wind energy systems could face an increase of 11-15% in tariff/cost of setting up and operations, and given that it is already going through a dull phase, this drastic increase will not bode well for it at all. Besides, the hybrid and solar combination projects will, in all likelihood, face an increase of 11-17%. The major factors that will lead to an adverse impact on the cost of renewable energy include removal of exemption, increase in tax rates, and removal of statutory norms. The ministry has put forward its argument that a sudden increase in cost would result in policy disruption, scare away new investors, and also make it difficult to retain existing investors.

100% tax holiday on the earnings for 10 years, concessional excise and custom duties, are some of the various fiscal incentives that the renewable energy sector currently enjoys. However, in the new GST regime, all these incentives will come to an end. With over $4 billion lined up for investments in India’s solar industry, its viability depends largely on exemptions continuing on related equipment to power 4.8 GW of electricity generation. Service tax is also likely to increase to 18%, thus leading to a 5% rise in operation and maintenance charges. Developers are keeping their fingers crossed, with the hope that a standard GST rate will not be taken into consideration for projects that have bid at high tariffs. Indian renewable energy development has to be given a big boost in order to meet the targets of the Government by the end of the decade. 

Solar Power in India-A new beginning in 2016

June 2015 saw Prime Minister Narendra Modi revising India’s solar power target from 20,000 MW to 100,000 MW by 2022. India currently has a total of 5547 MW grid-connected solar energy projects. Estimates reveal that India requires Rs. 6 trillion to escalate the capacity to 100GW. Recently, the Ministry of New and Renewable Energy said that India will add 3790 MW of solar power capacity by March 31,2016 to take the total installed capacity in India to 9038 MW. The Ministry submitted a status report that lays out the implementation of various schemes which will enable the meeting of the target by 2022. According to the Ministry’s statement, till January 31, a total of 5248.21 MW has been installed, with the maximum capacity being in Rajasthan and Gujarat coming a close second.

Of the new capacity that will be added by the end of this year, 322 MW will be added in Rajasthan, 281 MW in Telangana, and 276 MW in Tamil Nadu. The report also stated that tenders have been prepared till January 1 to add 15,177 MW of solar capacity in 2016-17. Tenders for another 4431 MW of projects are also expected to be ready by the end of the current fiscal year. If the projects reach fructification, by April 1, 2017, India’s solar power generation capacity will stand at 21,199 MW. Raj Prabhu, CEO and Founder of the Mercom Capital Group, was recently quoted saying that the sector of solar power in India has finally emerged out from a state of hibernation. The proof of it can be found in the fact that after three years of remaining at a stagnant level, solar installations in 2015 increased by 142% and 2016 and 2017 are expected to witness further growth in this regard.

Welspun Energy Pvt. Ltd (WEPL) is a leading independent developer of renewable energy projects. Within this year the organization will have achieved 1 GW of solar and wind commissioned capacities. ABB in India and Welspun Energy have together installed about 700 MW of solar photovoltaic projects in numerous Indian states like Punjab, Rajasthan, Gujarat, Maharashtra, Karnataka, and Tamil Nadu. The company also plans to participate in government’s program of setting up 4000 MW solar ultra mega power projects. The pipeline of state level projects that are to be commissioned through 2016 looks strong, and in the first quarter of 2017 will expectedly witness a significant capacity of addition through central government allocations. With Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka contributing almost 80% of all new capacity addition in calendar year 2016, the utility scale solar market seems to be well on its way to meet the target for the next financial year. 

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. 

Top 5 Countries That Have Set New Benchmarks In Renewable Energy

The renewable energy domain has been making incredible progress across the globe in recent years. For example, solar energy generation capacity is on the upswing, wind power is blowing strong across water and land, while the crucial battery storage technology has improved rapidly allowing the clean energy generated to be stored for use when needed

But which countries are making the most progress in the global race to convert to renewable resources? Here’s a close look at the top countries that achieved notable progress in the renewable energy space in 2014 and the beginning months of this year.

USA

North America leads the world in terms of recently announced energy storage projects.

Residential solar prices are a in a freefall throughout the country.

