India may reach total solar PV capacity of 50 to 75 GW by 2022 – a little over 60% of the 100 GW target set by the government, reveals India Re CEO Survey 2018 by Bridge to India. Possible reasons for missing the target include the duties threat, falling tariffs, weak power demand and various policy challenges. Total rooftop solar capacity is expected to reach less than 10 GW, which is only about 25% of the target.
Notwithstanding the ongoing safeguard duty investigation and the government’s ‘Make in India’ push, the industry is pessimistic about module manufacturing prospects in India. Sixty-one percent of the survey respondents believe that the country will have less than 3 GW of integrated manufacturing capacity by March 2022.
The survey was conducted among top executives of over 40 Indian and international companies. The participants were chosen across the value chain and included equipment manufacturers, project developers, engineering, procurement, and construction (EPC) teams, and financiers.
Regarding ease of doing business for utility-scale solar PV projects, Gujarat (followed by Madhya Pradesh and Andhra Pradesh) is seen as the most favourable state for policy framework (clarity and visibility), land acquisition, transmission capacity, permits and approval processes. The three worst states on these combined parameters are said to be Maharashtra, Tamil Nadu and Haryana.
Karnataka is understandably the overwhelming favourite for open-access projects because of its very attractive policy and ease of obtaining approvals. It is followed by Tamil Nadu and Andhra Pradesh. The bottom three states are Rajasthan, Maharashtra and Gujarat.
Madhya Pradesh, Maharashtra and Haryana, meanwhile, are the most preferred states for rooftop solar PV projects.
Challenges facing the sector
Not surprisingly, more than 70% of respondents feel that the current bidding environment is irrationally aggressive. Tariffs ought to move up, particularly in view of the increasing tender issuance, but it remains to be seen whether distribution companies (DISCOMs) are willing to accept that.
The response on various operational challenges paints a bleak picture. All factors are assessed as challenging/very challenging. The three biggest concerns are safeguard duty threats, poor policy environment and weak financial condition of DISCOMs.
Storage has been talked about as a vital component of clean energy grid, but it is yet to find acceptance in India. The industry feels that high costs, lack of awareness and a lacking policy environment (in that order) are restricting the growth of this market.