- India would need to install 10 GW in the current financial year and thereafter more than 15 GW every year to be able to achieve its 100 GW target, states a new ASSOCHAM report
- The country has shifted its focus from indigenous manufacturing while government policies curbing foreign imports are not helping the industry
- Quality-wise, domestically produced modules could do better, but this would need regulatory support along with significant investment, the report claims
- The country allows for 100% Foreign Direct Investment (FDI) in the sector, but the current level is less than 20%
- ASSOCHAM proposes to bring every stakeholder on the same table to better define policies and frameworks for the Indian solar industry
If India wants to achieve its 100 GW solar power target by 2022, it needs to install 10 GW in FY 2017-18. Thereafter, additions should be more than 15 GW annually every year. The country has already fallen short of its targeted 17 GW of solar power capacity in FY 2016-17, installing 5.5 GW during the entire year (see India Installed Over 5 GW In FY 2016-17). These claims have been listed in the latest report by the Associated Chambers of Commerce & Industry of India (ASSOCHAM) and NEC Technologies.
Titled ‘Capacity Building & Skill Development’, the report cites a number of challenges that the industry may face or is facing currently to realize the target. It points out that “the focus has slightly shifted from indigenous manufacturing and policies to curb the imports from other countries (for instance China) are not benefiting domestic manufacturing.”
It believes that the “the solar panels used in India are not designed to handle very high temperatures and dust prone conditions, and because of this, module damages are common and result in loss in energy generation.”
Another issue is that the government has placed solar in the 5% GST tax slab, while reducing taxes in coal to 5% from the previous 11.69%. This is not helping the solar industry at all and “may lead to a slow adoption of solar in the Indian energy sector.”
Investing in good quality battery energy storage systems makes sense for a power generation source that is variable by nature. However, battery packs are extremely costly, the report points out. This impacts the reliability of grid integration system, for small residential, commercial rooftop systems and large utility-scale solar power stations.
A big issue is also the poor financial condition of distribution companies, which is leading to financial challenges in the Indian solar industry. For 100 GW of solar installations by 2022, India needs investment worth 6,000 billion INR ($93.6 billion). But foreign investment remains at less than 20% even though the sector is open for 100% foreign direct investment (FDI).
Another concern is the lack of uniform policies across different sectors and their implementation, the report states. Smooth land allotment continues to act as a bottleneck as approvals from multiple agencies is a task.
But ASSOCHAM not only points to issues, it also comes up with a proposal for a solution: “The Indian solar industry is growing at a rapid pace and requires an integrator to coordinate with private companies and public sectors. There is a need of a consolidator to bring every stakeholder on the same table to better define policies and frameworks for the Indian solar industry. Public-private partnerships (PPPs) may offer an effective way to promote and implement rooftop solar PV projects, particularly in India,” stated ASSOCHAM.
A recent Parliamentary Panel report stated that India needs to reconsider its rooftop solar power capacity target of 40 GW by 2022 (see Govt Panel Finds Rooftop Target ‘Unrealistic’).