With India looking at solar playing a major role in the country's energy mix, an emerging sticking point is the imbalance between usage of imported v/s domestic PV panels for local projects.
As per Bridge to India's project database, India installed 5.5 GW of utility scale solar capacity in the last fiscal year reaching total cumulative solar capacity of 12.5 GW by March 2017. Another 12 GW capacity has been allocated to developers and is in various stages of development.
Southern states have continued to dominate the sector with Andhra Pradesh replacing Tamil Nadu at the top with a commissioned capacity of 1,962 MW.
Domestic manufacturers' combined market share fell to just 10.6 per cent; and with the domestic content requirement (DCR) policy shelved, prospects for domestic manufacturers appear very bleak.
But market volumes are likely to expand by 45 per cent as India is expected to add 8 GW in the upcoming year. States Amit Bansal, Director - Finance, Vivaan, 'Advanced and continuous research on solar cell materials, developments in enhancing the manufacturing capabilities of SPV module, and incentives for installation of SPV electricity in domestic and commercial set-ups are bringing good opportunities for PV panels in both national and international markets.'
However, BTI doesn't anticipate any new entrant to gain a meaningful foothold in the extremely competitive solar market.
As of March 2017, India had installed 12.2 GW of utility scale solar. In June 2015, the government had revised India's solar power target to 100 GW from 20 GW, by 2022. In co-relation, India's solar capacity expanded by a record 5,525.98 MW. While this figure indicates addition of 3,010 MW in the previous year, thus translating to an almost doubling of growth in the past year - it is meagre in comparison with the scale of projects planned and/or already in the works.
According to the MNRE, the country's cumulative solar capacity currently stands at 12,288.83 MW, against 6,762.85 MW at the end of March 2016. Last year, of the 5,526 MW added, only 2,803 MW of solar power was generated by March 2017. But, Renewable Energy and Mines Minister Piyush Goyal was visibly satisfied that the growth is impressive, even if it falls short of the target.
Santosh Vaidya, Joint Secretary at the MNRE said, 'These projects were ready and were only awaiting their synchronisation with the grid or state approval or signing of PPA. We have seen how low tariffs have fallen at bids such as the one at the Rewa Solar Park.'
On the private side, Vikram Solar has achieved 1 GW of solar manufacturing capacity this year and according to the company head aspires to expand their capacity to 2 GW by FY2020. Expressing his satisfaction, Gyanesh Chaudhary, MD & CEO, Vikram Solar said, 'With our high efficiency modules, we pride ourselves in being an Indian company to have fortified manufacturing capacity to 1 GW. India has today come into its own as one of the largest emerging PV markets in the world and we are geared up to do our bit in the 'Make in India' initiative as well.'
Another big player, Tata Power Solar too has expanded and modernised and fully automated its entire PV cell and module manufacturing facility in Bengaluru, Karnataka. This two-stage expansion doubled the company's module capacity to 400 MW from 200 MW, and increased its cell manufacturing capacity by 65 per cent from 180 MW to 300 MW.
Talking about the expansion, Anil Sardana, Chairman, Tata Power Solar said, 'A robust domestic, qualitative manufacturing base is the backbone of any nation and is a strong foundation for long-term viability of sector.'
An important point to note, as mentioned by Sardana, is that expansion in capacity has been undertaken only by large players like Tata, while many others - especially small local companies, are still facing challenges of sustained economics.
PV technology in India has completed more than 40 years and it is evolving continuously. States Bansal, 'Today, India occupies the position of a leader in the world's solar power market and did a commendable job in the 1990s when manufacturing base was strengthened to over 300,000 smaller systems aggregated to 22 MW.'
'For almost two decades, PV technology has remains as one of the great sources of foreign currency in India's export basket. GoI is quite supportive of boosting the growth of PV technology and the future seems brilliant,' he adds.
R&D in this sector is taking place at a good speed and there are many foreign companies that are willing to collaborate and invest in this sector. Third-generation solar cells use a variety of new materials and nanotechnology etc., for designing high efficiency PV materials. These systems are expected to rapidly become cost effective for use by utilities and industry.
