But
obstacles remain from red tape, protectionism
India is beginning to emerge as a major solar
power generator, third in rank after America and China, although the country
continues to face problems from a stifling bureaucracy and local industry,
which seeks protection against foreign manufacturers of solar panels and other
equipment.
Nonetheless, given the tie-ups and investments
already concluded, experts estimate that solar capacity in the country is set to
rise from a mere 50 MW in 2010 to nearly 10 GW in the next five years.
Crucially, the impact of solar power
generation will be felt the most in the rural and backward belts that remain
outside the national power supply grid, thus changing the lives of millions
that rely on the burning of high polluting and unhealthy biomass energy.
According to a 2011 study by the International Energy Agency, 404 million of
India’s 1.2 billion people have no access to electricity at all.
Solar and other renewable energy sources such
as wind and hydro are crucial to plug electricity generation gaps as a result
of insufficient utilization of thermal capacities due shortage of coal
supplies. This is apart from the much lower emission benefits of renewable
energy. According to the IEA study, titled Technology Development Prospects for
the Indian Power Sector, “challenges of the electricity sector in India include
low efficiencies of thermal power plants, continued reliance on coal plants,
and inadequate transmission and distribution networks. Improving the efficiency
of electricity generation from coal is needed to exploit the extensive domestic
coal resources and reduce air pollution. Integrated gasification combined‐cycle (IGCC) technology could achieve this, but has to be adapted to
India’s coal quality or to rely on imported coal.”
States such as Gujarat, Karnataka, Tamil Nadu
and Maharashtra are at the forefront of promoting RE in India via fiscal and
tariff incentives that promote both domestic and overseas investors. These
complement the efforts being made at the federal level to boost renewable
energy.
Solar
Interest
A bit of India’s solar progress is due to the
inducements being extended to investors under the officially backed National
Solar Mission, which seeks to install 20GW of solar power by 2022 in the
country. New Delhi is now in the process of implementing the second round of
the national solar mission, with the response again reported to be very good.
Nearly 200 firms have offered over 2,500 MW for the second bidding, much higher
than the allocated capacity 350 MW. In the first round, bid applications were
about 1,700 MW against allocated 150 MW of solar power.
That response has to be greeted with a certain
amount of caution. A 2010 study by the World Bank found that producers have
serious concerns about a number of issues, the most contentious of which is a
requirement for domestic content to protect local manufacturers, who do not
appear to be able to gear up fast enough to meet the country’s needs. US trade
officials have repeatedly raised the issue, threatening to take it to the World
Trade Organization. European Union officials have raised similar concerns.
Under the terms of the regulations, foreign
businesses seeking to manufacturing bases must tie up with a local partner.
This process takes a bit more time, but advocates say it ensures a win-win
situation for everybody -- business and politics. This is the way the power
equipment sector is also being developed. For solar, the local content norm
applies only to National Solar Mission, not state-backed projects, such as in
Gujarat etc.
The World Bank study also polled developers in
India, who complained that a long list of approvals from land usage
authorities, pollution control board authorities, the aviation ministry and
local authorities for water usage take months to solve. Some approvals must be
renewed every year.
Nonetheless, overseas solar operators still
have faith that the Indian market will develop. Companies that have tied up
with local Indian players include SunEdison, Juwi solar, AES Solar, Conergy,
Gehrlicher Solar, and Enfinity. Foreign solar module suppliers that have opened
Indian channels include First Solar, Solar Frontier, Abound Solar, Trina Solar
and Suntech.
In an assessment, the consulting firm Gartner
has said: “given the growth potential, it is only natural for global solar
photovoltaic manufacturers and their suppliers to invest in the fast-growing
Indian market.”
In a big move recently, the Frankfurt,
Germany-based First Solar GmbH, the world's largest solar company by market
value, signed an agreement to supply 100 MW solar modules to major Reliance
Power for its upcoming project in Jaisalmer, Rajasthan. Solar power from the
plant will be supplied to Mumbai.
In a statement First Solar said that the
“agreement is the largest PV module supply agreement in India to date,” adding
that “40 MW of advanced thin film modules will be supplied by end 2011.
Delivery of the remaining 60 MW solar module is expected in 2012.” The company
said that it expects India to return about 10 percent of its 2011 sales in
megawatts that can make up for the slide in Europe revenues.
The big problem for solar remains cost, which
is about 2.5 times that of coal in India, making it necessary for the state to
extend fiscal and tariff incentives to make the clean source of power, viable.
However, this too could change. In a
significant statement earlier this month, Lanco Solar, backed by the major
power and infrastructure firm Lanco Infratech, said that it expects solar power
costs to fall by more than 40 percent by 2015 that would allow the industry
take on conventional coal-fired power generators without state subsidies and
backing.
Renewable
High
Indeed, global players see good prospects in
investing in India’s RE sector that especially comprise wind and solar. Reports
by consultancies PwC and KPMG this year have highlighted that USA, China and
India are the top three favored destinations globally for renewable energy
investment.
India’s wind energy installations are
estimated to rise by 3,000 MW, nearly 40 percent higher than last year. Wind
capacity addition for the next three years is projected at 7,500 MW.
One significant interest indicator in Indian
RE is private equity investments that have taken a big leap in the first three
quarters 2011-12 (ending March) with 14 transactions worth over US$520 million
marking a fivefold rise.
Meanwhile, earlier this month, GE, the world's
third-biggest supplier of wind turbines, announced its first investment in
Indian RE generation. GE is pooling US$50 million with AIMS-listed Greenko
group’s US$65 million investment in 500MW wind projects. Greenko is building a
diversified RE portfolio in India.
In another recent boost, Hyderabad-based
Suryachakra Power has signed joint venture agreements with American Bio Sources
Inc (ABS) and Environmental Energy Finance Corporation USA (EEFC) to develop
500MW RE projects in the country.
The deal has been signed between Suryachakra
Global Ventures Ltd., Hong Kong (SGVL), a wholly owned subsidiary of
Suryachakra Power with ABS and EEFC to set up 50:50 joint ventures to develop
solar, wind, biomass power projects in India. ABS already has US$200 million
approved funding from the US Export-Import (Exim) Bank to set-up RE projects in
India.
Clearly,
RE is one momentum that India cannot afford to miss.
Siddharth Srivastava
Asia Sentinel
(Siddharth Srivastava is a New Delhi-based
journalist. He can be reached at sidsri@yahoo.com.)
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