Solar power is likely to become cheaper than or equivalent to conventional thermal energy prices over the next two to three years and reach Rs 4/kWh-Rs4.5/kWh by FY18, says India Ratings and Research (Ind-Ra). This will be driven by a decline in capital costs (solar modules and other balance of plant), an increase in efficiency and a shift towards large solar photovoltaic projects leading to the economies of scale and lower return expectations by developers. According to International Renewable Energy Agency, solar photovoltaic prices have fallen nearly 80 per cent since 2008. Additionally, solar module efficiency has witnessed an annual increase of 3.5-4.5 per cent. The increasing size of projects to 10MW and above from 5MW earlier also leads to the economies of scale in component procurement and better absorption of fixed costs. Moreover, the return expectation of developers is likely to moderate as the market matures, leading to a reduction in overall tariffs. The recent solar bids conducted by MP Power Management Company Limited with per unit prices reaching as low as INR5.05/kWh are suggestive of the above trends. Globally in a recent bid, NV Energy, a Nevada utility, agreed to purchase 100MW solar power under a fixed-price 20-year power purchase agreement at 3.87cents/kWh (INR2.43/kWh). Ind-Ra expects a strong pick-up in solar power installations over the next four-five years, driven both by the government impetus of 100GW of solar power by FY22 (60GW through grid connected solar projects) and a decline in solar power generation costs. These factors will increase the affordability of solar power for distribution companies and eliminate the requirement of government support by way of subsidies or viability gap funding (VGF). Ind-Ra sees a limited possibility of support by way of VGF, greater focus on infrastructure creation for the evacuation of solar power and higher possibility of distribution companies meeting their renewable purchase obligation. The solar space has already seen a significant decline in tariffs. Solar tariffs declined to Rs 7.49/kWh-Rs 9.44/kWh in in Jawaharlal Nehru National Solar Mission phase I, Batch II during FY12 from Rs 10.95/kWh-Rs 12.76/kWh during FY11. In phase II, Batch I, the concept of VGF was introduced and the tariffs declined to Rs 5.45/kWh. However, the current tariffs are even lower than those offered by through VGF. The recent coal-based bids for the purchase of thermal power by Andhra Pradesh saw tariffs in the range of Rs 4.27/kWh-Rs 4.98/kWh, only 1-14 per cent lower than the solar tariff of Rs 5.05/kWh bid recently in the MP Power Management Company power purchase tender. The feed-in-tariffs (FITs), outlined by respective state electricity regulatory commissions based on the cost-plus return on equity model, have also seen a significant decline. FIT for solar energy in Gujarat was lowered to Rs 8.03/kWh in FY15 from Rs 12.54/kWh in 2010. FIT for solar energy in Rajasthan has been declined to Rs 6.74/kWh for FY16 from Rs 15.32/kWh in FY11.
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France is determined to invest in India’s renewable sector, reports Arshad KhanAmbassador of France to India, François Richier, has affirmed that France will help India to develop renewable energy for sustainable development. Richier said that French companies will produce 10 per cent of the 100 GW of solar energy under the Make-in-India Initiative.“India has huge potential to generate electricity from renewable sources like solar and nuclear. France is very determined to invest in India’s renewable sector,” said the ambassador on Wednesday (July 8). He further said that there is a huge business opportunity for both French and Indian companies to tap the renewable sector.The ambassador further said that France is ready to invest in research and technology to increase the efficiency of domestic solar and nuke plants. He said, “currently India’s nuke energy accounts for 3 per cent of its total electricity produced compared to France’s 75 per cent in the same. There is a huge potential for growth in the sector and the government of France will lend its full support to develop technological innovations.”He added, “our main motive is to control the global temperature by 2 degree by the year 2020. This can only be achieved when nations all over the world agree to move from conventional source of energy to renewable source. India is this regard has a very important role to play as it the fastest emerging nation of the world.” Finance will be provided from the $10 billion green fund to encourage entrepreneur to invest in renewable energy.Indian entrepreneurs present at the event welcomed the gestures made by the French authorities. Gaurav Sood, MD of Solairedirect said to BW| Businessworld, “the move may lower the current rate which is Rs 6.50 per unit and will boost the supply chain. The major problem we face is the availability of land to set up solar plants and the cost of finance which is relatively higher.”Investors around the world are rushing to invest in India’s solar energy sector. A multi-billion dollar deal has been signed between three global giants, SoftBank, Bharti Enterprises and Foxconn. Collectively named SBG Cleantech, the three-way venture plans to invest $20 billion over 10 years. Earlier in March US-based First Solar Inc., Sun Edison and China’s Trina Solar Ltd planned to set up manufacturing facilities in India. Madhya Pradesh, Gujarat and Rajasthan have emerged as the top destination for Investment.
