What is the biggest concern for the Indian solar sector today?

“ Lack of Visibility of Projects” – This was cited unanimously by the CEOs of the top solar project developers  in India as the biggest challenge faced by the sector. On the opening day of the 7^th RE Expo in New Delhi on 12th September 2013, CEOs like Inderpreet Wadhwa(Azure Power), Alan Rosling(Kiran Energy), Pashupathi Gopalan(Sun Edison), Rajesh Bhatt(Juwi) stressed upon the importance of this point. It may be recalled that there has not been any project allocation under the JNNSM after December 2011 and the Phase 2 of the JNNSM has stalled. Many of the state policies are also facing huge delays or lack of interest due to various factors(Tamil Nadu, Andhra Pradesh and Rajasthan are examples).
Inderpreet Wadhwa said that visibility of projects for at least 3 years will help resource planning for companies. He also said that irrational prices like Rs. 5.5/kWh quoted during the bidding process will make projects unviable and cannot work. He mentioned that allocation of projects in states through L1 process has not been very effective. Instead of going for new and innovative ways of bidding, states should follow what worked really well for the JNNSM.
Alan Rosling said that the predictability of project is important. He also highlighted the fact that while MNRE’s role has been very important in the growth of the sector, there are several other players, mostly the state regulators whose role will be even more critical for the growth of the sector. These regulators can help grow the sector by effective RPO enforcement and bringing in clarity to the Open Access regime.
Pashupathy Gopalan of Sun Edison said that India is Number One in terms of potential among the 20 countries in which the company operates. There is a lull in the sector now and this is a time to reflect. He said that Consistency, Continuity and Visibility of projects are extremely important.
Tarun Kapoor, Joint Secretary, Ministry of New & Renewable Energy (MNRE) acknowledged the importance of the issue and said that there is a need to have a Feed-in-Tariff regime  like in Wind wherein developers don’t have to wait for allocation but can start project development anytime during the year.
On the topic of PV Manufacturing,  Mr. Kapoor said that domestic  module manufacturing is picking up, with good orders from overseas, but cell manufacturing is still in distress. The Indian Rupee depreciation cannot be of great advantage, because input costs(mainly imports) have also increased.
S Venkatramani of Indosolar said that while visibility of power projects is important, a level playing field for Indian manufacturers should be created. He said that the Rupee depreciation has improved competitiveness , but the onslaught of dumping of modules from other countries continues unabated. He said that the domestic  manufacturing industry is not asking for any incentives or subsidies, but only a stoppage of dumped products.  It is all about level playing field, he stressed.
On the topic of financing, Pashupathi Gopalan of Sun Edison said that a huge amount of Foreign Direct Investment has come in to the country (Rs. 20,000 Crore in the form of debt financing) and has helped India achieve close to 2 GW of installed capacity. However, there are two major challenges that are of concern to investors.

1.  Off-take risk – Honoring of the Power Purchase Agreement(PPA) is extremely critical for investor confidence, and the recent appeal of GUVNL for downward PPA tariff revision was a huge blow to that confidence. Investors feel nervous about other states doing the same.
2. Project allocation – The L1 process has been disastrous and has led to quality issues. There are several operational projects which are now refurbishing their plants because of quality issues. These developers who awarded the EPC contractors who quoted the lowest capital cost, are now facing quality issues which is leading to lower plant performance and they are now forced to refurbish their plants at additional cost.

In addition to these topics, off-grid solar was also discussed. Mr. Tarun Kapoor also announced the intention of MNRE to set up huge Ultra Mega Power Projects(UMPP) in Solar with more than 1 GW of solar plant in one location. He said that discussions are underway to set up 3 to 4 such Solar UMPPs.
The 7^th RE Expo had exhibitors from Solar, Wind, Biomass and other renewable energy segments and the number of visitors to the booths were impressive, considering the slowdown in both the solar and wind sector.
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