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Web Exclusive | May 2013

'Policy uncertainty hits growth of solar industry'

A clean energy consultancy firm Mercom Capital Group says that Indian solar sector’s growth continues at a slow pace amidst policy uncertainty and experimentation. Policy uncertainty is rife, with rules being changed every other month. Of the 1,761 mw installed base in the country, about 557 mw was installed so far in 2013 and several projects have been delayed.

Considering India as an emerging solar market where the growth rate is expected to be much higher than other parts of the world, installations in 2013 likely to end up in disappointing the markets, it noted. The current solar policy environment looks more like an experiment than a serious policy that will help create demand and solve the current power crisis in India, Mercom update stated.

The split and domestic content requirements are examples of this. Domestic content requirement policies, like those that contributed to the delays, continue to be pursued. There is a disconnect between the policies pursued and the original goal of procuring solar at the most cost effective prices. In fact, many policy changes have been contradictory.

The Ministry of New and Renewable Energy (MNRE) recently proposed a draft Phase II policy and has opened it up for comments. Instead of bidding for the lowest tariff, developers will now be bidding for the Viability Gap Funding (VGF) requirement. It has to be seen whether this will help to accelerate the sector growth.

Tamil Nadu, Gujarat, Odisha, Madhya Pradesh, Punjab, Andhra Pradesh, Chhattisgarh, Maharashtra and Rajasthan among others are all seeking to promote solar energy with their own initiatives. Gujarat leads the pack with an installed base of 857 mw.

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