Going solar is the need of the hour, but ‘going desi’ is equally important too
Narendra Modi government’s decision on Wednesday to set up 50 solar parks with 500mw each and double the targeted solar power capacity to 40,000mw in less than three years is a tall order. No matter what the Modi government does, unless all the stakeholders — both domestic and foreign — come along, this may not happen. But it’s rather heartening to see that Modi government has taken seriously the business of harnessing solar power to handsomely contribute to India’s energy security. The move to create 40,000mw solar power capacities, generate 64 billion units electricity and abate 55 million tonnes of carbon dioxide demonstrates India’s unflinching commitment to green energy policies. But there is many a twixt the cup and lip. India had a total of 9gw of solar capacity, including rooftop projects, as of December 2016. During 2016, the country added about 4gw of solar capacity — the fastest pace till date.
Notwithstanding soft-pedalling of Paris climate change accord by US under president Donald Trump, Modi seems to make a virtue of his energy polices by going solar. It was at this very conclave that Modi and his French counterpart François Hollande announced the global alliance on solar power that has hardly moved since September 6, 2016.
Modi’s juggernaut on solar front would definitely be music for progressive European energy policy experts that propagate environment friendly policies on the energy front. While US under president Barrack Obama had committed US to a solar alliance, the equation has changed now. Under a Republican White House, committed access to new technologies, funds deployment and partnerships may not be forthcoming. While this can be dealt with as a global community, a larger limiting factor for India going solar was dumping of cheap and significantly low quality solar panels, modules, cells and spares by Chinese manufacturers.
As in several sectors, Chinese solar products have disrupted the global ecosystem for new and renewable energy products markets. Before allowing unhindered solar energy imports from China, Modi will have to take calls on tricky issues pointed out by domestic players. Especially, after having lost out a major legal dispute at World Trade Organisation (WTO), for insisting on local content in solar power projects, checking Chinese exports has become virtually impossible. A country like India that was net exporter of modules and solar panels to Europe has turned a big importer beginning 2009 after the global financial turmoil. If analysts reports were anything to go by, a large part of solar cells and modules capacities worth 2,815mw and 8,008mw respectively in India has been under utilised due to stiff competition from cheap Chinese imports. In just seven months of this fiscal, solar cells, modules and panels imports crossed a staggering $1.25 billion thereby sounding alarm bells for Indian policymakers especially as Modi is obsessed with his global agenda of going solar. Lack of scale, large untilised capacities and very high financing costs owing to huge risk perception has tilted the scales against domestic solar power equipment producers. Many have shut shop or have become spares producers for their European counterparts. What has perhaps seriously dampened the spirit of desi companies was that this year’s budget has not brought in any policy package to revive the industry and meet the exponentially rising domestic demand for equipment.
Only positive for the solar power equipment industry was that tax incidence would be much lower once the goods and services tax (GST) kicks in July this year as steep countervailing duties would get submerged into the single impost. Unless cost-effective infrastructure was provided, WTO compliant fiscal incentives were doled out, Indian solar companies may go bust. Going solar is okay, but going desi is equally important.