Innovation Is the Only Way to Boost Solar Revolution

A few years ago, Solar was considered experimental and was a niche industry in the huge sector of energy generation. It is important to note that in 1977, solar panels cost $77 per watt p. However, currently solar modules cost between $0.33-$0.36 cents/per Watt p, which identifies more than 99% fall in prices. Also In 2015, power generation from renewable sources (1,985 GW) surpassed coal based energy generation (1,951 GW). And today, Solar PV panels have garnered a huge demand, resulting in global capacity additions nearly reaching 100 GW in 2017 alone. Countries, developing and developed alike are investing more in renewable energy ($286 billion in 2016) than conventional fossil fuel ($130 billion in 2016). New technologies that support renewable energy adoption like- Battery storage systems are also getting cheaper, paving a path for renewable energy (mainly solar) to become mainstream energy source.

Although the world has accepted solar and are working towards solarisation in an collaborative effort, it is important to note that solar only generates 2% of global electricity. Which is not very impressive if solar is to replace fossil fuels quickly. Mass adoption of green energy is the only way to save our future and climate, both of which are rapidly degrading, due to continuous use of depleting reserves of fossil fuels.

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BusBar Transition: A Necessity for Solar Tech Growth

Solar module is the centre of solar technology. And although there has been a considerable technological evolution in solar module development for more efficient solar energy generation, consistent growth is needed for successful transition of green energy source into mainstream energy. To win over the fossil fuel and to stay constantly viable as an energy source, the world needs to make sure that solar energy generation is consistently increased while need for space is reduced. Better cell usage, advancing junction properties, screen printing, doping are few of the many ways how energy yield maximization is assured through solar modules. Continuous advancement in cell & module technology is the only way to keep solar energy relevant in today’s fast changing world to match energy generation and usage pattern.

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Indian Solar Sector Needs to Focus on Sustaining Funding for Progress

Indian solar sector has shown incredible progress in the recent years. And have become INR 30,000 crore industry. The Government support has led India’s solar growth to take over the position of World’s third biggest solar market, overthrowing Japan in 2017, and increased investor interest in the industry. However, is the current fund generation status capable enough to support renewable energy goals? The question begs in-depth assessment.

Current Scenario

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It is important to note that India will need at least $125 billion to fund 175 GW renewable mission, out of which 100 GW supposed to be coming from solar. Foreign private equity investors like Goldman Sachs, Morgan Stanley, JPMorgan, European utilities EDF have shown interest in investing into Indian solar sector, while development banks like World Bank are offering financial support. Foreign direct investment in India has increased up to 17 per cent to over $25 billion, with the country focusing on industrial reforms and strengthening lucrative sectors (such as solar) recently.

However, it is important to highlight that most of the financing for renewable energy development in the country comes from domestic banks. And recent surveys indicating 65% fall in corporate funding within solar industry from Q4 2017 to Q1 2018, threatens to put constraints on solar growth in India. Currently there is quite confusion in the domestic industry regarding Anti-dumping duties, fall of solar tariff, and delays in tender auctioning; now adding lack of proper funding to the situation might reduce solar capacity addition by 40 per cent in the current financial year, which would definitely deal a severe blow to the growing industry.

With consistent growth, India is estimated to become fifth largest manufacturing country in the world by the end of 2020. And since solar has proven to be the most lucrative sector now, it is easy to understand that manufacturing solar would help India improve its industrial infrastructure, solve its energy crisis, create jobs and bring on socio-economic reform.

 

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And recent project planning of 20 GW being announced in instalments, Ministry of New and Renewable Energy (MNRE) also planning to award new project contracts in 2018. Additionally, plans for 5-10 GW of floating solar power projects auctioning in 2018, indicates India’s intension towards solarizing the country.

However, without enough funding, the growth prediction will not result into reality.

Issues with funding

We must point out here that India’s first renewable energy conference was held in 2015, where private companies committed to invest nearly $200 billion into green energy. Government of India has accepted and upheld 100% foreign direct investment under the automatic route and 74% foreign equity participation in a joint venture (without any approval). This has created the path to bring investment in Indian solar sector. India’s position in International Solar Alliance (ISA) has also made the country’s access to $1 trillion in low-cost financing for solar energy projects by 2030 possible.

Currently, around 293 global and domestic companies have committed to invest approximately US$ 310–350 billion to set up a cumulative capacity of 266 GW in (solar, wind, mini-hydel and biomass-based power) within 5–10 years. And between April 2000 and September 2017, the industry attracted US$ 12.3 billion in Foreign Direct Investment (FDI). So, it is easy to glean that Indian solar industry has become a lucrative enough market to attract funding.

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However, what is lacking is a sustainable funding mechanism that can continue to invoke interest in foreign investors.

Currently, the confusion within the industry regarding delays in anti-dumping duty imposition on foreign modules, GST, falling solar tariff, failure in meeting Renewable purchase obligation (RPO) in most states, instances of PPA renegotiations etc are scaring off investors. Blanket Safeguard Duty (recently withdrawn) had also stirred the domestic industry by imposing duties on SEZ based domestic modules manufacturers as well. It was a decisive decision by Government of India to remove the blanket safeguard duty.

However, Government of India still needs to take care of above discussed issues as they are delaying projects, and in some cases making them unviable, carving out investor’s interest. Indian solar sector has the opportunity and attention of the world to become an investment magnet by prioritizing solar industry and solving its issues that increase investor confidence.

Way Forward

Not only increasing foreign investor confidence, India needs to increase its domestic funding for solar as well. Recent news of National Clean Energy Fund being turned into GST compensation fund showcases totally opposite step than those that reflect building and supporting green energy reliance.

Although, Government of India is now actively focusing on shrinking delays in acquiring permits for construction, simplifying taxation process, and increasing skill development infrastructure, to support solar growth, more focus on raising funds is needed and would certainly help.

This Article was published in ET Energy World on 30th May 2018

Bibliography:

https://www.ibef.org/industry/power-sector-india.aspx

http://www.eai.in/ref/ae/sol/cs/spi/kc/key_challenges_in_the_growth_of_solar_pv_technology_in_india.html

https://www.thequint.com/news/environment/indian-solar-sector-funding-fell-65-last-quarter