Editor's note

Power Watch India - - NEWS -

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.

R Srinivasan

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