SOLAR OPPORTUNITIES.

Considering the huge solar targets, India needs to develop domestic solar manufacturing capacities and reduce its dependence on imports to avoid disruption in future. The proposed BCD is expected to catalyze the building up of capacities.

India's achievements in the last decade in accelerating renewable capacity addition have been remarkable. After adopting its National Electricity Plan (NEP) in 2018, India remains on track to overachieve its '2˚C compatible' rated Paris Agreement climate action targets. India stated its vision to reduce the emissions intensity of GDP by 33-35% by 2030, compared to 2005 levels; it also aims to increase the share of non-fossil-based energy resources to 40% of installed electric power capacity by 2030, with the help of transfer of technology and low-cost international finance including from Green Climate Fund (GCF).

As part of Paris Climate Agreement, India has committed to achieve forty percent of its installed electricity capacity from non-fossil fuels by 2030. For achieving this goal, India has set an ambitious target of 175 GW of installed renewable energy (RE) capacity, including 100 GW of solar power, by 2022. India has also set a target of 450 GW installed RE capacity by 2030. As per the Central Electricity Authority's Optimum Energy Mix report, the electricity requirement of the country by 2029-30 will be 817 GW, including the 450 GW from renewable energy sources, out of which 280 GW would come from solar energy. To achieve the target of 280 GW, around 25 GW of solar energy capacity is needed to be installed every year, till 2030.

Despite its low per capita emissions, India has made significant commitments in its intended Nationally Determined Contribution (NDC) submitted to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015 as part of the Paris Agreement. Although not stated in the NDC, it is assumed that the target to create an additional carbon sink of 2.5-3 GtCO2e through additional forest and tree cover by 2030 is cumulative, representing an average annual carbon sink of 167-200 MtCO2e over the period 2016-2030. 

Says Rahul Kshetrapal, Head - Sales & Business Development, India, Sterling and Wilson Solar Limited. “We are highly optimistic about the domestic market. India's achievements in the last decade in accelerating renewable capacity addition have been remarkable. It aims to increase the share of non-fossil-based energy to 40% by 2030 with the help of transfer of technology and low-cost international financing. With the ambitious target of installing 100 GW by 2023, India has shown the intent in adopting its National Electricity Plan (NEP) to overachieve the Paris Climate Agreement target. Though India has come a long way in renewable energy, especially solar, the deployment has seen various policy challenges; renegotiation of PPAs, curtailment of solar power, delayed payments from DISCOMs in some states, policy flip-flops on open access and net metering, land possession difficulties and more. Thus, we need to overcome these few challenges to ensure continued growth. India surely offers promising potential for the growth of clean energy, which is supported by the government's vision to evolve as a sustainable economy.”

“India is one of the world's largest and most promising renewable energy markets in the world, due to a combination of scale, rising electricity demand, high electricity costs, and abundant wind and especially solar resources.  In addition to government and utility projects, India has a large commercial and industrial segment which is very eager to source their power from renewable sources,” opines Andrew Hines, Co-founder and Chief Commercial Officer, CleanMax, a leading B2B renewable energy provider.

CleanMax has recently forayed into Wind Solar Hybrid (WSH) and has commissioned 110MW of wind-solar hybrid to date, and another 172 MW is slated to be commission in the next 18 months. “While both solar and wind generation are variable, in India the two sources are highly complementary. Solar generates during the day, while wind peaks in the evening and at night, and they also peak at different times of the year. So with a wind-solar hybrid, we can supply a consistent source of power, which means our clients can source a greater percentage of their requirement from renewables, which also means greater total savings,” says Hines.

Though India has come a long way in renewable energy, especially solar, the deployment has seen various policy challenges; renegotiation of PPAs, curtailment of solar power, extremely delayed payments in some states, policy flip-flops on open access and net metering, land possession difficulties and more. Thus, we need to overcome these few challenges to ensure continued growth. India surely offers promising potential for the growth of clean energy, which is supported by the government's vision to evolve as a sustainable economy.

The BCD Impact

The Ministry of New and Renewable Energy (MNRE) has finalized the new Basic Customs Duty (BCD) on solar PV cells and modules. The Ministry will be imposing a 25 percent BCD on solar PV cells and 40 percent duty on solar modules without grandfathering of bid-out projects. Reasoning out the move on the new BCD the official statement says, “India's solar sector is heavily reliant on imports of solar equipment. Government has also noted instances of certain countries dumping solar cells and modules to kill the nascent domestic industry, because of which government had to impose Safeguard Duties. Covid-19 pandemic brought disruptions in international trade including imports of solar modules and solar cells affecting solar capacity additions in the country. Considering India's huge solar targets and that electricity is a strategic sector of the economy, India needs to develop domestic solar manufacturing capacities and reduce its dependence on imports to avoid disruption in future.”

