Sunny days ahead for solar sector

India’s solar power production is around 5,500 MW and is expected to reach 12,000 MW by March, 2017
  India’s power requirement is expected to grow by more than 5 per cent over the next decade, while supply is projected to fall short by 3.6 per cent. Here the alarming fact is that traditional energy sources are not enough to match the pace of growing demand. In fact, the coal fed thermal power plants, which contribute to around 60 per cent of the total power production, is struggling with issues like fuel shortages, rising cost and environmental threat. Low rate of domestic coal production has resulted in import of expensive coal thus enhancing the pressure. Hence, there is a dire need to look for alternate means. In the wake of such a situation, solar power has emerged as the one stop solution to all these challenges.
With abundant sunshine across the country throughout the year, India has always been considered ideal for the production of solar energy. According to government reports, solar installations in the country are set to register near 100 per cent year-on-year growth from 2,133 MW installed in 2015 to 4 GW capacity this year. This shows that India installed roughly the same amount of solar power in the year 2016 that it had done in the previous three years clubbed together. The credit should also go to government’s constant efforts towards promoting solar energy. The union government has set a target of 100 GW of solar generation capacity by 2022, to help meet the country’s power demand and overcome the acute energy deficit.
Seeing this as an opportunity, both domestic and foreign players are trying to tap this sector. Government is also trying to boost this sector with various incentives and benefits. A sum of Rs 5,000 crore was sanctioned for 30 per cent capital subsidy on rooftop installations. Finance Minister Arun Jaitley has allocated Rs 5,036 crore for the renewable energy sector in Budget 2016. There has been a steady decline in solar power prices (cheaper solar panel costs and lower financing cost). All these steps have made this sector quite attractive for investors.
According to reports, solar and conventional energy are expected to achieve cost parity by 2019. This simply means solar power will cost less than or equal to power from conventional sources such as coal. All these factors point to a robust growth in renewable power over the next few years.
Opportunities in the sector The situations are very difference from the ones that existed two decades back. Solar energy makers and marketers have cost effective and durable technology which has made a real big difference. The clean energy cess levied in the budget is an opportunity as it will give a push to solar power.
Currently, India receives an annual sunshine of 2,600 to 3,200 hours which is almost twice as much as that of European countries. Yet renewable energy accounts for just 13 per cent of the total installed capacity. This shows that this is still an unexplored avenue which needs to be exploited. According to a report, globally, about 55 GW of solar capacity is expected to be added in 2015, with Asian countries likely to continue dominating the market. India is being touted to become the fifth largest market for solar energy by 2017.
Current and potential challenges Cost and financing remain key hurdles in the way of realising the 100 GW target. Potential problems with transmission and land acquisition would also act as hurdles in the way of achieving the mammoth target. Availability and cost is expected to be a major obstacle in the case of rooftop solar projects and the government will need to provide a greater push in order to realise the target of 40 GW for rooftop projects. Despite the announcement of the UDAY Scheme, the financial health of distribution companies which are not able to afford solar power remains a key concern for the sector. One of the biggest hurdles faced by Schneider Electric in the Indian solar industry has been the long gestation period of the projects. This is primarily due to land availability-related issues, high capital expenses and low investor confidence in investing in solar. However, the company is now positive about the timelines for project execution due to the initiatives taken by the new government. From the policy perspective, expediting work will now involve shorter timelines due to the integration of the various energy departments, including renewable energy, into one department.
Additional incentives neededPhase one of the National Solar Mission has been quite successful keeping in mind the incentives provided by the government for the solar sector. The continuous push brought the Indian solar market on the international radar and many international organisations are keen to invest in the country now. However we need to keep in mind that achieving the target of 100 GW by 2022 is not going to be an easy task by any means and there is a need to provide a greater push in the form of more incentives from the central or state governments. Furthermore, minimum guidelines for tariff need to be issued and state policies should be in sync with Central ones to promote solar power across India. States with less solar irradiation and higher demand for power should have additional incentives. While there have been differential tariffs for developers with and without accelerated depreciation, tariffs could also be differentiated by project size as larger projects benefit from economies of scale, unlike small projects. Such a step can help promote distributed energy via small projects.
The government ought to incentivise generation of renewable energy and promote smart energy systems too. Policy reforms and other measures are required to create an enabling environment for investments in renewable energy. But it should be done judiciously to ensure a level-playing field for all stakeholders.
Industrial and commercial buildings have been at the forefront of such installation, with residential buildings lagging behind due to the lack of clarity on government support and infrastructural issues. Though government structures have started issuing tenders for rooftop solar installations, considering the fact that rooftop capacity is to contribute 40 per cent (40 GW) of the overall capacity addition target for 2022, the progress so far has been underwhelming. One major question that has emerged is the low tariffs. Experts believe that solar sector might end up in loss if they face same situation of tendering at very low tariffs as in the case of coal thermal projects. This needs to be figured out immediately.
However looking at the environment when everyone is looking towards Sustainable development, solar sector will definitely see an unprecedented growth.
Authored by__
Bhupesh Arora, General Manager – Sales & Marketing, Solar Business, Schneider Electric India