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Solar power in India is well set to come into its own over the next few years from the perspective of both financial viability and availability. There is going to be an exponential growth in distributed solar energy, coupled with new storage techniques, which will bring noticeable changes to India’s energy spectrum. The future of Indian energy segment is here and going forward, by all accounts, it is the sun that will power our economic and energy growth into the next millennium. Solar, thanks to its distributed nature, has the potential to significantly reduce the current energy peak deficit and improve delivery. This is however based on the assumption that solar energy will get its due in terms of adequate financial support from the central and state governments. Ever since, the government announced its ambitious National Solar Mission, there has been intense competition among states for solar power generation. Individual states are launching tailor-made schemes to leverage solar power to its fullest potential. However, when it comes to their solar potential, there is considerable disparity among states, so much so that each state is taking a different route towards solar power generation. States like Madhya Pradesh and Maharashtra are going all out to set up large-scale solar power projects. On the other hand, agricultural states, like Punjab and Haryana, which rank relatively lower in estimated solar power potential, are finding it difficult to make land available for large solar projects. These states are trying to get a grip on the situation by setting up solar projects on available spaces like rooftops and canals. To understand what trajectory the solar mission is taking, we must first take stock of how much the top solar power producing states across India are contributing to the mission, their potential as well as limitations, and the current extent of support from the central government. Gujarat, the state that contributes 15 percent to India’s renewable energy basket, has the highest installed capacity (of about 900 MW as of June 2014) in the country. But considering that it is already a state with surplus power, the government has relaxed its approach towards solar power generation. In the recent past, there have been no significant additions to solar power generation sources in the state. Because the solar power potential of the state (37.55 GW) is still not fully exploited, there is a need to revisit the solar policy with special emphasis on rooftop projects. There is also a need to develop robust energy transmission infrastructure that will enable power-rich Gujarat to transfer energy to energy-deficient states. Rajasthan is also one of the top states in terms of solar power generation, along with the highest solar potential (142.31 GW). However, the state’s installed power capacity is 839 MW, no more than a fraction of its overall potential. The state is blessed with high solar radiation and enjoys 325 sunny days a year, making it a favourable destination for players in the solar industry. The downside is that dusty weather causes significant production loss due to soiling (that is, accumulation of dust on the surface of the solar unit) while extremely high temperature leads to photovoltaic losses. The state’s new solar policy and Bureau of Investment Promotion Rajasthan have come up with attractive packages for the solar sector. Meanwhile the state government is exploring possible incentives, including exemption on electricity duty and entry requirements, along with customized packages for investors in solar projects. Shekhar DuttMadhya Pradesh has an installed capacity of 353 MW and Maharashtra, 286 MW. Both states have over 60 GW each of potential solar power. These states have significant wastelands and have ambitious plans to turn them into large-scale solar power plants to quench their energy needs. While Andhra Pradesh is power surplus, the state is nowhere close to realizing its solar potential. The state has only 234 MW of installed capacity versus an overall potential of 38.44 GW. One of the main challenges in the way of solar generation is joint demand by solar, wind and new energy sectors for reduction in cross-subsidy surcharge. Sector players argue that single-window clearances for power projects are only on paper and there are still no permissions in sight despite much effort. To overcome this, the state government has now decided to offer 'deemed permission' to entrepreneurs as part of a new industrial policy, but we will have to wait and see if the policy is going to be effective. Tamil Nadu currently stands at a 104MW of installed solar capacity, with a 17.67 GW of solar potential. The state came up with an ambitious policy in 2012, but is facing challenges in terms of grid balancing. The mood around solar is generally upbeat in the country, but there are bottlenecks across states holding back the full impact of solar growth. A major issue is the poor transmission infrastructure between states. This needs to be addressed soon if we are to achieve any breakthrough in the solar space. The solar power industry has great prospects for growth, but is still at a nascent stage, growing in a much disarrayed fashion. India’s current solar power installed capacity is around 3 GW, which is less than 0.5% of the estimated potential (750 GW). This clearly points toward a huge opportunity ahead of us. Perceptive of this, the Indian government has increased fivefold its target for capacity addition in solar power. Instead of the initial target of 22 GW by 2022, the government now plans to add 100 GW capacity. Consistent government initiatives are required at such a formative stage. And many initiatives like the Jawaharlal Nehru Solar Mission, the setting up of the Solar Energy Corporation of India, R&D support for the solar mission, and 100% foreign direct investment are all nudging the solar mission towards a higher destiny. Solar power policies, for their part, should encourage efficient generation, wherein capacity is added only after proper assessment of all resources, including scarce resources like land and funds. This alone will ensure secure and long-term supplies of solar energy which means instead of accelerated depreciation (AD), generation-based incentives (GBI) should be considered as a suitable incentive for both solar and wind.Taking a cue from the global renewal energy circuit, experts here suggest that AD should be withdrawn in favour of an overall cut in the corporate tax rate. It has been documented that such economy-wide tax breaks enable overall macroeconomic benefits. The Ministry of New and Renewable Energy (MNRE) must ensure a level-playing field, with no preferential treatment meted out to PSUs. And more clarity in the policies would be a welcome change. Shekhar Dutt is Director General, Solar Power Developers Association (SPDA)
