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Problems ailing the Solar sector in India

Solar pannels and mounting structure at rooftopIn spite of the huge potential of solar power in India, the sector has not fully taken off much to the disappointment of potential investors. Given the magnitude of solar potential in India and the government policies providing it the necessary push, one would expect solar to have fully developed as a proven technology by now but sadly, this has not been the case.

This is partly due to the mismatched and untimely policies of the government that has created uncertainty in the minds of the investors. Take for example, the case of the Gujarat Urja Vikas Nigam Ltd. that petitioned the state regulator to reduce solar tariffs. Their argument- the higher profits being earned.

The move was in spite of the fact that a tariff order could be challenged within 60 days according to the rules of the state but GUVNL in this case was asking for revision after a period of three years. In the end thankfully, the CERC struck it down. It doesn’t bode well for investor confidence when the government tries to revise prices midway.

Take the case of Tamil Nadu which came up with a very low solar tariff of Rs. 5.78 kWhr and Andhra Pradesh which thought it wise to bring in a fixed tariff after the bidding process.

Given the fact that solar technology is still in its nascent stage in India, it hasn’t really reached the level where the government can withdraw necessary support. India still depends on largely imports and domestic industries have struggled to compete with global firms.

One area which is grossly under represented at present is the roof top solar which also has enormous potential. Very few states have taken the trouble to come up with a net metering policy and customers have not found any incentives for installing solar panels.

Gujarat is planning to move to solar rooftop after pioneering a novel 10 MW solar power plant on top of the Sardar Sarovar canal. Read more on it here.

 Solar projects need to be financed on a priority basis by lending institutions while ensuring that subsidy is provided in order for solar projects to remain attractive. Solar REC market has been put in place to ensure attractiveness of renewable energy sources. Read more on it here.

There have also been cases where solar projects have missed deadlines. The government needs to be gracious and not impose penalties for missing deadlines as this is a learning experience for both the authorities and the investors.

Finally, the lack of a reliable database also serves as a handicap. A reliable current database that details DNI for all parts of the country needs to be put up in the public domain for better project preparedness and planning.

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