From perovskite and gallium-arsenide to silicon based PV cells, the Indian solar industry is working on all the latest technologies and the research work is continuously gaining pace in both public and private institutions. One of the most powerful solar-absorbing technology, 'quantum dots' has been already introduced in various R&D laboratories of the country.
States Sujoy Ghosh, Country Head, First Solar India, 'It's a misnomer that thin film PV modules are less efficient than conventional poly silicon technology. But as the deployment of solar increases in areas between the two tropics and the real-time energy production starts to command a premium over name-plate capacity, thin film manufacturers would need to expand their manufacturing footprint to target the growing demand that's more conducive to their technology.'
In this regard, First Solar has cumulatively spent over $1 billion in R&D activities between 2002-2016, with an average spend of $125 million in the last five years. The impact of this is evident in the fact that between 2012-2016, the company improved cell efficiency three times faster than equivalent improvements in poly silicon cell efficiency.
Another major improvement in technology within the country has been RenySys's production of India's first five Bus Bar (5BB) solar PV cells, which are aimed at delivering higher module efficiency and cost saving. Increasing the number of Bus Bars (BBs) in an PV cell lowers the series resistance and thus increases the current. Eventually, the PV cell power increases, which improves the overall module performance.
States, Avinash Hiranandani, Managing Director, RenewSys India Pvt. Ltd, 'Our products are high performing, commercially viable and future ready. Commitment to R&D and competitively priced products are crucial to the solar industry, affecting a project's performance and success. The launch of 5BB cells and modules will significantly improve the performance of solar PV systems.'
Added Hiranandani, 'While we are excited to announce these developments, we hope that the government will support companies like RenewSys that have made significant investments based on the Government of India's pro-local manufacturing policy.'
MNRE has approved more than 30 parks of a total capacity of about 19 GW in 21 states across the country. The rising start-up culture in India and gradual decline in solar PV cost are responsible for the 300 per cent growth of small energy grids (SEGs) in 2016, when compared to 2013.
The recent decision of GoI to levy only 5 per cent GST on the solar sector is indeed a great initiative, and will help the industry pick up the growth momentum. The sector is expected to grow between 100-110 per cent over the next five years.
However, India imported 5.7 GW i.e. 89 per cent of its total solar PV module requirement in FY2016-17, at an estimated cost of $3 billion. According to Vinay Rustagi, Managing Director, BTI, 'increasing reliance on imports in a growing and strategically important sector is creating various stress points and raises the risk of a knee-jerk policy reaction by the government, which has been unable to effectively support domestic manufacturing.'
China dominates global manufacturing and is trying to secure control on the technology upgradation roadmap for solar PV, by pumping billions of dollars in subsidies and support measures. The result has been a massive scale up in its manufacturing capacities from 23 GW in 2013 to over 70 GW, despite steep fall in prices.
Meanwhile India has been unable to match China's financial commitment, but has implemented Domestic Content Requirement (DCR) - which has been good rhetoric, unsupported by sustainable or major gains. Here, commenting on the World Trade Organisation verdict against India, Bansal feels, 'Organisations like WTO should take unbiased decisions to promote renewable energy because developing countries are already struggling with environmental issues.'
He adds that such steps are discouraging, especially to foreign investors. To deal with this scenario, India must strongly convey to the world that it is determined to replace the existing energy base with eco-friendly renewable energies in a certain time framework.
The sticking point here is that the country has focussed on reducing solar tariffs, making cheap Chinese imports the viable option, thus hurting the prospects of domestic manufacturers, who unable to compete have now filed a new anti-dumping duty petition.
The ever-increasing share of imports for solar modules is a concern when India plans to meet a significant share of its power requirement from solar and a huge majority of modules are imported from a single country. BTI opines that the entire sector is exposed to the risk of a potential disruption in global supply chain and/or change in international political, trade or economic environment.
Thus, given the multi-faceted implications for project developers, investors, discoms and other stakeholders, the country needs a larger debate on the role of DCR in the sector. GoI too should mull long-term implications for the sector and send a clear policy signal to reduce uncertainty for all stakeholders, instead of depending on band-aid like short-term responses.
- JOCELYN FERNANDES
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