Solar installations are expected to reach 64.7 GW in 2016 up from 57.8 GW forecast for 2015 and the largest markets in 2016 will be China, US and Japan, as per a Mercom report. India has reached 2.8 GW in solar installations year-to-date and cumulative installations have reached 8.1 GW as of August 2016, it said. As per its forecast, about 4.8 GW of solar energy capacity is expected to be installed in 2016. But it cautioned that while solar installations and its share of energy generation have picked up momentum, discoms continue to be a drag on the sector in view of their reluctance to purchase solar in light of low power demand and cheap power availability on the exchanges. It called upon the centre to address the issue immediately to restore confidence among developers and investors.
In a recent solar development, the World Trade Organisation (WTO) ruled against India’s domestic content requirement (DCR) policy following a dispute raised by the US. The US argument is that the DCR under India’s solar programme violates global trading rules by discriminating against imported solar cells and modules. At this juncture, India pointed out violations of some WTO provisions by US in its own renewable energy sector and said that about eight US states (Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota) support their renewable sector with subsidies and domestic content requirements.
A US statement said that US solar exports have fallen by more than 90% since India implemented DCR rules. Mercom said, “The reason for this fall has more to do with competition from cheaper Chinese panels than DCR rules. Chinese panels are being sold in India at the cheapest prices anywhere in the world - at or below $0.39 (~Rs.26)/watt.”
Two examples here to put things in perspective - Eight out of the top 10 solar module suppliers in the Indian market are now from China as against four last year, as per consulting firm Bridge to India. Also in 2015, 80 per cent of the approximately 161 million imported solar panels were from China.
Commenting on WTO’s impact, Mercom said that in the short term, this will affect manufacturers who are overly dependent on the DCR market but in the long term, the effect should be minimal, as DCR projects are a small part of the projects auctioned and that manufacturers will now have clarity and can adjust their strategy accordingly in order to compete.
At this crucial juncture, India should support local manufacturing companies, without running afoul of WTO rules, especially in view of its energy security needs even while reducing the carbon footprint so that we could look forward to sunny days ahead.