Energy storage facilities estimated to grow 10x in five years

States like California have taken the lead by pushing for a mandatory 50% renewables by 2030 Renewables account for an impressive 98% of new energy distribution.

Germany

Electricity output from renewables has grown eight times since 1990, latest data suggests a huge shift towards clean energy taking place.

German battery maker BMZ, will be quadrupling its production capacity to roughly 5 GWh of energy storage capacity annually by the year 2020

Germany plans to abandon all nuclear power by 2020 and has announced new 150MW ground-mounted solar energy projects towards this end.

The country has invested approx 30 billion Euros in offshore wind energy projects.

India

Solar power is likely to constitute about 25% of India’s total power generation capacity by 2022.

The government has also announced 100 GW wind energy capacity by the same year.

Rajasthan is likely to witness 40 GW of solar capacity development in keeping with India’s mission to possess 100 GW solar power generation capacity by 2022. Assuming all developers adhere to their states commitments, Rajasthan alone is likely to account for nearly 40% of this target.

India is gearing up to welcome approx 750 MW facility which is coming online soon.

Indian Railways, the fourth largest rail network in the world has joined the renewable bandwagon and plans to create a 1 GW solar plan

China

China has put a cap on coal after smog levels in the country reached alarming levels.

It has already installed approx 5.04 GW in the first few months of this year.

China’s offshore wind sector capacity has increased by approx 500%.

5GW of distributed solar to be available in 2015

United Kingdom (UK)

Sales of eco-friendly electric cars in the UK have recorded a 300% rise.

Estimates for solar energy capacity have also jumped by approx 4%.

57 MW of solar power has already been connected in the UK.

With wind costs on the decline, UK has planned a 400 MW offshore wind programme, headed by a proposed 1.2 GW offshore wind project.

Welspun Renewables has pioneered solar and wind power solutions that have set new industry benchmarks for their sheer size and installed capacity.

Tamil Nadu, Mah Ahead In Wind Power Generation

Wind-Power_Generation

Wind energy in India has a proven track record with 23,762 MW of installed capacity by the end of last financial year (31stMarch 2015), up from just 1,667 MW of installed capacity in year 2002.

A huge chunk of capacity augmentation took place in 2011-12 with 3,197 MW being added during the period. Further, tax benefits including Accelerated Depreciation and Generation Based Incentive (GBI) have further strengthened the growth of the wind energy sector in the country.

As per the present scenario, the wind energy distribution scenario varies across India. Southern and western states which boast of the highest wind velocity have the maximum wind capacity. Tamil Nadu is the leading state in terms of wind installations with an impressive 33% share in India’s overall installed wind capacity. Wind power plants in Tamil Nadu have generated 82 billion units cumulatively till the year 2013-14.

Other leading Indian states with the highest wind energy generation (Cumulative in BU) include:

Maharashtra (28)
Gujarat (25)
Karnataka (24)
Rajasthan (15)

Private sector investments in the sector are booming given the buzz surrounding wind energy in India. As per a report prepared by the Credit Rating Information Services of India Limited (CRISIL), India’s wind energy sector has the potential to attract approx INR 1 lakh crore of investments by 2020, if the tariff costs of wind energy continue with their downward spiral.  CRISIL has predicted a 4 GW of wind energy capacity addition per annum over the next five years.

The Government of India has reiterated its intention to persist with the accelerated depreciation and other benefits accorded to the sector to fuel the overall growth of the renewable resources sector. In addition, the National Wind Energy Mission with its emphasis on the development of offshore wind energy is also in the pipeline, which is also expected to have a positive impact on the growth of the wind energy sector.

Developing wind energy is an important facet of the Indian renewable energy development initiative with the nodal Ministry of New and Renewable Energy (MNRE) estimating approx 103 GW of wind energy potential. Recently India has set itself a target of 60 GW wind capacity addition by 2022, as part of the bold initiatives by the central government which is looking at renewable energy as a means to secure energy security and help the power sector to reduce its harmful GHG emission levels.

Quite clearly renewable energy development is high on the government’s agenda and wind energy will play a prominent role in our journey towards being a zero-carbon based economy over the next decade.

Welspun Renewables has developed some of the world’s largest and most efficient wind and solar power plants pan-India.