India presented its budget for 2015-16 in which a number of proposals for propping up the infrastructure sector in India were announced, such as setting up a Rs.20000 crore fund to invest in infra equity. There were also plans to set up 5 more giant thermal power plants with a capacity of 20000 MW. However, there was no concrete plan on how the government would achieve its target of 100 GW of solar energy by 2022. There are huge hurdles for the government to reach its 100 GW target.

1) The problem of finance which is both costly and difficult to get

2) The problem of integrating high amounts of intermittent renewable energy into India’s creaking power grid

3) The structural issues on how India’s bankrupt distribution utilities will be able to pay the solar power electricity prices

The increase in coal cess from Rs.100/ton to Rs.200/ton will go to the national clean energy fund, however how it will be used is not known. There were also no announcements of increasing the fund flow to the solar energy sector, either through a sovereign fund or through making solar energy a priority sector. Note solar energy requires large amounts of debt to fund its capex-heavy nature and Indian banks are facing a huge problem of ever rising NPAs on their balance sheet. The fossil fuel power sector has been one of the major contributing factors to the NPAs, as many gas and coal power plants are lying idle due to a lack of fuel. Even the running ones face issues, as the bleeding distribution utilities do not have money to purchase the power which is generated.

Solar energy received a boost during the Re-invest 2015 in which a lot of domestic and foreign companies announced grandiose plans of installing 10 GW, 15 GW and even 20 GW of solar power plants in the country. But all of these plans are not worth the paper they are written on. Many of these companies such as Essel are small timers, with no money or expertise. Even the larger ones won’t go ahead given the issues in land, power infrastructure, debt financing, issues in hedging of foreign loans etc.

It is hoped that during the remaining course of the year, the government will announce solutions to the myriad implementation hurdles faced by the solar industry.