India’s Practical Ground Level Challenges in meeting its Solar power ambitions

While the Indian government has been gung ho about increasing the share of solar powered generation in the country with a 25x increase in solar capacity envisioned over the next 5-7 years, the ground level realities are quite different. The distribution utilities are not only financially challenged, but also are presenting huge red tape hurdles for the growth of rooftop solar energy in various states in India. While utility solar installations are growing at a good pace thanks to massive government tenders, rooftop solar has stalled. Not only are the regulations extremely hazy, but the distribution utilities are creating hurdles as they see rooftop solar as a threat to their continued existence. India’s electricity sector is mostly governed by state regulations and the central government has little power to enforce a uniform policy structure across the country unlike say Germany.

Net metering policies have not been implemented in most parts of the country, which means that rooftop solar is not growing even in those parts where grid parity has already been achieved. For example in Maharashtra the tariffs are very high at almost 20 cents a unit, compared to the 10 cents a unit for rooftop solar. But the lack of clarity on grid connections by rooftop solar systems has made it hard for the rooftop segment to grow. India wants 40000 MW of rooftop solar to be installed which is almost 40% of the overall solar target. However the current installation is only around 300-350 MW, which is less than 10% of the overall solar target. The government is trying to push the sector and a rooftop solar policy is in the works. However, it remains to be seen how the center can push the states to change their regulations and policies to allow this nascent sector to grow.

The other major challenge being faced by the sector is the shoddy construction quality of the current utility projects. The huge competition intensity in the solar industry has made the companies bid aggressively for solar projects. They have cut cost in the capital side, by using inferior quality components and using low quality contractors. This means that many of these solar projects may run into trouble, as they generate much lower electricity than initially thought of. There may be a huge opportunity to buy these distressed assets and modify the equipment in later years to produce more electricity. While currently the competition is quite intense with many of the large utilities confused about the costs and the tariffs, I expect a shakeout with the less serious and smaller players going out of this business. This will make the industry more sustainable in the coming years.

Hindu

Joint Secretary in the Ministry of New and Renewable Energy Traun Kapoor told media persons on the sidelines of the Inter Solar India conference, that power distributors feel that their market would be lost if industrial units produce their own power using rooftop solar projects. They fear that their top-end customers could produce their own power depriving (power distributors) of the revenues, he said.