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Sunny days ahead for solar sector

India’s solar power production is around 5,500 MW and is expected to reach 12,000 MW by March, 2017
  India’s power requirement is expected to grow by more than 5 per cent over the next decade, while supply is projected to fall short by 3.6 per cent. Here the alarming fact is that traditional energy sources are not enough to match the pace of growing demand. In fact, the coal fed thermal power plants, which contribute to around 60 per cent of the total power production, is struggling with issues like fuel shortages, rising cost and environmental threat. Low rate of domestic coal production has resulted in import of expensive coal thus enhancing the pressure. Hence, there is a dire need to look for alternate means. In the wake of such a situation, solar power has emerged as the one stop solution to all these challenges.
With abundant sunshine across the country throughout the year, India has always been considered ideal for the production of solar energy. According to government reports, solar installations in the country are set to register near 100 per cent year-on-year growth from 2,133 MW installed in 2015 to 4 GW capacity this year. This shows that India installed roughly the same amount of solar power in the year 2016 that it had done in the previous three years clubbed together. The credit should also go to government’s constant efforts towards promoting solar energy. The union government has set a target of 100 GW of solar generation capacity by 2022, to help meet the country’s power demand and overcome the acute energy deficit.
Seeing this as an opportunity, both domestic and foreign players are trying to tap this sector. Government is also trying to boost this sector with various incentives and benefits. A sum of Rs 5,000 crore was sanctioned for 30 per cent capital subsidy on rooftop installations. Finance Minister Arun Jaitley has allocated Rs 5,036 crore for the renewable energy sector in Budget 2016. There has been a steady decline in solar power prices (cheaper solar panel costs and lower financing cost). All these steps have made this sector quite attractive for investors.
According to reports, solar and conventional energy are expected to achieve cost parity by 2019. This simply means solar power will cost less than or equal to power from conventional sources such as coal. All these factors point to a robust growth in renewable power over the next few years.
Opportunities in the sector The situations are very difference from the ones that existed two decades back. Solar energy makers and marketers have cost effective and durable technology which has made a real big difference. The clean energy cess levied in the budget is an opportunity as it will give a push to solar power.
Currently, India receives an annual sunshine of 2,600 to 3,200 hours which is almost twice as much as that of European countries. Yet renewable energy accounts for just 13 per cent of the total installed capacity. This shows that this is still an unexplored avenue which needs to be exploited. According to a report, globally, about 55 GW of solar capacity is expected to be added in 2015, with Asian countries likely to continue dominating the market. India is being touted to become the fifth largest market for solar energy by 2017.
Current and potential challenges Cost and financing remain key hurdles in the way of realising the 100 GW target. Potential problems with transmission and land acquisition would also act as hurdles in the way of achieving the mammoth target. Availability and cost is expected to be a major obstacle in the case of rooftop solar projects and the government will need to provide a greater push in order to realise the target of 40 GW for rooftop projects. Despite the announcement of the UDAY Scheme, the financial health of distribution companies which are not able to afford solar power remains a key concern for the sector. One of the biggest hurdles faced by Schneider Electric in the Indian solar industry has been the long gestation period of the projects. This is primarily due to land availability-related issues, high capital expenses and low investor confidence in investing in solar. However, the company is now positive about the timelines for project execution due to the initiatives taken by the new government. From the policy perspective, expediting work will now involve shorter timelines due to the integration of the various energy departments, including renewable energy, into one department.
Additional incentives neededPhase one of the National Solar Mission has been quite successful keeping in mind the incentives provided by the government for the solar sector. The continuous push brought the Indian solar market on the international radar and many international organisations are keen to invest in the country now. However we need to keep in mind that achieving the target of 100 GW by 2022 is not going to be an easy task by any means and there is a need to provide a greater push in the form of more incentives from the central or state governments. Furthermore, minimum guidelines for tariff need to be issued and state policies should be in sync with Central ones to promote solar power across India. States with less solar irradiation and higher demand for power should have additional incentives. While there have been differential tariffs for developers with and without accelerated depreciation, tariffs could also be differentiated by project size as larger projects benefit from economies of scale, unlike small projects. Such a step can help promote distributed energy via small projects.
The government ought to incentivise generation of renewable energy and promote smart energy systems too. Policy reforms and other measures are required to create an enabling environment for investments in renewable energy. But it should be done judiciously to ensure a level-playing field for all stakeholders.
Industrial and commercial buildings have been at the forefront of such installation, with residential buildings lagging behind due to the lack of clarity on government support and infrastructural issues. Though government structures have started issuing tenders for rooftop solar installations, considering the fact that rooftop capacity is to contribute 40 per cent (40 GW) of the overall capacity addition target for 2022, the progress so far has been underwhelming. One major question that has emerged is the low tariffs. Experts believe that solar sector might end up in loss if they face same situation of tendering at very low tariffs as in the case of coal thermal projects. This needs to be figured out immediately.
However looking at the environment when everyone is looking towards Sustainable development, solar sector will definitely see an unprecedented growth.
Authored by__
Bhupesh Arora, General Manager – Sales & Marketing, Solar Business, Schneider Electric India

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