‘India will be one of the world’s top 5 solar markets by 2020’

While “commitments” made by companies at the RE-Invest 2015 summit earlier this week, to put up 266,000 MW of solar and wind projects, has been looked upon as “unrealistic and too ambitious”, observers say that the interest manifested is a sign that the importance of renewable energy industry is growing.

Some 200 companies gave letters of commitment to Prime Minister Narendra Modi at the summit.

“Demonstrating increased ambition and commitment to solar development at the highest level of politics and industry is a positive development for the Indian solar market,” says Adam James, Solar Analyst with the US-based GTM Research. He views the “new emphasis on extremely large project with some scepticism due to technical and financial risks involved,” but says that GTM Research believes India would be one of the world’s top five solar markets by 2020.

“The interest and response that RE-Invest 2015 has generated is reflection of the trend of the rise of renewable energy,” says Santosh Kamath, Partner and Head-Renewable Energy, at the global consulting firm, KPMG. “The commitments show the growing confidence of renewable energy companies in India,” says Ashwin Gambhir, an analyst at Prayas group, a Pune-based energy think-tank.

Tobias Engelmeier, Founder & Director, Bridge-To-India, a Germany-based, India-focused solar consultancy, feels that the high targets are technically possible if the politicians throw in their support, though, unlikely, because there is no strategy in place. However, India will be a big market “by default, not by design,” he says.

However, as Rama Bethmangalkar of VenturEast, an Indian venture capital company which has invested in renewable energy companies, points out, “There are numerous challenges in the power sector — from land acquisition, power evacuation, to high cost of capital and continued muted interest from equity investors.” Many observers also note that the biggest challenges include the financial health of the power supply companies, most of which are state-owned and bankrupt. These are the companies which will buy electricity from renewable energy producers.

Arunabha Ghosh, CEO of the Delhi-based think-tank, Council on Energy, Environment and Water, calls for credit guarantee and payment security measures.

Engelmeier warns that the “big question of who will be the bankable buyer of these large amounts of solar electricity remains unanswered.”

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