“In­dia needs to in­stall 90 GW of so­lar in five years”

Says Priyadarshini San­jay, Man­ag­ing Di­rec­tor, Mer­com Com­mu­ni­ca­tions In­dia, in con­ver­sa­tion with R Srini­vasan.

Power Watch India - - GREEN AHEAD -

Kindly com­ment on the so­lar sce­nario es­pe­cially since so­lar tenders and auc­tions have slowed in In­dia and what will be the ram­i­fi­ca­tions of these de­vel­op­ments?

Since Septem­ber 2016, tenders have slowed down for IPPs. Dis­coms are cur­rently in a wait-and-watch mode since so­lar tar­iffs are con­stantly fall­ing. They want to pro­cure so­lar at the cheap­est rate and they are sit­ting back and wait­ing for tar­iffs to keep drop­ping which is caus­ing ev­ery­body to post­pone tenders and auc­tions. Tenders can­not be de­layed in­def­i­nitely and many de­vel­op­ers who have in­vested mil­lions in an­tic­i­pa­tion of in­creased ac­tiv­ity to meet gov­ern­ment goals are be­gin­ning to panic. Mar­kets don’t re­act well to un­cer­tainty and for­eign in­vestors are go­ing to con­clude that In­dia is not a stable mar­ket that can meet its set goals un­less ten­der and auc­tion ac­tiv­ity picks up again.

The lat­est record low tar­iff is Rs 3.15 per kilo­watt hour (kWh) and is ex­pected to fall be­low Rs 3 a unit dur­ing auc­tions for the Bhadla so­lar parks in Ra­jasthan. To what ex­tent are fears, that it may af­fect smaller play­ers in the mar­ket, jus­ti­fied?

The Kadapa auc­tion shows that ag­gres­sive bid­ding in this case is more than just pro­ject eco­nom­ics as most of these projects can pro­cure com­po­nents at ap­prox­i­mately the same price lev­els (or at least within a few points). It comes down to de­vel­op­ers will­ing to give up re­turns to de­velop a pipe­line. Tenders and auc­tions have slowed down over the past cou­ple of quar­ters in In­dia and bank guar­an­tees are stuck and over­heads are in­creas­ing. There is a huge pent-up de­mand for large-scale projects as com­pa­nies have in­vested and staffed up to meet In­dia’s ag­gres­sive so­lar in­stal­la­tion tar­get but are not see­ing the auc­tions. It is ex­pected that if states and im­ple­ment­ing agen­cies tweak their tenders ef­fec­tively, so­lar costs can be brought at par with ther­mal through­out the coun­try. Smaller de­vel­op­ers will find it hard to bid ag­gres­sively as in­ter­est rates and other costs tend to be a lit­tle higher for them. If ten­der ac­tiv­ity in­creases, it will ben­e­fit ev­ery­body in­clud­ing smaller play­ers.

Your views on large-scale de­ploy­ment of EVs (adopt­ing so­lar charg­ing sta­tions) in In­dia and the re­sult­ing ben­e­fits. Also in view of the fact that In­dia’s en­ergy im­port bill is ex­pected to dou­ble from around $150 bil­lion to $300 bil­lion by 2030.

EVs are just mak­ing their en­try into In­dian mar­ket and it is still very early. There are not many man­u­fac­tur­ers of EVs in the coun­try plus cost is a huge de­ter­rent, EVs have gained ground in the US and some parts of Europe as EV pur­chases are sub­sidised to a cer­tain ex­tent ($2,500 to $7,500 per ve­hi­cle in the US) to make them af­ford­able. To­tal EVs in the US as of last year was only about 1% - that gives you an idea as to how long it will take for In­dia to get there. In­dia sees an op­por­tu­nity to re­duce its en­ergy im­port bill but how much has the gov­ern­ment spent on R&D for EV and charg­ing sta­tions? If you de­pend on im­ported tech­nol­ogy, it will still be pretty ex­pen­sive. The gov­ern­ment has to lay out a long term strat­egy and in­vest for all this to hap­pen.

Your views on vi­a­bil­ity of the 100 gi­gawatts (GW) so­lar tar­get by 2022.

The tar­get is ag­gres­sive, but not un­achiev­able. Based on fore­cast from our re­cently re­leased Q1 In­dia So­lar Quar­terly Up­date we are es­ti­mat­ing so­lar in­stal­la­tions to the tune of 65-70 GW by 2022 based on cur­rent mar­ket con­di­tions and chal­lenges. In­dia needs to in­stall 90 GW of so­lar in five years – a rate of 18 GW per year. Most states have spec­i­fied RPO tar­gets. How­ever, due to the lack of en­force­ment of RPO reg­u­la­tions and the ab­sence of penal­ties when obli­ga­tions are not met, many state dis­coms are not fully com­ply­ing with their RPO tar­gets. The fi­nan­cial health of dis­coms has to im­prove, power de­mand needs to pick up and trans­mis­sion in­fra­struc­ture needs to be im­proved to be able to get to 100 GW by 2022.

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