The gov­ern­ment, even while abid­ing by the WTO rul­ing, is plan­ning a scheme to sub­sidise both lo­cal as well as for­eign man­u­fac­tur­ers, says R Srinivasan.

Power Watch India - - CONTENTS -

The coun­try has set an am­bi­tious 100 GW by 2022 so­lar tar­get, out of which the rooftop seg­ment tar­get is 40 GW. As per a Bridge to In­dia report, over the past two years, the rooftop so­lar mar­ket in In­dia has grown at a com­pounded an­nual growth rate (CAGR) of 90%. As of 31 March 2016 the cu­mu­la­tive in­stalled ca­pac­ity stands at 740 MW. While Tamil Nadu leads in in­stal­la­tions due to high con­sumer aware­ness and lack of re­li­able grid power, Gu­jarat is in sec­ond place since here the rooftop mar­ket has been pri­mar­ily driven by state gov­ern­ment ini­tia­tives and Ma­ha­rash­tra is third since it is driven by high con­sumer tar­iffs across all con­sumer cat­e­gories.

In fact the so­lar rooftop trend has caught on in schools, ed­u­ca­tional in­sti­tu­tions, air­ports, ports and even on­line mar­ket­place Snapdeal ware­houses. The Min­istry of New and Re­new­able En­ergy is even rop­ing in re­li­gious gu­rus to en­sure that their ashrams are pow­ered by so­lar en­ergy. In a re­cent press re­lease, Snapdeal, In­dia’s largest on­line mar­ket­place, an­nounced plans to utilise so­lar en­ergy in a big way as an in­te­gral part of its daily op­er­a­tions. The green ini­tia­tive will kick off at Snapdeal ware­houses and fol­low­ing this ini­tia­tive, the cen­tres will de­crease power con­sump­tion by pro­duc­ing nearly 1 MW at peak through so­lar pan­els and gen­er­ate 1.5 mil­lion units per year. Even the V O Chi­dambara­nar Port has inked a Mem­o­ran­dum of Un­der­stand­ing with So­lar En­ergy Cor­po­ra­tion of In­dia (SECI) to in­stall a five MW so­lar power plant at an es­ti­mated cost of Rs 30 crore, which is ex­pected to be com­pleted by March 2017. The ex­pected an­nual power gen­er­a­tion would be 7.5 mil­lion units and re­duc­tion of car­bon emis­sions from the project will be 8,025 met­ric tonnes per year. A re­lease said that as part of the Green Port ini­tia­tive, it has al­ready com­mis­sioned a 100 KW so­lar power plant at the port’s ad­min­is­tra­tive build­ing in Au­gust.

In view of the in­creas­ing rooftop so­lar trend and queried about whether data cen­tres (huge power guz­zlers that usu­ally have large rooftop space) could em­u­late IBM’s ex­am­ple and adopt so­lar, Aditya Ravin­dran, Con­sul­tant, En­ergy Ver­ti­cal, Feed­back Busi­ness Con­sult­ing Ser­vices Pvt Ltd said,

The com­mer­cial es­tab­lish­ments (in­clud­ing ed­u­ca­tional in­sti­tu­tions, ware­houses, su­per­mar­kets/malls, ban­quet halls etc) have large rooftop space and pay some of the high­est tar­iffs (up to Rs 12 per unit in some cases) for power from the dis­coms. Thus, rooftop so­lar PV in­stal­la­tions which can sup­ply power at Rs 5-7 per unit give them a huge relief in terms of cost of power and pay­backs as at­trac­tive as 3 years in some of the states. For global com­pa­nies like IBM, it not only makes good busi­ness sense to adopt cheaper so­lar power, but it also falls in line with their global cor­po­rate pol­icy of

“go­ing green”.

More­over, de­vel­op­ers in the rooftop so­lar PV seg­ment have been very ac­tive. There is a good amount of com­pe­ti­tion and a large area of rooftop space still avail­able in the coun­try giving this busi­ness a lot of po­ten­tial to be tapped.”

