Projecting solar power capacity addition of 48-50 GW between fiscal 2019 and 2023, rating agency Crisil says developer sentiment has been negatively impacted by the lack of clarity on several policy issues and arbitrary bid cancellations. This is contrary to a supportive policy stance from the government.

Over fiscals 2017 to 2019, while previously tendered capacities continued to be commissioned apace, certain risks to future project implementation had manifested. There were frequent bid cancellations, lack of clarity on GST procedures, and cost pressure from the imposition of safeguard duty on imported cells/ modules.

In a statement, Crisil states that while GST clarity was lacking for over a year, with a final decision taken by the GST Council in December, it ended with an increase in taxation.

Similarly, the safeguard duty was a double whammy of sorts, impacting the cost of solar power projects and not resulting in any significant offtake for the domestic manufacturing sector.

Besides, cancellation of bids post-auction, as state utilities/ SECI found tariffs to be higher than expected, hampered progress. Close to 4.7 GW was cancelled in this manner over March-December 2018.

In such a scenario, Crisil Research’s outlook factors in the prevailing market dynamics, where regulatory/ policy support is itself emerging as a key risk. The renewable energy domain is dependent on policy support and any uncertainty on that front can have strong negative consequences.

Hence, considering the current regulatory haze, the outlook has been revised downward. “We continue to monitor the same and remain aware of a possibility of upside to our call, once regulatory risk is mitigated to an extent,” Crisil stated.

Further, adequate land availability, timely implementation of grid infrastructure, and the ability of players to raise low-cost funds will be crucial enablers.

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