The year 2019 is expected to improve Indian solar scenario, which witnessed a slowdown in second half of 2018. Research data indicates that more than 35 GW of solar projects were tendered in the country between Jan-September 2018. Surprisingly, near about 13 GW of projects were auctioned at the end of the year. This stands as 65% decline in tender activity in Q3 2018, in comparison with Q2 2018.
However, in 2019 developments like, introduction of battery storage policy will have positive effects on renewable energy capacity addition. According to Bridge to India 15 GW renewable energy capacity will be added in 2019 (out of which most will come from solar), which is twice the capacity compared to 2018. However, recent policies have made a dent in the Indian solar growth and stand as challenge in way of solar growth. Let us split the expectations and effect of policy to identify the current scenario.
Expectations
If one has to forecast the solar deployment based on tender timetables, we can see that Renewable energy capacity addition is expected to reach 10 GW to 15 GW by the end of 2019. And with new solar parks getting operational, most of that capacity is expected to come from utility scale solar. Additionally, Indian Government’s recent decision to focus on rooftop solar development will also facilitate growth. In Q2 2018, Indian solar installation rate started declining and stood at 1.6 GW in and fell even lower to 1.5 GW in Q3. This decline continues till the end of 2018 and it portrayed more than 30% Y-o-Y decline in comparison to 2017.
However, in 2019, solar is expected to make a come back with solar dominant states like- Rajasthan, Andhra Pradesh, Tamil Nadu and Karnataka contributing more than 75% of the expected solar capacity addition; with Rajasthan contributing the highest 2 GW capacity.
Falling cost and lack of infrastructure in land-to-land power evacuation will lead to developers prioritizing floating solar projects. Data suggests close to 80 MW of new floating solar capacity addition within 2019, which is a great news for India in regards of improving solar adoption rate and saving water reserves.
Rooftop solar sector is also expected to shine, showing nearly 2 GW of new capacity addition in 2019, which is ~40% higher than 2018. Solar pumps will have a lead in contributing to this capacity. So, although expectations are high. We need to consider the challenges as well to get a realistic picture of 2019’s solar trajectory.
Challenges Exist
Power evacuation issues and delays in getting solar parks ready have to be considered and actively solved if Indian solar and renewable energy scenario is expected to make great changes.
Increasing imports of solar modules, drop in solar tariff, cancelation of projects, that are limiting Indian solar growth each year. However, the recent policy deviations have made things even more challenging for Indian solar sector.
Currently, solar panels, plants, solar power based devices, solar lantern/solar lamp attract 5% GST rate. However, other important equipment that play a major role in establishing a solar plant like- module mounting structures, cables, inverter, battery, transformers etc are taxed at 12/18%. Additionally, there has been an increase in service tax rate, which now attracts 18% GST from being 15%. This has raised cost of solar projects.
In the same breath, we need to highlight that demands like asking developers to set up a manufacturing plant to win solar projects (e.g- SECI’s 10 GW solar project continues to fail in attracting bidders) have shown negative effects and produced hesitant developers, which is not good for the industry.
Solar is not a new technology, but in order to help it become the best replacement for fossil fuel based energy, Government of India needs to make it into a priority and invest in its growth.
Way Forward
Currently, India has tremendous opportunity to grow its solar and renewable energy capacity to multiple folds. However, the country has to act now, in solving policy discrepancies, and other policy reforms have to be made, prioritizing solar as the most lucrative and quickly growing industry.
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