Asked to com­ment on how data cen­tres too could adopt so­lar, an In­dia Power spokesper­son said, “It is a good ini­tia­tive taken by schools, ed­u­ca­tional in­sti­tu­tions, on­line mar­ket­place Snapdeal ware­houses and ashrams to in­stall so­lar for their power re­quire­ments. This will not only cre­ate aware­ness but also pro­mote so­lar among lo­cal peo­ple and chil­dren. Data cen­tres have large rooftops which can be used for in­stal­la­tion of so­lar and the power pro­duced by them can be utilised for their own use. The Gov­ern­ment of In­dia has set up a tar­get of achiev­ing 40 MW so­lar rooftops by the end of 2022. If data cen­tres are ready to in­stall, they not only re­duce their power con­sump­tion but also re­duce GHG gas emis­sions. The data cen­tres can em­u­late IBM’s ex­am­ple and adopt so­lar in or­der to re­duce green­house gas emis­sions by us­ing so­lar power. Due to con­strained sup­ply of coal and the poor fi­nan­cial con­di­tion of In­dian util­i­ties, the price of elec­tric­ity has been in­creas­ing over the last few years. This in­stal­la­tion of large rooftops will act as a boon for data cen­tres in or­der to re­duce their con­sump­tion of units and billing. The cost of so­lar power gen­er­a­tion has been fall­ing con­sid­er­ably. Com­mer­cial and in­dus­trial con­sumers, as such, face the high­est power tar­iffs among all con­sumer groups. It be­comes nec­es­sary for In­dian IT com­pa­nies and data cen­tres to take sev­eral mea­sures in or­der to re­duce their car­bon foot­print and switch, at least par­tially, to clean en­ergy sources.”

Low tar­iffs

In the last few years many multi-na­tional and do­mes­tic so­lar power plant de­vel­op­ers have won projects through com­pet­i­tive bid­ding and are of­fer­ing elec­tric­ity tar­iffs much lower than

Rs 5 a unit. It is felt that th­ese low tar­iffs have not yet ad­versely im­pacted the en­gi­neer­ing, pro­cure­ment and con­struc­tion (EPC) firms or so­lar panel mak­ers. Asked if the so­lar in­dus­try will feel the heat of low tar­iffs in the years to come, Aditya Ravin­dran said,

De­vel­op­ers have been the com­mu­nity fac­ing a large part of the trou­bles from the low tar­iffs as they are not able to suc­cess­fully en­sure the fi­nan­cial clo­sure of projects with low tar­iffs. Even if they man­age to es­tab­lish fi­nan­cial clo­sure and achieve com­mis­sion­ing, their fi­nan­cial prob­lems, if any, would come to the fore only when they com­mence com­mer­cial op­er­a­tion. Mean­while, there is so­lar ca­pac­ity ad­di­tion still go­ing on suc­cess­fully at rel­a­tively higher tar­iffs, and this is keep­ing the EPC com­pa­nies busy for now. Larger EPC firms are ac­tively pur­su­ing busi­ness op­por­tu­ni­ties in for­eign ter­ri­to­ries in­clud­ing South East Asia and Africa.”

About whether the so­lar in­dus­try will feel the heat of low tar­iffs in the years to come, an In­dia Power spokesper­son, said, “The so­lar in­dus­try is not go­ing to feel the heat of low tar­iffs in the years to come. The main rea­sons are low cost tech­nol­ogy and the cost of debt is com­ing down. In­dia has an am­bi­tious plan to add 100 gi­gawatts (GW) of so­lar power by 2022. Most of the big in­ter­na­tional play­ers such as For­tum, SoftBank, First So­lar etc, are look­ing for an op­por­tu­nity to in­vest in so­lar.”

So­lar parks

The Min­istry of New and Re­new­able En­ergy (MNRE) plans to seek the Union Cab­i­net’s nod for dou­bling the ca­pac­ity of so­lar parks to 40,000 MW from 20,000 MW. Also the coun­try is to in­stall 700 MW of rooftop PV in 2016 – all of which sounds great on pa­per. Asked to elab­o­rate on chal­lenges that the in­dus­try may en­counter along the way and for sug­ges­tions, Aditya Ravin­dran said,

Re­duc­ing the tar­get of rooftop so­lar PV and ap­por­tion­ing it to so­lar parks has been a wise move. Although, there is good ac­tiv­ity in the so­lar rooftop space, the scale of th­ese projects is too small to help achieve the erst­while tar­get of 40 GW. On the other hand, so­lar parks are com­plete op­po­sites of this. Th­ese are large ca­pac­ity projects, and 40 GW of ca­pac­ity ad­di­tion could be done with much less num­ber of projects.

The only chal­lenge be­fore such projects would be to as­sess and counter the im­pact of mas­sive vari­abil­ity in gen­er­a­tion on the re­gional power grids.”

