For the solar industry, 2018 began with a sneeze; a number of other ailments followed.

The Director General of Safeguards had just recommended a punishing 70 per cent duty on solar modules imported from the countries that India imports most from.

Though the duty was brought down to 25 per cent in actual application, it did the damage — it made building solar plants costlier without bringing in the intended benefit of fetching business to domestic module manufacturers. Then came other issues: uncertainty over GST rates, upper limit for tariffs in capacity auctions meant to jawbone the industry into quoting low prices for electricity sold and the morally repugnant cancellation of tenders.

The macro-economic conditions — weakening rupee, tight liquidity conditions, low demand for electricity — made things bluer. And then land acquisition issues cropped up.

All this happened under the looming threat of State governments opening done-deal agreements for renegotiations. Capacity addition bucked the rising trend and ended up, for the first time ever, below the previous year’s achievement.

According to the consultancy, Bridge to India, 2018 saw fresh capacities of an estimated 6,833 MW compared with 8,489 MW in the previous year.

Happy that a bad year has passed? Wait a minute....

The current calendar year promises to be worse. None of 2018’s problems has gone away, and there are more coming in.

After February, election-induced sclerosis is sure to set in and, although everybody sees it happening, there seems to be no prophylactic measure as the focus has shifted to politics. Tendering activity is picking up but with the tariff cap in operation, and there is one more uncertainty over the application of safeguard duty to developing countries other than China and Malaysia.

The issue is this: the safeguard duty applies to all developed countries and China and Malaysia. As for other countries, the duty does not apply until imports from an individual country exceed 3 per cent, or imports from all countries collectively exceed 9 per cent of India’s consumption. When these limits are breached, the duty comes into operation. Nobody knows for sure when imports breach these limits.

And, there is a big blighter in the authorities annulling tenders after the bids are submitted.

Last year, about 4 GW of tenders were binned and, very recently, Gujarat cancelled 700 MW of solar tenders on the ground that the quotes were high (₹2.84 for 250 MW of SB Energy and ₹2.89 for 250 MW and 200 MW, respectively, of France’s Engie and Finland’s Fortum.) All tenderers want tariffs in the neighbourhood of ₹2.44, reached first in Rajasthan (Bhadla) auctions of May 2017 and again in Gujarat in July last year, not minding the fact that the conditions of those auctions were different.

Sunil Jain, Executive Director and CEO of Hero Future Energies, a New Delhi-based renewable energy company, says he has become very selective about tenders, fearing that when the pen is about to be uncapped for signature, the tenderer would say ‘no, thanks.’ Bidding costs money (₹10-15 lakh a tender) and companies end up spending it for nothing.

“I am not at all optimistic about 2019,” says Jain, noting that in Gujarat, 2,500 MW of capacity is stuck in land acquisition issues.

Some optimism too

Yet, some experts seem to be of a view (or hope) that the mists could disappear after elections. Safeguard duty is set to come down to 20 per cent from July, by which time there would also be clarity about imports from which country have breached the 3 per cent limit.

The slight reduction in the duty and the expected fall in module prices (to around 21 cents a watt) could offset the impact of the duty a bit.

The optimists seem to bet on two factors — rooftop solar and floating solar.

Rooftop solar was the silver lining in 2018, with installations growing at a healthy clip, albeit on a small base. Bridge to India estimates that India added 1,588 MW of rooftop solar capacity in 2018, compared with 1,082 MW in 2017 and 556 MW in the year before. With no land, tariff or transmission issues, this segment could provide some tailwinds. The consultancy expects 2,368 MW of rooftops in the current year.

And, at long last, floatovoltaics seem to be picking up. If land is scarce, put it on water. According to the National Register of Large Dams, India has 4,862 large dams (whose walls are at least 15 metres high).

Of these, 59 are considered to be of ‘national importance’ and they collectively have a water surface area of 12,732 sq km — 22 times the size of Mumbai.

Sunil Rati, Director, Waaree Energies, a solar module manufacturer, counts floating solar among the technological innovations (along with energy storage and flexible modules) that will take solar forward.

Floating solar has been waiting to happen and auctions for 5 GW of solar-on-water seem indicated for 2019.

Bridge to India believes that solar installations could pick up in the second half of the current year, and fresh addition to capacity could touch 14 GW. Needless to say, much will depend upon the will and resolve of the new government that comes to power after May.