According to Waaree Energies, India's largest solar modules manufacturers, the recently proposed Basic Customs Duty on solar modules and cells with effect from 1st April 2022 is another step towards the upliftment of the sector. States Dr. Doshi, “We appreciate the government's move to impose 40% Basic Customs Duty on solar modules and 25% on cells; this shall provide a level playing field to the Indian manufacturers. This has been a long awaited move for the solar manufacturers and we are thankful to the government for announcing these measures/duties. The duty will thus create adequate opportunities for expansion for the domestic manufacturers while also allowing newer players to enter the market. This is a great step towards Make in India and Atmanirbhar Bharat initiative.”

According to Doshi the country has witnessed over 80% solar modules requirements which have been fulfilled via imports till now. If this is shifted to India, it will give an impetus to the government's vision of making India self-dependent. It is not only import of solar panels but it is also about making the country secure and energy independent. “With this step we will have many other benefits like huge employment, R&D and export. The introduction of any new industry brings with it the growth of all ancillaries, services and other supporting industries. Similarly, the solar manufacturing industry will also aid in the growth of indigenous manufacturing of aluminum, glass and other components hence supporting the country's economy and helping it remain within India,” he adds.

Andrew Hines opines, “Since modules make up a large share of a project's capital cost, any increase to module cost will lead directly to a higher electricity tariff. Solar power is already among the cheapest forms of power generation in India, so the overall proposition for solar power will remain strong. However, the cost will be passed onto electricity consumers.”

Puneet Jaggi, Founder, Prescinto Technologies, one of the top 10 AI startups by Stellaris Venture Partners and International Finance Corporation (IFC) reasons out for a balanced approach. “While we feel that domestic cell, module manufacturers, and project developers need protection from cheap and sometimes unreliable products from international markets, there needs to be a balance. This would be the third change in the duties regime in the last four years. Developers have had a tough time dealing with the increase in the cost of equipment vis-à-vis the tariffs they have quoted for solar projects. In addition, developers are also having issues with reimbursements that were to be provided to them under the change in law clause in solar tenders allocated in the past. A further hike in duties may cause solar tariffs to inch up and also hamper the government targets for solar project deployment. More importantly, the Indian manufacturing ecosystem for solar cells and modules is not yet fully backward integrated; there is still a large dependence on Chinese raw material suppliers. So, we believe that in the short term new duties may benefit domestic manufacturers, project developers may have tough time bidding for projects.”

While appreciating the move, Dr. Doshi also pinpoints some concerns about the solar manufacturing sector in the country. “For all the solar module manufacturers in India, we see a short term yet huge challenge to continue our business for next one year, Safeguard Duty which is expiring in June. There will be no barriers for imports of solar modules. Due to import duties on raw materials and other cost differences Indian manufacturers will be not able to compete with the imports. In such a scenario from the date of SGD expiry to the date of implementation of BCD, Indian manufacturers will not have any business and we will see a huge surge in imports.”

There is also the risk of loss of 20 thousand direct jobs and over 2 lakhs indirect jobs.  There shall be a huge financial crunch and operations shall be affected of Indian module manufacturers. Yes there will be small DCR business but, it is not enough to continue operations. We would like to request the government to continue SGD or bring Anti-dumping duties at the earliest. There are DCR tenders which are much more than present capacity if they can be converted to Make in India this will provide some relief.” Having said that, the company however is extending their full support towards making India a energy efficient country while aiding the country to reach its ambitious target of 450 GW by 2030 and 175 GW by 2022. 

The Atmanirbhar Bharat initiative has geared up the country toward scaling up domestic manufacturing. Scaling up of domestic solar manufacturing would also enable India to export solar cells / modules. This would also provide other countries an alternative avenue for procuring solar cells / modules.

IOT: The Next Phase of Innovation

As per the industry input the next phase of innovation in solar sector will be powered by remote monitoring technologies which will be data driven. The advent of IoT and Big Data analytics has had strong impact on almost all the verticals of businesses, so the case is with solar industry.  IOT coupled with data analytics provides a technological platform to achieve plant's performance, reduce costs, realize economies of scale, thereby sustaining the bottom line.

Tracking and analysis of sensor data will help the players monitor the physical health of the plant. It will help mitigate equipment level faults. Predictive analytics will help in proactive detection of faults, degradation, and failures in devices such as modules, inverters, and transformers. This will lower plant downtime and generation loss due to device failure.

Speaking about the huge scope of technology disruptors Puneet Jaggi says that Artificial Intelligence, Machine Learning, and Data Analytics have a bright future in the renewable energy domain, especially when it comes to leveraging them to achieve operational excellence. “We expect that project developers, owners, and operators will be relying on data analytics for operations and maintenance automation in the near future. On the generation side, key aspects for RE generators such as meteorological data, plant performance monitoring, and workflow automation can be addressed using platforms such as Prescinto, which uses AI to generate actionable insights. This in turn translates into higher profitability and better returns for asset owners and operators. On the demand side, the prediction capabilities of AI will lead to improved forecasting and asset management as well, consequently, both these elements will enhance grid stability. Relying on technologies such as IoT, sensors, and big data, AI holds a promising future in the renewable energy domain,” he says.

The economic credentials of a clean-energy driven recovery look strong and the solar industry is highly optimistic of the market potential and fresh investments in this sector.

Hits: 440