Asked to elab­o­rate on chal­lenges that the in­dus­try may en­counter along the way, an In­dia Power spokesper­son said, “In­dia has em­barked on an am­bi­tious tar­get of 100 GW of so­lar power by 2022. The tar­get seems dif­fi­cult but it can be achieved. In or­der to achieve it, many chal­lenges will need to be over­come. Some of th­ese chal­lenges are:

1. Lack of pol­icy and reg­u­la­tory sup­port 2. Is­sues with re­spect to grid au­toma­tion and sta­bil­ity

3. High cost of en­ergy stor­age

4. Lack of skilled man­power for in­stal­la­tion and O&M

5. Man­u­fac­tur­ing of low cost so­lar mod­ules and ac­ces­sories.”

WTO rul­ing

The World Trade Or­gan­i­sa­tion (WTO) re­cently ruled against In­dia’s do­mes­tic con­tent re­quire­ment (DCR) pol­icy for so­lar cells and mod­ules. The case against In­dia was orig­i­nally filed in 2013, fol­low­ing the an­nounce­ment of DCR in JNNSM Phase II pol­icy and after In­dia de­cided to file an anti-dump­ing case against US, China, Malaysia and Tai­wan. Cur­rently, there is a pipe­line of 925 MW of so­lar works to be auc­tioned un­der DCR. Asked about ram­i­fi­ca­tions of the WTO rul­ing on In­dia, Aditya Ravin­dran said,

In­dian so­lar space is largely de­pen­dent on im­ports from South East Asia and North Amer­ica, and it can­not go against the ver­dict of the WTO. The only op­tions re­main­ing with the gov­ern­ment and reg­u­la­tory bod­ies is to look for al­ter­na­tive mea­sures to pro­mote do­mes­tic man­u­fac­tur­ing in the so­lar in­dus­try.”

About ram­i­fi­ca­tions of the WTO rul­ing on In­dia, an In­dia Power spokesper­son said, “The US is of the opin­ion that In­dia’s do­mes­tic con­tent re­quire­ments were in­con­sis­tent with WTO rules that pro­hibit dis­crim­i­na­tion against im­ported prod­ucts. Un­der the so­lar mis­sion, so­lar power de­vel­op­ers are man­dated to use In­dian-man­u­fac­tured cells and mod­ules rather than US or other im­ported so­lar tech­nol­ogy that the US con­sid­ered a breach of in­ter­na­tional trade rules. This result in favour of US will boost sales of Amer­i­can so­lar mod­ules into In­dia as Amer­i­can so­lar ex­ports to In­dia have fallen by more than 90% dur­ing this pe­riod. How­ever, the In­dian gov­ern­ment wants to boost so­lar mod­ule man­u­fac­tur­ing in In­dia and for that rea­son only they had man­dated that so­lar power de­vel­op­ers should use In­dian-man­u­fac­tured cells and mod­ules.”

RE vs ther­mal?

Power sec­tor an­a­lysts have warned that the un­prece­dented surge in re­new­able en­ergy ca­pac­ity in the next few years will af­fect ther­mal power plants. At a time when ther­mal power plants are op­er­at­ing at an all-time low of just

over 50% of their ca­pac­i­ties, there is a de­bate whether the coun­try re­ally needs the planned ad­di­tion of 175 GW of re­new­able en­ergy by 2022. Also Partha Bhat­tacharyya, for­mer Coal In­dia Chair­man re­port­edly said that the so­lar wind fo­cus has hit low-cost coal-based power production. About whether the re­new­able en­ergy push will ad­versely af­fect ther­mal power plants, Aditya Ravin­dran said,

In­dia is push­ing ahead for re­new­able en­ergy ca­pac­ity ad­di­tion with­out any pro­found em­pha­sis on en­ergy stor­age sys­tems. Nei­ther does our power sys­tem have any sig­nif­i­cant ca­pac­ity of peak­ing power plants. In the ab­sence of stor­age and quick-act­ing power plants, gen­er­a­tion ca­pac­ity at base load power plants would have to be kept on standby as spin­ning re­serves. Not only is it in­ef­fi­cient and pol­lut­ing, but the fre­quent ramp­ing up and down of the power plant’s out­put also af­fects its health and life.”

About whether RE will af­fect ther­mal power plants, an In­dia Power spokesper­son said, “The re­new­able en­ergy push will def­i­nitely ad­versely af­fect ther­mal power plants. There is vari­a­tion in the production of elec­tric­ity from re­new­able en­ergy sources. On an all-In­dia scale, coal-fired plants pro­vide a steady out­put in or­der to meet what is called the base load while gas-fired plants and hy­dro plants with stor­age man­age to respond to vari­a­tions in de­mand. If the ad­di­tion of re­new­able en­ergy con­tin­ues, de­pend­abil­ity on the ther­mal power plant will re­duce and it will be forced to run the ther­mal power plant at a lower PLF.”

