The ‘one step forward, two steps back’ ballad that the Indian solar industry is enduring since the time the industry first crawled out of the well, continues unabated. While the investigation by the Commerce Ministry’s anti-dumping watchdog into the anti-dumping case launched by the Indian Solar Manufacturers Association (ISMA) against solar developers buying cheap solar cells and modules continues, the Domestic Content Requirement (DCR) clause has forced the delay of the 2nd phase of the Jawaharlal Nehru National Solar Mission (JNNSM) since DC requires solar power developers to buy a substantial percentage of their equipment from Indian equipment and component manufacturers.
Now, the government is trying to give us a consolation pill by launching the National Institute of Solar Energy (NISE) to replace the faceless Solar Energy Centre in Gurgaon, Haryana.
The aim of this institute, as per a Press release from the Ministry of New and Renewable Energy (MNRE), is to “accelerate the process to support induction of the latest technologies to ensure maximum cost benefit and lead to early commercialisation.” That’s pretty vague, to say the least, and any attempt to predict the institute’s success in this decade might bounce way off the shifting goalposts of India’s solar energy landscape. While the long-term output has looked bright for years, the short and medium-term is hazy at best.
Investments in the solar power sector (both equipment manufacturing and power production) nosedived 67% to $1.7 billion in 2012, from the all-time high of $5.2 billion, touched a year earlier. However, 2012 was perhaps just a bad day in the office, not only in India but all over the world. Last year, total investments in the clean and renewable energy sector saw a 12% decrease to $244 billion globally while investments in India fell 45% to $6.5 billion from the $12.9 billion registered in 2011.
Data for the year 2013 are yet to come in, but it has definitely been a better year in terms of scale project size. For instance, a consortium led by Bharat Heavy Electricals and Power Grid (both of them public sector heavyweights) announced the launch of the world’s biggest solar power plant near Sambhar Lake in Rajasthan, with a total capacity of 4,000 MW. It is one of the world’s top locations in terms of highest solar energy incident on the earth’s surface during a year. The project will cost around Rs 30,000 crore ($4.5 billion).
Soon after, Welspun Energy announced another significant project – the 2nd biggest solar power plant in the country with a total capacity of 151 MW, to be commissioned in Madhya Pradesh by 2017. Moreover, Reliance Power will be commissioning 100 MW capacity in Rajasthan by March 2014, currently the largest solar power project in Asia. Therefore, big-ticket investments are just beginning to shape the dynamics of India’s solar sector. However, public sector R&D and adequate financial support will be crucial for long term to unleash the real potential of this industry, which could grow much bigger than thermal power during the second half of this century.
Globally, public sector and university R&D in solar has flourished in collaboration with the industry, backed by huge government subsidies. NISE can only be successful if efficient product patenting, technology transfer and royalty pricing mechanisms are in place. But sadly, India has always been a laggard in this respect. Secondly, if we put the entire R&D in the hands of one institute, it will require massive funding since the current shallow pockets of the industry can’t allow private players to fund cutting-edge R&D projects. Thirdly, proven mechanisms such as priority sector/subordinated lending and take-out financing are not allowed for solar developers although other priority sectors like roads, ports, thermal power and steel plants enjoy that privilege.
The initial goal of the institute is to establish a national review-cum-strategy board to study and evaluate different models across the globe for a future roadmap. But the commercialisation of any new technology developed from the scratch could take at least a decade and by that time, JNNSM’s deadline of facilitating a capacity of 20 GW of solar power would have long passed. There’s just one bright spot in the entire exercise. If the institute works along the lines of a few state-of-the-art institutions like IISc, ISRO and TIFR, it might ensure some future technologies being disseminated at relatively cheaper cost to the industry in the 2020-2029 decade.
The immediate requirement is to allow private sector R&D through massive subsidies and tax credits in excess of 200% for all R&D expenses incurred by any private player in India. Also, solar energy purchase should be made mandatory for industries and state governments who can buy a certain percentage out of their total power purchases. Currently, only a few state governments follow such purchase obligations, but that’s hardly enough to ensure feasibility. Issues like take-out financing and priority sector lending must be immediately implemented as similar incentives are already available for the solar energy sector in countries like China, the US and Germany – the Big Three of the global solar power industry.
The National Institute of Solar Energy could be a step in the right direction although a bit too late. But it must work in tandem with industry developments and set up stringent annual targets for project completion and knowledge dissemination. That’s the only way to add real power to the fledgling sector.
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