India's solar sector will see speedy growth in 2022: Amplus Solar
However, challenges regarding price, tariff and non-tariff barriers and supply fluctuations still remain
For some time now, India has been continuously proclaiming on the global stage that by 2030, it would elevate its renewable power capacity to 500 GW from 150 GW today, and that the country would meet 50 per cent of its energy requirements from renewable energy. This stance notwithstanding, there has been a significant slowdown in renewal energy (RE) capacity addition in India, thanks to the pandemic.
However, there is a strong project pipeline and many projects are under the tendering process. Mind you that the Union Minister for Power and New and Renewable Energy RK Singh recently said that in 2022, India expects the investment in renewable energy to cross at least $15 billion. Data from the Department for Promotion of Industry and Industrial Trade (DPIIT) showed that Indian 'non-conventional energy' sector received about $7.27 billion as FDI from 2014-15 up to June 2021. One also has to keep in mind that while solar energy is the future, WEEE (Waste Electrical and Electronic Equipment) is a growing problem. Speaking to Bizz Buzz exclusively, Ritu Lal, senior V-P & head (institutional relations), Amplus Solar, delves at length on all such issues and much more and also on the key challenges before the Indian solar sector and the ways to overcome those.
There has been a significant slowdown in RE capacity addition in India, thanks to the pandemic. However, there is a strong project pipeline and many projects are under the tendering process. So, do you foresee any Upturn in RE capacity addition in 2022?
Year 2021 actually proved to be a good year for RE capacity additions in India, especially solar, despite the project delays due to the pandemic. The sector reported its highest-ever annual new capacity addition in 2021 (10.19 GW: including utility-scale, rooftop and off-grid systems). We expect the pace to continue in 2022.
Beyond the mass interest in reducing our carbon footprint and objectives like India's ambitious renewable energy targets, the understanding of the need to build back better and cleaner that has come with the pandemic will help in continued strong growth for solar across all segments – utility, hybrid, distributed and residential. However, challenges regarding price, tariff and non-tariff barriers, and supply fluctuations remain.
Despite power tariff hikes, solar power tariffs are expected to be below Rs 3 per unit, which is cost competitive. What is your take on this? Do you think that this will come in handy to the country's solar sector?
Clean-energy transition at the envisioned scale requires massive capital infusion and the cost-competitiveness of solar is a great pull for investors, indeed. Having said this, import barriers aimed at promoting domestic manufacturing may lead to a period of uncertainty for investments, considering the current state of import dependency. There is also uncertainty due to other factors that have an adverse impact on price such as the recent increase in GST. As cost of financing, interest rates, module costs, and capacity utilisation factor (CUF), have a major impact on solar tariffs and project returns, the government should address them via requisite policies in order to foster continued investor confidence.
What are the key challenges before the Indian solar sector? And how to overcome them?
The solar-energy transition is both expansive and expensive. The sector faces quite a few policy and regulation challenges addressing these determinators in their current form. Better finance options for the distributed segment, including MSMEs and residential consumers, must be made available. Frequent policy changes and backtracking, especially in the distributed sector is another area to improvise to support growth. One of the major impediments in the rooftop segment has been the negative impact of rooftop solar on the revenues of the Discoms. This has led to many high-potential states reversing policy decisions and imposing restrictions and exorbitant charges on rooftop solar. Unless the Discom issue is addressed on priority, the distributed solar segment will continue to underperform, despite the huge demand from consumers.
Peak power demand reached an all-time high of over 200 GW on July 7, 2021. It surpassed the previous all-time high of 197.06 GW. Thermal power satisfied 67 per cent of the load when demand was at its peak. In comparison, renewable energy sources accounted for 16 per cent of the supply. Hydropower met 14 per cent of the demand, and the remaining was met through gas and nuclear units. Do you think this power mix or percentage wise break up is ok, or would you like to see it differently?
As of now, we continue to operate on fossil fuel-based economic system. The clean energy transition will need a redesign of the entire energy production and consumption patterns to be able to achieve scale. There is a pressing need of collaboration across levels in trying to leverage solar and wind as replacements of fossil fuels and not mere supplements. Large-scale integration of storage is also a key element to making the transition successfully.
How is country's rooftop solar sector progressing? If you are not satisfied with the progress, what according to you, is going wrong and how to address the issue?
The country's rooftop sector growth can do much better with requisite support offered by the government. Rooftop generation is ideally suited for a country like India where land is scarce and expensive, and where we see double digit transmission and distribution losses. The ecological footprint of rooftop solar is also minimal compared to utility solar. As already mentioned earlier, onboarding of Discoms is required urgently in order to unshackle the sector and allow it to fulfill its potential. Availability of finance for the sector (for MSMEs as well as homeowners) is also a need that needs to be addressed by the government on priority. The focus should shift from capital subsidy to generation-based incentives to ensure that the quality of the installations is as desired.