Surveying current demand-supply seesaw in solar market

Let us not underestimate the role of solar risks . The Indian solar market is being tested to its limits. GST has increased execution costs. Amidst reports that there is still lack of clarity on the 5 per cent goods and services tax (GST) levy on solar equipment .The industry has claimed that though the government has said GST would be applied to solar modules at a concessional rate of 5 per cent, there is still no clarity on whether it will be extended to other equipment as well.

Module prices have shot up when bidders were factoring in another 20% price decline by the end of this year. Chinese module suppliers are even reluctant to supply to India. The government is considering anti-dumping duty petition to support domestic solar manufacturers. But perhaps, the biggest challenge facing the sector is slowing power demand.

Lack of visibility over project pipeline is forcing developers to bid aggressive tariffs and reconsider strategic options including consolidation. It is therefore relevant to ask what does the future pipeline scenario look like?

  • Seven states – Karnataka, Andhra Pradesh, Tamil Nadu, Telangana, Rajasthan, Madhya Pradesh and Punjab – together make up over 80% of India’s total installed and pipeline capacity of 27 GW;
  • Other states continue to lag and progress is expected to be slow because of surplus power situation in the country;
  • After peaking at about 8 GW in 2017, India’s utility scale solar capacity addition is expected to stabilize at a much lower level of 5-6 GW per annum for next few years;

The ten largest states in India have power consumption greater than 50 billion units each and together, they account for 75% of India’s total power demand. These states, located mainly in central and southern India, should also account for bulk of solar power demand in the country. Five of these states – Karnataka, Andhra Pradesh, Tamil Nadu, Telangana and Rajasthan – have led the sector growth so far and tied up more than 3 GW of solar capacity each. Madhya Pradesh and Punjab have tied up another 2 GW and 1 GW respectively. These seven states together make up for over 80% of India’s total installed and pipeline capacity of 27 GW. They have front-loaded their solar power demand and are well ahead of their annual targets determined by the Ministry of New and Renewable Energy (MNRE).

Solar activity in these states is inevitably expected to slow down going forward and indeed, some of them are already cancelling ongoing tenders. (Source: E& Y & BRIDGE TO INDIA Research reports). In contrast, combined installed and tendered pipeline capacity of the three largest power consuming states, Maharashtra, Uttar Pradesh and Gujarat, is lower than that of Karnataka on a stand-alone basis. In May 2017, it was predicted that Uttar Pradesh could be a dark horse for India’s new solar allocations. Since then, it has issued a 750 MW tender under SECI scheme and is believed to be considering further tenders. Maharashtra’s power consumption is almost three times that of Andhra Pradesh but its installed solar capacity is just one-third in comparison. Gujarat, a solar frontrunner back in 2012-13, is also lagging way behind. It added a paltry 211 MW in the last two years against almost 1 GW in neighboring Rajasthan and 2 GW in both Andhra Pradesh and Telangana.

Unfortunately, the prevailing power surplus situation in India suggests that slowdown in solar power demand may continue for 3-4 years. One can expect India’s utility scale solar capacity addition to peak in the current year (at about 8 GW) and then stabilize at a much lower 5-6 GW per annum for the next 2-3 years. Rooftop solar is expected to, however, provide some relief by continuing to grow at a healthy rate and becoming a 3 GW per annum market by 2020.

I feel there are few serious key issues that needs to be sorted out on the solar energy. From land acquisition to problems in grid evacuation, there are many issues that can derail returns on a project.Reaching a perfect solar economy would require policymakers and society to jointly work together and overcome several organizational and financial challenges in the next decade only then we can offer the affordable clean energy solution for one and all.

Looking hard it is quite apparent that several discoms, as the ultimate buyers of power, are in a poor financial condition. Hence, payment delays and rising receivables can upset both financial plans as well as cash flow management. Financing a large number of projects that have been awarded will require debt of almost $10 billion every year. India’s banking sector is already facing its own set of challenges and there are only a few banks that finance such long-term projects.

