The Sunday RE Brunch 1 : 22 January 2017

(This blog series is supported by Aspiration Cleantech Ventures)

Hi there,
Welcome to the first edition of the Sunday RE Brunch.  We have started this brunch series to take a step back from the busy weekdays, and take stock of some of the major news of the week, and think a little deeper about the influence of these news on the industry. So, here we go.
The biggest news of the past week was the inauguration of Mr. Donald Trump as the 45th President of the USA. Mr. Trump’s election has led to lot of concern among the global renewable energy community, and reams of paper(and billions of pixels) have been used to write about the subject. As this Forbes article rightly says, “Clinton would have been great for renewable energy, Trump not so great. Everybody knows that. But, how bad would Trump be?”. This article from PV Tech says that “US Solar industry is mature enough to stand on its own two feet in spite of President Trump”. The best way to approach this question is to put the burden on Time, and say “Only Time will tell” J
While on the topic of Trump, it is not only the Energy sector that is likely to witness global realignments. If Trump really meant what he said during the presidential campaign, US will enter a phase of isolationism and will leave the geopolitical leadership to Russia and China. Reports from Davos, Switzerland, suggest that the world’s elite is hedging its bets and increasingly cosying up to China, and China has used this opportunity to position itself as the global leader of trade and environment protection. This has caused consternation not only among the western media, but also among some of the veteran Indian journalists(like Tavleen Singh – read her column here) who are in Davos to cover the event.
Back in India, the renewable industry had already shrugged off the Trump news and was minding its own business. Where is the time to think of Trump, when the solar industry has a target to grow from about 10 GW as of December 2016, to 100 GW by March 2022?
Speaking of targets, CRISIL released a report stating that India will meet only around 30% of the target it has set for itself on the Rooftop Solar PV space. The report, released during the India Rooftop Solar Congress event that took place earlier last week, says that India will have about 12-13 GW of rooftop solar capacity by 2022, as against the target of 40 GW. But then, as most industry folks will say, a 12-13 GW installation by 2022 is still a great achievement given the fact that the total rooftop installations in the country stood at around 1 GW at the end of 2016. Details of some of the major themes discussed during the conference can be read here.
One of the major discussion points in the industry currently relate to the implementation of GST and the impact of changes in the tax regime. Some of the tax incentives like the 10 Year tax holiday under section 80-IA will end on 31st March 2017, whereas Accelerated Depreciation benefits are likely to be further reduced. In this article in Business Standard, Andrew Hines of CleanMax Solar writes about the negative impact of the removal of these two incentives on the growth of rooftop solar PV segment.
On the subject of targets vs accomplishments, Mercom Capital reported that India’s achievement of solar installations for the year 2016-17 was way behind the target(2.25 GW vs target of 12 GW). But despite that, Bloomberg New Energy Finance predicts that India will be one of the leaders in 2017 in terms of solar capacity addition, especially since Japan and China is likely to witness a slowdown.
The wind sector was dominated by discussions about the newly introduced reverse bidding process for allotment of 1 GW of wind installations. According to Livemint, “bids totaling 2,600 MW have been received from 13 companies including Adani Power, Hero Future Energies Pvt. Ltd, Renew Power and Inox Wind for the two-stage process—technical and financial. Apparently 70% of the bids are from Tamil Nadu(read the article here). For an industry that is dominated by a few Wind Turbine Manufacturers, and that has grown on the back of tax incentives and very little competition, this is new territory, and the implications are unclear. Mr. Ramesh M, writing in Business Line, states that the Reverse Bidding in Wind is “An Idea whose time is now”, and analyses some of the potential implications(read more here).
There were some more interesting news in the industry, but it is time for a wrap up. We end this Sunday Brunch with some fond memories of Mr. Barack Obama’s presidency and his legacy in advancing the growth of the renewable energy industry. We look forward to his continued contribution to the industry in his capacity as a private citizen.