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

The unutilised state of National Clean Energy Fund

The formation of NCEF or National Clean Energy Fund was indeed the right step towards supporting India’s green energy initiatives. The idea was introduced by the Government of India in 2010-11. And upon receiving huge support, it quickly became India’s carbon tax, on coal to generate fund for research and financing clean energy technology. Currently, the name of NCEF has been changed to National Clean Energy and Environment Fund (NCEEF) to support initiatives for clean environment development.

It should be noted that at the beginning, tax imposed on coal on behalf of NCEF was INR 50 per tonne, which eventually ascended to INR 400 per tonne in 2016-17. It is fairly easy to glean from the context that NCEF could have been identified as a very able supporting column for nascent green energy infrastructure of India.

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Joining Hands to Protect Water: A Move That Can Result In Climate Restoration

In development of a country, using and protecting the natural resources plays a major part. To change the climate from going through drastic negative changes the world has readily accepted solar. However, it is also important for a country to focus towards protecting its water resources to support its economic growth while ensuring sustainability. Within Asia, India and its south Asian neighbours are blessed with huge reserves of natural water. However, due to lack of an infrastructure to distribute the water carefully and equally, the countries still suffer from scarcity of water from time to time. Statistics show that availability of water per capita in India has reduced by almost 70% since 1950. And while move towards industrialisation and economic development has gained importance, population growth and inefficiency in water use has resulted into water scarcity in regions.

Global Scenario

Research statistics show that increasing stress and degradation of climate mainly due to fossil fuel combustion, is affecting economic growth of South Asia, and seems to be leading to prolonged water scarcity in the near future.

The United Nation has recognized protection and efficient use of water as an important goal to establish and maintain sustainable development. The World leaders are starting to understand that setting a dedicated global goal for water is a necessity now, because water is a global resource and even if one country is left out of the development process, it will have negative impacts on the sustainability of the climate, which the whole world shares.

The developed and developing countries are banding together to create an international cooperation for saving the water resources for the global good. Information, methods are being shared and investments are being made to support better water harvesting, wastewater treatment, recycling, and sanitation-related activities and programmes. Sustainable Development Goals of United Nations have set a timeline of 2030 to incorporate changes that can assure climate sustainability and allow developing and developed countries alike to initiate economic development initiatives without hindrance.

Joining Hands and Resolving Disputes

There are 12 major river systems and a number of small rivers that go through India. And as the country is agrarian in nature, the demand of water is very high. Lack of technical competence to efficiently use the water doesn’t seem to satisfy the requirements thus creating an unnecessary demand for more of it. The similar scenario is seen in the neighbourhood countries of India, which leads to disputes for claim on the water.

India is moving towards the right way by choosing solar. Renewable energy shift can revolutionize India’s energy scenario and bring in socio-economic growth. However, to complete the transition, India also needs to focus on its use of natural resources as well. Developing an efficient water management is very important to ensure water security and also to share the natural resource to other countries.

Inter-sectoral water cooperation is also necessary as it can help the country understand the best way to divide the water into different sectors such as- Agriculture, Construction, Mining, Energy and Industry. Efficient usage and water protection rights will stop it from being misused or wasted.

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Solar Has Made It Easier

Conventional energy generation process uses a lot of water (1.90 liters/kWh for Coal, and 1.60 liters/kWh for oil, and 2.30 liters/kWh for generating energy from Nuclear). And besides using up water, the kilotons of toxic waste produced by the conventional power plants annually contaminate rest of the water sources.

In this scenario, choosing solar as the mainstream energy source can win the battle for climate improvement, as it is a water free energy generation system. Additionally, solar can make it easier to send water to the cities, states or even countries which are in need of it by reducing cost of pumping water through solar water pumping solutions.

So, it seems that India is standing upon the perfect opportunity to not just better its socio-economic progress, impacting climate a positive way, the country can inspire other developing and developed countries to establish sustainability through protecting and efficient use of natural resources.

 

http://wsds.teriin.org/water-cooperation.php

Share your thoughts with me on this at @gyaneshc.

Solar Industry 2018: Opportunities Exist, More Efforts Needed

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Solar industry is growing globally and the year 2017 has been the year of expansion for solar. China led the growth spectrum by adding 52 GW of new solar installations in 2017, while US (12.5 GW), India (~6 GW), Japan (5.8 GW), Germany (2.2 GW) took positions respectively. Australia, South Korea, Chile, and Turkey also became GW markets in 2017 stepping into competition for solarisation.

With awareness growing and more developing countries investing in the renewable energy mix, 2018 is estimated to bring in huge opportunities, forwarding solar revolution to new heights.

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The Energy Revolution

As a species we have made incredible leaps through the centuries. However, energy has been one of the neglected issues in global development. Although our discovery of fossil fuels ran our industrial engine conveniently, it also kept emptying out the planet’s core. And after centuries, only recently the connection between continuous depletion of fossil fuel reserves and its effects on the world have been made. The obvious and very simple question, that what’s next after all fossil fuel reserves are depleted- has loomed over our sophisticated society.

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