Yet all is not so bad! . Good news is increased solar liquidity. State Bank of India recently signed an agreement with seven companies for funding solar power energy projects. The seven companies include Adani Group, JSW Energy, Hinduja Renewables, Tata Renewables Energy, Azure Power, Cleantech Solar and Hero Solar Energy. The bank has funded 43 projects rooftop solar power projects, amounting to Rs 2,317 crore with the aggregate capacity of 475 mw, by availing line of credit from World Bank. SBI has availed $625 million from World Bank.

I commend the cheerful optimism of Rajnish Kumar, SBI chairman, who feels the main advantage of giving loans to solar power projects is that “there is no fuel supply risk unlike other power projects. Secondly, it helps in protecting mother Earth.”

 

SANJITH S. SHETTY

Permanent link to this article: https://blog.sohamenergy.in/surveying-current-state-demand-supply-seesaw-solar-market/

Transitioning to clean energy will ensure investment in our future.

Soham Renewable Energy was born with the idea that clean green energy is not just an option anymore, it is a dire necessity to protect our environment and satisfy the ever fast growing energy consumption rate. Today’s burning issues such as global warming, energy shortage , increasing pollution & fluctuating oil prices, validated our belief in renewable energy.

Clean Energy

World trends in energy have shifted towards renewable energy sources, and because of this small hydroelectric projects have become increasingly popular. Small hydroelectric projects are believed to have zero impact on environment unlike big hydroelectric plants that can cause damage to nearby ecosystems, and often cause flooding. Hydropower technology, which is considered as the renewable energy source is today technically not only most known but also most developed on global level, with the very high level of efficiency. 22 percent of world’s electricity generation comes from the small and big hydro power plants.

CLEAN GREEN ENERGY ADVANTAGE OF SMALL HYDRO: In comparison with other type of power plants here are some of the advantages of small hydroelectric power projects:

  • There is no displacement of population so people’s livelihood and home are safe
  • Life of small hydro is around 100 years so future generation around plant have a ready source of employment
  • Nearby agriculture lands are safe and do not fear flooding which happens with Large Hydro plant
  • Existing flora and fauna are unharmed
  • There is no extra costs related with the distribution of electricity
  • There is no negative impact on nearby ecosystems as water is let out
  • Relatively cheaper maintenance

The first hydel power plant of 22 MW work started in 2001 at Jog waterfalls (South East Asia’s largest waterfall) called Ambuthirtha Power Private Limited (APPL). This project is the first of its kind in India to be registered under the United Nations for Framework convention on Climate Change (UNFCCC) which started generating power in 2007. The company has also shown its understanding of the Clean Development Mechanism (CDM) space by selling its Certified Emission Reductions (CERS) commonly known as carbon credits to Japan’s second largest power utility.

With first project taking off smoothly, Sanjith then decided to take on another challenge of taking over an abandoned partially built hydro power near Moodabidri and rebuilt it .This is a 15 MW “run of the river” hydro project located across the Gurupur River. Acquired in a run-down state, it took all of Soham’s engineering skills and determination to turn this project into the resounding success it is today. This highlights how Soham’s ‘never say die’ attitude has allowed it to raise the bar. The project was commissioned in September 2009 and functions on the same eco-friendly principles of the first project.

This was soon followed by commissioning a 6 MW “run of the river” Mahadevapura Small Hydel Project in 2014, located on the Cauvery River, Mandya District, and Karnataka. Then in 2015 Mulibettu Small Hydel Project was commissioned successfully. This is a 10.5MW “run of the river” scheme located on the Gurupur River in Moodabidri, right down to our Mannapitlu project utilizing the common facility corridor. 

All four projects showcases Soham’s expertise and reiterates its commitment to use clean, green technologies to reduce the effects of global warming. With its track record of hands on leadership, project execution excellence, world class processes, and dedicated green initiatives, Soham is confidently striding forward towards a multi-fold growth with full commitment to its future generations.

 CLEAN ENERGY ADVANTAGE OF SMALL HYDRO:

All our four hydro projects are 100% Eco, Enviro and People friendly. With minimal reservoirs, small hydro does not impact the environment compared to large hydro units. The best part is not only does small hydro produce cleaner electricity than fossil fuels, but as the water passes through the generator, it is directed back into the stream and leaves almost no impact on the surrounding environment.

 

SANJITH S. SHETTY

Permanent link to this article: https://blog.sohamenergy.in/transitioning-clean-energy-will-ensure-investment-future/

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