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India's $100 billion push into solar energy over the next decade will be driven by foreign players as uncompetitive local manufacturers fall by the wayside, no longer protected by government restrictions on the sector.The money pouring into India's solar industry is likely to be soaked up by foreign-organised projects such as one run by China's Trina Solar - not the country's own solar panel manufacturers.Last week, Softbank became the latest foreign player to enter India's solar market, leading an investment of up to $20 billion. The Japanese firm said it would consider making solar panels locally, but with Taiwan's Foxconn rather than a local manufacturer.Many Indian solar panel producers have benefited over the past six months from a surge in demand for panels not yet fulfilled by foreign companies. But their small scale and outdated technology will quickly make itself felt when the global players arrive."The smaller manufacturers of India, especially the cell manufacturers, will be adversely hit because they are unable to compete both on technology and even on price structures," said Jasmeet Khurana at solar consultancy Bridge To India.India's solar panel makers can no longer turn to the Indian government for help. The government is more concerned about creating jobs quickly and ensuring plentiful power supply in a country known for its many blackouts.India, in contrast to Chinese and German efforts to protect local producers, has scrapped most restrictions on where equipment that turns sunshine into energy is bought. Last year, it dropped an anti-dumping duty on panel import.Foreign players making panels in India are expected to compete with local manufacturers to fulfil so-called domestic content requirements for government projects.Trina has unveiled plans for a $500 million plant and US-based SunEdison is investing up to $4 billion in a manufacturing facility. Both are tying up with Indian power firms to build the plants.Solar TargetsIndia has said it expects peak power demand to double over the next five years from around 140,000 megawatts today. To help meet that demand, 100,000 MW of new capacity is to come from solar panels, and of that it wants at least 8,000 MW to come from locally-made cells.Foreign players manufacturing in India will probably win the bulk of those orders.Indian rivals like Indosolar and Moser Baer produce panels, but they cost 8 to 10 per cent more than foreign producers, Khurana said.It is not yet clear which foreign firms will emerge as the winners, with most of the facilities years away from being built and the big tenders for huge solar parks touted by the government still to be awarded.But those who can quickly build scale will be the most able to compete on cost."The lowest cost in manufacturing will only come from scale and integrated facilities," said Sujoy Ghosh, India Country Head at US-based First Solar.First Solar is to build 5,000 MW of solar power before 2020, but will rely on imported panels for now because it is cheaper to buy component parts internationally where they are more readily available.As for some of India's small panel makers, they are looking to complement the efforts of foreign players instead of trying to derail them.Maharishi Solar, a small manufacturer based in Delhi, is looking to tie up with a foreign company, the company's head Ajay Prakash Shrivastava told Reuters.It stopped producing solar panels a few years back as it could not compete with foreign manufacturers, primarily Chinese. Shrivastava said import panels are as much as 45 per cent cheaper thanks to subsidies in their home countries and lower borrowing costs."The Indian manufacturers do have a disadvantage," he said. "We are trying to find a partner who can bring in the latest technology."(Reuters)
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After the Hero group, Bharti Enterprises' decision to enter the renewable energy business, a completely new field for the company, is surprising but not shocking. Founded in 1976, the Bharti group has ventured into various fields including Telecom, Retail, Insurance and Wealth management. But is it so easy for a company to enter the renewable sector in India with amateur group in renewable sector like Softbank? The Japanese technology giant has a very small portfolio in the Solar energy and Foxconn which claims to have some expertise in manufacturing solar panels is known for making Apple Iphones. One must note that the Bharti group entered the retail business with an international player like Walmart and the insurance business with AXA. However, the move to invest as much as $20 billion over the next 10 years into a relatively new area for Softbank and completely unknown sectors for India’s Bharti and Taiwan’s Foxconn shows the easily available funding for the sector in the international market. According to Salil Garg an analyst at Fitch India Ratings, "Renewable energy offers huge opportunities for companies to enter the business. The government supports it with preferential tariff, renewable power obligation etc. Moreover, there is plenty of funding available for the sector. So due to tariff and tax benefits and the less time taken to set up a solar power plant, the return on equity is also very good." Moreover, a solar power plant takes around one year to reach the production cycle after funding and clearances as against a gestation period of 5-8 years for a thermal power plant. Moreover, due to rapid changes in technology, the developers have befitted and it is hoped that within next two years the solar energy would be cheaper than the thermal energy. This would not make the Return on Equity higher for the developers in the coming years. However, a major concern in the short term remains with the capability of state discoms to buy expensive solar power under the renewable purchase obligation. At present, the cost of solar power is above Rs 5 per unit, which makes it almost double the rate of average cost of thermal power under the power Purchase Agreements. Another problem that the sector faces is that of acquiring land for the projects. Given the failure of the NDA government in getting consensus on the Land Acquisition Bill it looks unlikely that this problem will be resolved anytime soon. How the company manages to sail through these challenges will decide whether Bharti will be using its own solar power panels to run its mobile towers.