Funds, cheap im­ports

So­lar has picked up pace but dis­tri­bu­tion com­pa­nies are re­luc­tant to pur­chase so­lar in light of low power de­mand and cheap power avail­abil­ity on ex­changes. MNRE is mulling a $400 mil­lion World Bank fund to pro­tect clean en­ergy pro­duc­ers from pay­ment de­lays by dis­coms. About fund­ing sup­port from banks and on dump­ing of lower cost mod­ules from China and Tai­wan, Aditya Ravin­dran said,

If we are to look at the en­ergy mar­ket from a purely eco­nomic stand­point, the de­mand-sup­ply equa­tion should bal­ance it­self out, as the fall­ing prices would bring more de­mand for power. But be­cause of the an­nual na­ture of tar­iff re­vi­sions, a larger re­liance on long-term PPAs, and the at­tempts to re­cover the losses of the dis­coms, th­ese fall­ing prices might take some time to reach the bulk of end-users. Only then would the de­mand bounce back and prices sta­bilise.

A loan to the de­vel­op­ers to stay afloat for this rather long du­ra­tion would def­i­nitely help to re­tain in­vest­ment in the sec­tor, but this should only be treated as an in­terim mea­sure. Mean­while, this pe­riod should be utilised by the gov­ern­ment to make strate­gic moves in the sec­tor to elim­i­nate the root-cause in­clud­ing the long-awaited sup­ply­wire busi­ness sep­a­ra­tion

On dump­ing of mod­ules from China and Tai­wan - In­dia is not in a po­si­tion to ban or reg­u­late the im­port of so­lar power equip­ment from th­ese coun­tries. The coun­try has to go a long way in ful­fill­ing its 100 GW so­lar power tar­get within the next 6 years, and we do not have an op­tion to deny th­ese im­ports to give an op­por­tu­nity for the do­mes­tic man­u­fac­tur­ing in­dus­try to mushroom.”

Elec­tric Ve­hi­cles

Gov­er­nor Brown has committed to hav­ing over 1.5 mil­lion elec­tric ve­hi­cles (EVs) on the road in Cal­i­for­nia by 2025 and Pa­cific Gas and Elec­tric is propos­ing to in­stall 7,600 elec­tric ve­hi­clecharg­ing sta­tions over the next three years, the sin­gle big­gest de­ploy­ment of plug-in spots in the coun­try. About such large-scale de­ploy­ment of EVs in In­dia and its ben­e­fits, Aditya Ravin­dran said,

EVs would be re­ally ben­e­fi­cial for cities where the ve­hic­u­lar pop­u­la­tion is be­ing blamed for air pol­lu­tion. A large scale mi­gra­tion to EVs could also help in driv­ing down the fuel im­port bill for In­dia.

But In­dia is a highly price-sen­si­tive mar­ket. Till now, the response to EVs and hy­brid ve­hi­cles has been ex­tremely poor, even after the launch of such ve­hi­cles in a wide spec­trum of prices. Not even the sub­si­dies and tax waivers have been able to at­tract a sig­nif­i­cant num­ber of cus­tomers.

Fol­low­ing global trends and on-go­ing de­vel­op­ments like Tesla’s Giga fac­tory, the de­mand for EVs and hy­brid ve­hi­cles would also gain mo­men­tum in In­dia. The ve­hi­cle man­u­fac­tur­ers need to be ready for this sce­nario, be­cause when this de­mand hits, the mar­ket would see ex­po­nen­tial growth in the sale of hy­brid ve­hi­cles and EVs.”

About large-scale de­ploy­ment of EVs in In­dia and its ben­e­fits, an In­dia Power spokesper­son said, “Gov­er­nor Brown signed the bill set­ting a goal of plac­ing 1.5 mil­lion elec­tric ve­hi­cles (EVs) on the road by 2025. The gov­ern­ment will change its clean-ve­hi­cle re­bate pro­gramme to pro­vide an ex­tra credit for low-in­come driv­ers who wish to pur­chase or lease an elec­tric car. It will also pro­vide as­sis­tance to car-shar­ing pro­grammes in low-in­come neigh­bour­hoods and in­stall elec­tric-ve­hi­cle charg­ing sta­tions in apart­ment

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