Record Solar Capacity Addition in Q2 – Still Future Target Seems Hard To Achieve

India Solar addition in Q2 2018

India installed a whopping 1,372 MW of solar energy in the recent April-June quarter. This marked the fourth consecutive quarter where the solar capacity addition was more than thermal power capacity addition. A total capacity of 2.2 GW was added across India during this time, of which solar accounted for more than 60%. The country has been witnessing a gradual shift towards solar and the coal share is shrinking. The net capacity addition in the coal sector has been just 2.4 GW over the last four quarters, retiring 1.8 GW in the last year. The same momentum was not seen in the wind energy sector. The pace has slowed down after the introduction of competitive reverse auction bidding in this sector. However, the sector is expected to catch up to its peer in the coming quarters.

Though the country is making a good progress in the solar energy sector, industry experts fear that India might not touch the 100 GW mark by 2022. They say that India would be close at 78-80 GW in that time frame. The imposition of safeguard duty is being blamed for the stalled growth. The safeguard duty would increase capital costs by 15-20%, and raise bid tariffs by another 30-40 paise per unit. Many leading developers are also wary of bearing the extra cost on account of these duties and might withdraw from the existing projects. Though Crisil still expects an additional solar capacity addition of 56-58 GW during 2019-2023. Poor growth in the rooftop solar sector is also a sore point in the Indian solar market. According to Crisil, India will install a total of just 8 GW of rooftop solar capacity compared to the estimated 40 GW by 2023.

The director of Crisil Research opines that “The government must be live with the outcome of bid price; it should go ahead with these projects even if tariffs are higher than what they like”.

Source: Mint

India has one of the lowest solar prices in the world. The country should try hard to build up and maintain the pace of growth, as solar will remain one of the major sources of energy in the future.