India to reach solar market potential of 12,500MW by 2016-17

With solar PV capacity rising from under 20MW to more than 1,000MW in two years, all eyes are turned towards India. The latest energy report from KPMG, The Rising Sun, predicts that India has a solar market potential of 12,500MW, calculated to be reached by 2016-17.

India currently has a power deficit of 9%, expected to continue its steady increase over the next few years. This has generated net losses of INR88,170 crores this year.

Author of the KMPG report, Arvind Mahajan, insists that, “To realize this, utilities and regulators should create an enabling environment recognizing the specific characteristics of solar power.”

However, The Hindu Business Line cannot envisage an Indian solar future because of the radio silence surrounding Phase II of the National Solar Mission, which was due to be announced this July.

KPMG states that the captive and REC market has the potential of reaching 2,500MW by 2016-17. Despite this, The Hindu Business Line argues that these electricity distribution companies, which are driven by renewable purchase obligations, have become bankrupt entities. The publication contends that there is no “evidence of the various electricity regulatory commissions enforcing the obligation”.

Mahajan puts the onus on the central and state government to provide the necessary support to the solar industry over the next five years, “to realize the immense potential solar power offers for an energy starved country like India”.

The Hindu Business Line suggests raiding the coffers of the National Clean Energy Fund in order to be able to offer FiTs on the same scale as those available in Japan. KPMG is in agreement: “This financial assistance can help states support solar power and mitigate payment security concerns.”

Additionally, KMPG recommends the Indian government should provide “infrastructural support, appropriate regulations such as “banking facility” or “net-metering” to allow access to rooftop and small-scale solar power projects which is expected to reach parity before grid-level consumers.”

Furthermore, KPMG’s report helps to instil a little faith in the Indian government because it has proposed the creation of a number of National Manufacturing & Investment Zones (NMIZ) to boost growth of the manufacturing industry in India. “The concept of NMIZ proposes a framework for more business friendly policy, procedures and approval ecosystem, combined with superior physical infrastructure,” states Mahajan. He believes this could be used as a model for a solar industry focused manufacturing and investment zones to “encourage investments in this clean source of energy”.

All legislative proposals need financial backing to make them concrete, however, The Hindu Business Line writes, “The government does not have money”. Unfortunately, without appropriate remuneration, KPMG’s optimistic predictions for a rising sun in India may not come to fruition.

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