New research has shown that India achieved an operational solar power capacity of 20 gigawatts (GW) by the end of 2017.
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Mercom India Research has claimed a record 9.5 GW of solar power capacity was likely added in 2017, taking the total solar power capacity operational in India to over 20 GWs. While there’s no official word from the Indian government yet, media reports said the figure did not match those released by the Ministry of New & Renewable Energy, but Mercom attributed the figures to its India Solar Project tracker.
If the new research is spot on, it shows, at least on paper, that the Indian government was well on its path of meeting revised capacity targets of 100 GW of installed solar power capacity by March 2022.
India has made a major push in the renewable energy sector, but ,according to some experts, it faces an uphill task vis-à-vis funding, since the plan will require U.S. $125 billion. The plan seeks to achieve an ambitious 175 GW renewable energy target by 2022.
For the solar projects alone, India will set up a U.S. $350 million fund, according to India’s Power Minister RK Singh.
The country, which receives twice as much sunshine as European nations, wants to make solar central to its renewable expansion. It expects renewable energy to make up 40% of installed power capacity by 2030, compared with 18.2% at the end of 2017.
The Power Minister told a gathering at an event organized recently by the International Solar Alliance in Abu Dhabi that India would achieve its target of 175 GW of installed renewable energy capacity well before 2020. The installed renewable power capacity was currently about 60 GW, and India planned to complete the bidding process by the end of 2019-20 to add a further 115 GW of installed renewable energy capacity by 2022, he added.
But a major hurdle that stands in the way of solar power expansion is the policy around the manufacturing of solar panels and their import.
While the Modi government has often emphasized the need to do away with protectionism in order to push solar power, one of the government’s ministries has proposed a 70% import duty on imported solar panels. While this was subsequently stayed by an order of a high court, sector experts have decried this kind of protectionism.
This lot points to the U.S., for example, saying that the country levies a safeguard tariff on imported solar modules and cells, starting at 30% in the first year, 25% in the second, 20% in the third, ending at 15% in the fourth. They want the Indian government, too, to follow suit.
The government, on its part, does not seem averse to this, it would seem.
A news report said it was “weighing the option” of lowering the proposed 70% safeguard duty on imported solar modules and panels from China and Malaysia recommended by the Directorate-General of Safeguards.
The Standing Board on Safeguards, headed by the Commerce Secretary, which is currently examining the proposal, is yet to make its recommendation to the Finance Ministry as it is deliberating upon the appropriateness of the high duty proposed by DG Safeguards, a government official told the BusinessLine newspaper.
The government has to walk a tightrope, on this issue. While domestic manufacturers of solar panels would definitely benefit from a high safeguard duty. On the other hand, it would increase the cost of production for local power producers.
Overall, on the renewable energy front, India expects foreign capital to make up for the bulk of its investments to meet its target. But the lack of a concrete policy coupled with the fact that at least three ministries involved never seem to be on the same page vis-à-vis renewable energy, has ensured that only local banks and financial institutions have invested in these type of projects so far.
Just a couple of days ago, though, there was some cheer on the foreign investment front.
One of China’s biggest solar panel makers, LONGi Solar, announced it would invest nearly U.S. $309 million in India in the wake of U.S. protectionism and India’s anti-dumping measures threat. The company’s total investment will include $240 million in construction investment and $68 million in working capital, to double the capacity in Andhra Pradesh from 500 MW to 1 GW.
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This could be the start of a new wave of investments, some experts hope. In 2017, India imported 24.1% solar products from China. China produced a total of 76 GW of solar modules and 68 GW of solar photovoltaic cells, up over 33% from the previous year. LONGi’s investment is expected to lower costs.