Policy Stability Vital for Large-Scale Solar Installations

Domestic manufacturing needs support to ramp up installations


Large-scale projects are the drivers of solar development in India, with a pipeline of approximately 57 GW at the end of the second quarter (Q2) of 2022.

For India to achieve the ambitious target of 280 GW of solar power by 2030, more large-scale solar projects must be installed.

The industry is, however, beset by a host of challenges like supply chain constraints, rising prices, supply shortages, land acquisition, and transmission issues, holding them back from adding to these numbers. The basic customs duty (BCD) on imports, hike in Goods and Service Tax (GST) rates, the Approved List of Models and Manufacturers (ALMM), and transmission infrastructure delays in Rajasthan are also seen as hurdles.

Mercom India hosted a Solar Summit 2022 on July 28-29 in New Delhi. The summit addressed opportunities, emerging industry trends, the government’s solar installation goal, and supply chains.

A session dedicated to large-scale solar projects – ‘Large-Scale Solar Project Development – Keeping the Engine on Track’- deliberated on the current scenario, risk mitigation, the policy landscape, and measures to overcome hurdles in the way of large-scale project development.

The panelists were Dilip Nigam, Adviser, MNRE; Pradeep Kumar, Managing Director, LONGi Solar India; Sandeep Kashyap, COO, Solar Business, ACME Group; Saurabh Mehta, Head (BD and Project), Mahindra Susten; and Vaibhav Roongta, Chief Business Officer, Rays Power Infra.

Priya Sanjay, Managing Director, Mercom India, moderated the session.

Policy Impact

Panelists spoke about how policy changes have impacted the large-scale solar installation numbers in the country.

Kashyap felt that while policies must be dynamic to help the sector, stability and clarity are equally important. “The MNRE has to an extent, helped most of the developers when it comes to providing extensions for projects on force majeure issues and GIB-related concerns. As a developer, if there is a stable policy for a few years, it really helps. Otherwise, there are financial pressures of handling policy changes as the raw material prices have also risen due to various supply chain issues.”

Mehta agreed with Kashyap.  “The government must ensure these changes don’t hurt the developers as we cannot factor in or forecast these changes when taking up projects. We keep a cushion for rupee depreciation, but the impact remains. The focus when picking large-scale projects is lower levelized cost of energy (LCOE) and managing the supply chain issues. For the short term post the BCD and ALMM implementation, we need strategies like importing cells for assembling modules in the country and part domestic sourcing. In the long term, we need more reliable and cost-effective domestic sourcing for the components.”

Roongta provided a solar park perspective where more players are involved and how the frequent policy change has a broad impact. “From an EPC perspective, the frequent changes hurt everyone involved since everyone is looking for ways to save cost. Extending projects without proper approvals can lead to penalties. Due to the supply shortage and new regulations, we juggle between bifacial and other technologies to manage projects and complete them on time.” He was confident that tariffs would become affordable with the execution of more and more large-scale projects.

Kumar spoke about how international manufacturers have lost business in the country. “Post-BCD and ALMM, we are currently running through a phase with no business at all. We are looking at a long-term plan and not just focusing on the Indian market but also globally for markets with scope. We are clear that the government’s intent is good and aims to boost domestic manufacturing and the local economy, so we plan to build partnerships along the same line and further our portfolio. In order to expand the domestic manufacturing capacity, the government must look at curtailing exports, providing PLI for the entire value chain, investing primarily in R&D, provide continuous support through stable policies.”

Providing the government’s point of view on large-scale development and the way ahead, Nigam said, “We as a sector have come a long way. We must ensure transmission planning is more robust once we know where renewable energy projects are coming up. We have to ensure enough off-takers; otherwise, there is no point in installing so much capacity. More RTC and hybrid grid projects would also help get more DISCOMs on board. You can expect the same kind of support for domestic manufacturing as it is in China. We are in the process of finalizing a roadmap.”

The solar installation goal is stiff, and the challenges are many. It is more vital now than ever for the government to ensure that the hurdles in the way of the sector’s expansion are removed.

In May this year, Mercom reported that India needed 14 GW to meet the 60 GW large-scale solar target by 2022 that it has set for itself, which could be achieved easily if the government were to facilitate the commissioning of stalled projects.

Industry stakeholders believe  that the government needs to tweak the policy regime for the solar target of 280 GW by 2030 to become a reality.