Solar power to grab bigger share in India’s energy mix

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Interview | Bettina Weiss, President, SEMI India

SEMI India is keeping a close watch on the

centre’s “Buy Indian” mandate which have been initiated to boost the lacklustre domestic solar-power sector. Whether this puts the domestic solar sector on a collision course with the US remains to be seen. SEMI India’s Bettina Weiss, responds to many such topical queries, while speaking to Ritwik Mukherjee. Excerpts:

What would be the impact of Indian government’s “Buy Indian” mandate, which has been initiated to boost the lacklustre domestic solar-power sector, on the foreign suppliers who contribute the majority of the parts used in India’s solar farms?

The domestic content mandate is a matter of ongoing discussion and consultation between the government and the industry. We must note here that there are differences in opinions with respect to such a mandate even within the various segments of the Indian solar PV community. There are also trade protocol considerations that the government will be keeping in mind and will need to balance. A considered decision will balance the interests of the manufacturing industry and long term solar PV growth and adoption based on the need to have the best quality, performance, reliability and price point of solar products available to Indian users.

Having said this, SEMI firmly believes that for the full benefits of solar to accrue to India, the region must develop a strong, robust manufacturing base and this must be encouraged and enabled through the right kind of policy intervention and support.

Policy support could extend, for example, in areas such as priority lending, capex subsidies for manufacturing such as those provided under MSIPS, tax rationalisation, a technology development fund, etc.

Eventually a complete manufacturing eco-system needs to develop locally for Indian firms to compete on price and performance and to be able to innovate. Webelieve Indian manufacturers can compete with the best in the world, as long as the domestic market continues to expand to provide them scale and there is greater awareness and consciousness among all segments of end users in the region about the importance of adopting quality products that are certified and qualified in Indian conditions, are backed by warranties and adhere to quality norms. Historically, Indian PV manufacturers have exported a large proportion of their production and with the expected rebalancing of global PV supply and demand in 2015 — this opportunity will open up again for those manufacturers who stay in the game.

How is solar energy sector faring in India? — the current problems and the way ahead?

We believe that while these are difficult times, particularly for manufacturing, the solar deployment record of the last three years should give us all tremendous hope for the future. India now has a class of solar EPC firms, which are among the biggest in the world. The learning curve has been steep, but there has been tremendous progress. All the questions of just a couple of years ago – about grid connectivity, bankability, financing, plant performance and so on are already finding answers and a next level of challenges are being addressed.

Installed grid connected solar power generation capacity is close to 2 gw, from just a few megawatts about three years ago and this will multiply several times in the years ahead, rooftop PV has immense untapped potential across urban, commercial and industrial segments and in some usage segments is already at parity with conventional electricity. Telecom tower electrification/backup and diesel replacement, rural off-grid electrification and micro-grids are segments for immense growth.

Solar PV is a proven, constantly improving technology and is here to stay in India’s energy mix. The future is, unqualifiedly bright for India. With creative business and financing models and with a commitment to quality and operations, solar is a superbly suitable, clean energy source for the region.

Your take on Jawaharlal Nehru National Solar Mission (JNNSM)?

The JNNSM energised the solar market and brought solar to the frontlines of the energy agenda. It has to be credited, along with key state policies such as that of Gujarat, with creating the megawatt scale solar market across India. It has also been innovative in its approaches to making solar electricity palatable to buyers (the bundling scheme under Phase 1, for example) and has been aggressive in implementing a market price discovery process.

The solar mission has many objectives, being part of the broader National Action Plan on Climate Change — and among these are the widespread promotion of solar energy across all segments – megawatt scale grid connected projects, rooftop and small scale generation, rural/off-grid electrification, solar thermal, etc. We believe the first of these segments has, in consort with state policies, been opened up and will now grow under its own momentum and via the enforcement of RPO and the REC mechanism and with the states stepping in to play a much more active role. The rooftop and small scale generation segments are benefiting from the drop in PV module and system prices and are likely to be the next big market driver, enabled by regulatory assistance and policy support.

Enabling the establishment to end manufacturing capacity in the country is one of the mission’s stated goals and we expect that the downstream (adoption) momentum will begin to benefit the manufacturing segment, aided also by a recovery in the global PV supply-demand situation. On the R&D front we have seen the establishment of the National Center for PV Research & Education at IIT Bombay that has already become an active center for training, education and research collaboration. More such centrally funded initiatives are likely to follow.

n When will India achieve grid parity?

Grid parity is best understood as a ‘band’ rather than a single ‘point’. If one were to plot the cost to consumer of PV power (as a declining curve) and that of grid electricity (from all grid sources combined) one would have to plot a series of curves for the latter as grid electricity prices vary depending on demand segment and region of the world.

In India, in certain applications, such as urban rooftop PV, especially at the higher end of the consumption spectrum, solar PV is already very close to parity. Power from diesel generation costs the consumer Rs 12 to 15 per kwh, and contains a built-in subsidy component. The energy price of gas and imported-coal based thermal power are also on a rapidly rising curve, without factoring in environmental costs. So the case for solar PV is already very compelling in a host of applications ranging from urban situations to telecom and captive generation.

ritwikmukherjee@mydigitalfc.com

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