India has journeyed a long way gaining global recognition as a major solar player. As of now, the country has 12 GW of cumulative solar energy generation capacity, with 14 GW under construction and 6 GW to be auctioned. Considering the fact that India has doubled its capacity within a bit more than a year (5 GW in 2015 to 12 GW in 2017), the mammoth milestone of reaching 100 GW by 2022 seems possible with private players and Government coming into an alliance. Undoubtedly, Indian market is showing an incredible growth rate, but we are still nowhere near the countries (China, US) that already dominate huge parts of the solar product supply chain. And it is important to contend with these countries to claim a larger part of the industry, cashing in on the growing green energy scene to initiate socio-economic reform in the country.
How to Compete?
Through manufacturing of course! As countries like China, US, Canada are backed by decade long industrial growth that have fashioned deep roots to penetrate solar industry, they can mass produce solar components, controlling the price of the products. For example, Chinese modules are still 8-10 per cent cheaper than domestically manufactured modules (Chinese modules cost $0.33-$0.36 cents/per Watt p, while domestic modules cost $0.35-$0.40 cents/per Watt p). This has created an influx of foreign modules in Indian industry, claiming demand (8 out of top 10 module suppliers in the Indian market are Chinese) that would have given domestic manufacturers a leg up and allowed India to bring in revenue selling domestically manufactured modules.
Therefore, it is important for Indian solar industry to become cost competitive with the countries dominating the sector. And in order to do that, domestic manufacturing is the right way to go.
In hopes of helping domestic players to grow and to build industrial reliance, Indian Government opted to impose DCR. And although, WTO swatted it down, Government has done a great job keeping DCR quota for Government based energy development projects. Besides that, Policies on- easy financing, ‘Solar Park’ development, offering long tenure loans, net metering, viability gap funding, mandating solar installation in Government buildings, and initiatives like International Solar Alliance and Make in India have helped domestic solar manufacturers to find a better footing in the industry.
Although, progress is being made, there are challenges to be handled. Offering flexible incentives and financing options, Slow net metering implementation time frame, Imposing anti-dumping on foreign solar modules (India spent $1.3 billion in 2015-16 in imports), Consistent decrease in announcement and awarding DCR projects, Enforcing solar installations on buildings, Establishing more module assessment labs (currently India has 5 MNRE accredited labs), Delay in Awarding Contracts 9 out of 12 GW of bids conducted in the FY 2016-17 so far, only 4 GW has been awarded), Delay in new manufacturing policy implementation, Continuously falling discount in tariffs, lack of solar skill development etc need prompt response from Government to bring comprehensive socio-economic growth in the country through solar development.
Possible Way Forward
To make India globally competitive, Indian solar industry needs to develop a larger policy framework than the one already exists to support domestic manufacturing plans. We have already explained how domestic manufacturing can help India control the solar supply value chain, bringing revenue within country, and profitably manufacture solar modules. Therefore, it is important to make sure that new policies address manufacturing issues concerning transport, infrastructure, taxation, labor laws, and power outages. Bridging the gap between having policies and implementing them aggressively is also another area Indian Government needs to show vigilance in.
Introducing solar manufacturing in National Skill Development Mission training plans can help in creating skilled workforce, strengthening Indian solar industry and its employment rate significantly. Support to large scale projects and fully integrated manufacturing plants can also be effective additions to the ‘Make in India’ policies in the future. Making Indian solar globally competitive has to be our primary concern as every other priorities cling on its individual success. Therefore, more focus at challenges and better efforts at increasing domestic manufacturing capacity can work wonders for the industry.
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