Highlights Of The Indian Solar Energy Sector
- The Indian solar energy sector is very well positioned given its role in the global solar sector, its potency on account of large-scale projects, and a pro-business environment
- Ambitious targets in the sector have kept the benchmark high but the industry is rising up to the opportunity by delivering global-standard offerings and solutions
- Policy uncertainty and lack of financial support continue to be concerns for the sector, for things appear to be evolving in the right direction for a growth up-tick
I had the pleasure of interacting with Subrahmanyam Pulipaka, the CEO of the National Solar Energy Federation Of India (NSEFI), and having a hearty discussion on the Indian solar sector. His wealth of experience and close involvement in the industry clearly came through in our conversation. Addressing issues related to public policy and challenges affecting the sector, as well as the scope for business opportunities and technological innovations that exist in the space, Subrahmanyam literally shed light on all that is to know about the Indian solar energy sector.
What follows, is a brief summary on some of the key takeaways from that discussion.
For the entire conversation with Subrahmanyam, you can listen to the complete podcast below or on SoundCloud here.
World-over, renewable energy never really came to the forefront; continuing to remain on the backburner for most countries’ and companies’ mandates. Arguably, a significant cause for this can be attributed to the dominance (and monopoly) that the cash-rich petroleum and thermal energy sectors had on the global economy and trade. But maybe now, with the world taking up sustainability and climate change a lot more seriously, renewable sources will start getting their due and consequently become mainstream.
The story for solar energy in India has not been very different. Yes, given several indigenous factors and causes, how things played out might have be different; but the moral of the story was largely the same.
An Evolving Policy Framework
The biggest deterrent for the growth of the sector has been India’s public policy on solar energy; or, in fact, the dearth of it. For a new sector in a new market, policy either gets modelled from an existing industry or from an existing market.
In India’s case, it got modelled along the lines of the existing energy industry – which was primarily thermal-based. And along with that, Indian solar also inherited the issues and challenges of the existing energy sector, especially those of the distribution companies (DISCOMs). But in that too, a learn-as-we-go approach was adopted.
Policy uncertainty and the lack of aggression resulted in the sector never being looked at as a priority. With global mandates shifting, especially towards sustainability and green manufacturing, there came about a consensus on pushing forward on renewable sources for energy generation; solar being at the forefront of this.
And being an integral part of world’s efforts for a greener future, India’s policy on solar has seen a lot of evolution over the past two decades, with the recent-most being critical to India’s rise in the global solar energy sector.
Large-scale Plants Versus Roof-top Solar
In fact, over the past decade, there have been significant strides in asset creation and capacity-building in the Indian solar energy sector. Unlike the path adopted by other countries of starting with the roof-top segment in solar energy, India strived to emulate the incumbent thermal energy sector and set-about large-scale solar plants.
However, the absence of compliances and regulations to monitor the nature of companies claiming to be EPC contractors in solar, eventually led to not only the misuse of spending in the sector but also negatively impacting the perception towards solar. The worst-affected casualty of this was the solar roof-top segment. Rather than questioning the capability and eligibility of the contractors involved, the entire technology got tainted.
One respite and messiah for the segment can come in the form of the ongoing PM-KUSUM Scheme (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan Scheme). Targeting farmers, the Scheme provisions for the installation of solar panels for electricity generation and irrigation purposes.
Aside from the many obvious benefits to the rural and agrarian community, the impact on the solar sector at large will be significant, given the large number of farmlands that can avail the Scheme’s provisions.
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Nevertheless, the pursuit of creating large-scale solar assets resulted in the country becoming the world 3rd largest contributor to solar energy creation. And while India is now ~35MW rich in solar energy generation, there continues to be commendable work underway and in the pipeline through the various projects being tendered accompanied by the development of additional units and schemes; and the ambitious goal of 100MW by 2022 is an achievable albeit difficult target.
Manufacturing Solar: Challenges & Opportunities
However, to get to these numbers there is a dire need for a domestic full-fledged solar manufacturing ecosystem that is backed by the administration, as much as by sound infrastructure and a pro-active bullish banking sector. When the new target of 100MW by 2022 was defined, the administration failed to take into account the lack of domestic capability to reach the target.
So, maybe, the imposition of the anti-dumping law in solar was not the best thought through decision. While it is true that the law resulted in an opportunity for Indian manufacturers to come to the fore, it failed to address the bigger issue of pricing and technical requirements.
Hence, though there exists a capability for the assembly and installation of solar modules in India – it is the consideration of manufacturing photo-voltaic (PV) cells vs modules that needs to be investigated. Because, to achieve the kind of numbers we are hoping to, there is the need for a robust local manufacturing ecosystem.
Another important consideration is the availability and mining of rare earth elements (REE) in India – or more specifically, the lack of REE resources in India. Therefore, no matter how good the intent is and no matter how much we preach about the need and goodness of the ‘Make In India’ initiative, the reality exists on the ground. And policy will need to be created such that it supports this reality in a pragmatic and near-holistic manner.
Unfortunately, the challenges posed before the sector are not restricted to technology and raw material resources alone. The lack of an aggressive policy to support the sector’s growth added with the dual-natured approach of administrative bodies towards understanding and addressing the sector also resulted in it not becoming a lucrative option for investors.
Although there has been a consistent interest from foreign investors in India solar opportunities, the hurdles posed before the sector in the form of taxation and disparate GST rates in solar leading to litigations, have resulted in a large number of distressed and non-performing assets (NPAs) in the sector.
Inevitably, this has detrimentally impacted the global perception of products coming out of the Indian solar energy sector. In this vein, it is heartening to see the incredible work being done by the NSEFI to showcase the on-ground capability of Indian companies working in solar and to, consequently, dispel the misconceptions about the Indian solar industry.
The questions being raised regarding the poor quality and efficiency of Indian solar technologies and services, will soon become a thing of the past.
For the entire conversation with Subrahmanyam, you can listen to the complete podcast below:
India: Still The Biggest Opportunity
Albeit late in the day, the industry in India is standing up to the opportunity that exists in the global solar market. And rather than trying to play catch-up with existing (and relatively saturated) foreign technologies, this is the chance for Indian players to lead from the front with the emerging technologies.
Skilling of manpower, though existing as a challenge as of today, is not a herculean task and can easily be overcome with time and the right training. The main aspect remains that a hawk-eye focus is maintained on the present leading into the future, rather efforts being retrospective in nature.
“We are at the right juncture of the world’s energy evolution journey; because we are not so big that we move slow, that whatever investment comes will only result in smaller returns after a period of period. And we are not too small and backward that whatever investment comes, will take an extremely long time to see returns.”Subrahmanyam Pulipaka
With the big role that India now plays in the global renewable energy sector, especially with solar, the future in terms of trade, scale, and innovation looks bright. The sheer nature of India as an emerging economy fuelled by several factors such as its young population, and backed by a pro-business administration, positions the market perfectly to take lead on the next industrial revolution.
That said, only time will tell if the Indian solar industry will truly take up the global opportunity that exists. And more importantly, how lucrative it becomes for foreign companies and investors to enter the Indian market in their pursuit for scale and business expansion.