Economy

Solar power sector loses shine in 2018-19

M Ramesh Chennai | Updated on April 30, 2019 Published on April 30, 2019

With just three years to go to meet target of 100 GW, India would have to add 23 GW of capacity each year to 2022   -  THE HINDU

Only 6,529 MW were added during the year

The pairing of ‘hope and despair’ has probably never been done better than for the Indian solar sector in 2018-19. The fact that the government had tendered out capacities of 14,230 MW in the previous year spawned joyous hope at the beginning of the year; the denouement was anti-climactic.

2018-19 turned out to be a forgettable year, with fresh capacity additions tottering to a paltry 6,529 MW as against 9,010 MW in the previous year, according to data supplied by the Central Electricity Authority.

Coming on top of a dismal performance by the solar’s sister, the wind industry, which added a dismal 1,580 MW in 2018-19, the year was a forgettable year for the whole of the renewable energy industry.

The country today has 30.6 GW of solar power capacity, which splits as 26.7 GW of large, utility-scale plants and 3.9 GW of rooftop plants, according to the Cleveland, US-based Institute of Energy Economics and Financial Analysis (IEEFA). With just three years to go to meet target of 100 GW, India would have to add 23 GW of capacity each year to 2022.

Industry insiders attribute the poor performance to policy uncertainties. One was the threat of a 70 per cent ‘safeguard’ duty on imported modules, which was finally settled at 25 per cent. This, according to the market research and ratings agency Crisil, increased costs by 10-15 per cent.

Then there was the lack of clarity on the classification of solar modules, inverters and EPC contracts, for the purpose of GST.

And then came the ‘tariff caps’, or the highest price an energy company can offer to sell electricity at, in capacity auctions. To complicate matters further, the infrastructure for evacuating the electricity from the plants did not come up adequately.

It did help that module prices slid from around 32 US cents a watt in mid 2017 to around 23 cents now, but that benefit was eaten up by the depreciation of the rupee.

The industry is now looking at the new financial year with hope again.

Hope again

Crisil is hopeful that things will improve this year. About 9 GW of capacities have been auctioned out and is up to the industry to execute projects. Crisil, in a March 2019 report, projected new installations of 8.5-9 GW for 2019-20.

The reason for the cautions optimism is that the safeguard duties are set to decline to 15 per cent in after January 2020, and finally go after July 2020. IEEFA, which observes that “short mis-steps are getting in the way” of development of solar, expects another near flat year for utility-scale solar with 7-8 GW commissioned by March 2020.

Published on April 30, 2019
This article is closed for comments.
Please Email the Editor