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Japan's SoftBank Corp on Monday (22 June) announced investment of $20 billion in setting up solar power projects in India in partnership with telecom giant Bharti Enterprises and Taiwan's Foxconn. The joint venture entity will be called SBG Cleantech, which will be headquartered in Delhi and will focus on solar and wind energy. SBG Cleantech will have Manoj Kohli, a Bharti veteran, who until recently led Bharti’s emerging businesses, as executive Chairman and Raman Nanda, as the CEO. Softbank, the Japan-based telecommunications and Internet major, had previously committed to invest $10 billion in India over a ten year period. In a news conference, Softbank said that the three firms – Softbank, Bharti and Foxconn -- will set up 20 Giga Watts of renewable energy projects in India. SoftBank will hold majority stake in the joint venture, SBG Cleantech Ltd, while Bharti Enterprises Ltd and Foxconn Technology Group will have minority stakes. Its CEO Masayoshi Son said Foxconn will help with planned solar equipment manufacturing for the projects. The three firms are also looking at manufacturing equipment in India, he added. India has recently set a target of 100GW solar and 60GW wind target by 2022. Government of India’s mission is to achieve 24×7 power for all and the renewable energy target by 2022. India has achieved a base of 3.7 GW of solar power. The venture will invest in renewable energy plants across India. SBG Cleantech intends to participate in the 2015-16 round of solar power plant tenders under the National Solar Mission (NSM) program and state-specific solar programs. Sunil Bharti Mittal, chairman of Bharti Enterprises said: “This project will immensely contribute to the Hon’ble Prime Minister’s vision of meeting the country’s energy demands through clean sources.” "At Bharti, we believe in projects that have a transformational impact on society. In line with this vision, we are participating in a renewable energy venture with SoftBank and Foxconn which has the potential to transform the Indian economy," Mittal, said. Son and Mittal will be visiting Andhra Pradesh and Rajasthan over the next two days to talk to state government officials about potential projects, Mittal said at a news conference. He said that subject to winning project bids, land and other clearance, the first project should get off the ground in 12 to 18 month, adding that land acquisition should not be an issue since the venture will be using arid, non-cultivable and non-irrigable land. ashish.sinha@businessworld.in
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Azure Power, an independent power producer, on Thursday said it has commissioned a 100 MW solar plant under National Solar Mission policy in Rajasthan. "Azure Power has announced the commissioning of its 100 MW solar plant under India's National Solar Mission policy in Jodhpur, Rajasthan," the company said in a statement. The company will supply power to Solar Energy Corporation of India for 25 years. With the completion of these projects Azure Power has become the largest investor of solar power in Rajasthan. "This is the largest capacity project under the NSM Phase-2, where the power is being sold to Solar Energy Corporation of India at Rs 5.45 per unit with Viability Gap Funding," Inderpreet Wadhwa, Founder and Chief Executive Officer of Azure Power said. The 100 MW solar plant is also a significant milestone for the “Make in India” solar power initiative of the company. Equipment for 60 MWs has been made in India. This is the first of its kind large capacity solar power project executed exclusively with Indian technology and manufacturing. Azure Power has several projects operating under various policies for grid connected, rooftops and off-grid systems in the country. (BW Bureau)
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