India is likely to exceed its ambitious target of creating 100 GW of solar power by 2022, the head of French solar company Solairedirect has said.
In an interview with BusinessLine in December, Thierry Lepercq, the head of solar power producer Solairedirect, which began operating in India six years ago, said that a combination of government policy — which has been pushing up solar capacity through competitive auctions — a low cost base, and signs that corporate India was starting to embrace solar as an economically rational energy solution, would mean that capacity could go “significantly beyond that” quickly.
Solar power target India has raised its solar power target from 20 GW to 100 GW by 2022, which would put it well ahead of much of the world, including the current leader Germany, which has around 40 GW of installed solar power, and China at 12 GW.
While Indian capacity is currently in the region of 3 GW, with the right policy framework in place India could easily exceed targets, Lepercq said. “There is considerable flexibility which is only matched by diesel generation. Solar can be deployed very quickly — building a dam takes 10 years — but developing a solar park, even on a large scale takes six months.”
Policy approach India’s policy approach to solar power has been in contrast to markets such as Europe, where solar has been heavily subsidised, but where the industry took a sharp hit following a fall in Government support in the wake of the economic crisis.
India’s competitive auctions by contrast have sought to grow the market by putting downward pressure on prices — Solairedirect, for example raised eyebrows when it won a tender for a contract in Gujarat in December 2011 by bidding ₹7.49 a unit — against a reference point of ₹15 — a target the company met despite scepticism.
Lepercq said that the cost base in India had proved lower than anticipated — with the cost of the so-called “balance of systems” — the components that make up a solar energy generating system that exclude the photovoltaic panels themselves — had proved cheaper than most global markets. “We have reached a level of competitiveness in India in the balance of systems that are world class — 25 per cent lower than in France and lower than the US, and in some cases lower than in China,” he said.
As a result a cost of producing solar power in India was “significantly less expensive” than many parts of the world.
Transparent and efficient “Before we entered the market, people had told us India was too complicated but we have found the process transparent and efficient and that’s not a one off experience,” he said. Solairedirect, which has raised over $1 billion for projects globally, and financed many of its India projects through domestic banks, has 16 MW of installed capacity in India with a further 100 MW of capacity at various stages of construction. He said that he was encouraged that in India solar power would increasingly been seen as an economically rational answer to the country’s energy needs. “We are not just talking about saving the planet…our main concern is energy supply and growth.”
The company is in talks with a “major” manufacturer to install and supply 300 MW of solar capacity at three of their plants.
“It’s not just the Government but corporate India — and they have tended to be conservative when it comes to investment in new technology. Our very strong conviction is that corporate India has turned the corner mentally and with the power of corporate India behind it capital will follow.” Solairedirect’s investment plans — focused on India and other fast growing markets such as Chile reflect the changing face of the global solar industry as it re-orientates away from Europe to Asia, where China, Japan and India have been the largest markets. From a minor player five years ago, Asia now accounts for over half the installed capacity of 454 GW globally in 2014, according to figures from IHS Global Insight — a trend projected to continue into the future.
Investment plans Lepercq welcomed the Indian Government’s decision not to impose the anti-dumping duty on solar panels (from China, the US, Malaysia and Taiwan) arguing that the only way to achieve large-scale solar power usage was without Government subsidies. “The Government understands that if it imposed these duties the costs would be paid in the form of higher solar power prices in India and that’s the wrong thing for the country.”
“It seems to us that if you are building barriers you don’t trust your own manufacturers to be competitive,” he said. “Nobody has built long-term sustainable capacity on the basis of durable import duties — you are better off with a highly competitive domestic manufacturing sector.”