Solar consultant, Bridge to India, has released its 2014 'India Solar Handbook', claiming India should be one of the best solar markets in the world, but it is hindered by policy complexity.
Given the country's naturally high solar radiation, growing demand for electricity and population, its lack of fossil fuels and newly elected pro solar government, India should be one of the world’s leading solar markets.
However India is currently hindered by “confusing” policy: state and national policies cross over, variable land taxes and import duties are repelling investment. Just last week, Bridge to India said anti-dumping duties could halt India’s solar industry for two years.
The handbook is a detailed guide of the solar industry in segments, its drivers and challenges and predictions for the future.
The report also states due to currency fluctuations and investor uncertainty from power purchase agreement (PPA) disputes leading to a lack of adequate loans, funding solar developments is still a notable difficulty.
To add to investor uncertainty, some projects are not performing as expected, so more adherence to quality and better performance information is needed to reassure investors they will make good returns, says the report.
Corporate Social Responsibility (CSR) payments are predicted to boost solar funds. CSR payments are currently set at 2% of profits for most corporations in India; as solar comes under CSR, the government is expected to make CSR compulsory for all corporations in India, providing more funding for solar developments.
India’s installed capacity currently stands at 2.5GW. This was mostly driven by the JNNSM national solar mission and state policies in Gujarat.
Out of the 2.5GW, 70% is in the deserts of states, Rajasthan and Gujarat. Rajasthan is expected to take the number one solar spot from Gujarat in 2015, with most of the national solar mission developments planned in the state.
JNNSM created a buzz in 2010/11, but since then, other markets such as China the US and Japan have excelled past India in the international solar market, the handbook states.
India ranked sixth in the global PV markets in 2013 - despite a 6.8% decrease in deployment since 2012 after the JNNSM rush.
At least 370MW is expected in 2014, with PPAs to be signed in the third quarter, in the states of Madhya Pradesh (100 MW), Chhattisgarh (100 MW), Haryana (50 MW), Karnataka (50 MW), Uttarakhand (50 MW) and Odisha (20 MW).
The handbook quotes the International Energy Agency prediction that India will overtake the US and China to be the leading solar market in 2030.
The handbook also highlights an estimated 60GW of diesel power privately installed, showing a gap in the market where power demand has been filled by diesel in the absence of robust electricity access policy.
To drive India’s solar industry, the handbook advocates for the government to set up a rigid framework, including net metering.
Bridge to India forecasts the utility solar market will reach 6.9GW by 2016, with a further 494MW of rooftop installations and 302MW expected to be installed at telecom towers to replace diesel generation.