With Modi Government focusing more on Renewable
Energy and Budget giving boost to the Sector, Solar Power in India is on a
Boom. After entering the 2 GW club in 2013, India is all set to join the
countries with more than 3 GW capacities by the end of 2015. As of 31st July
2015, India had a total grid connected capacity of 2,839 MW.
While the solar policy of Gujarat was the engine for
the growth of the sector to reach the 1 GW Stage, the JNNSM Phase I was
instrumental in reaching the 2 GW milestones. The JNNSM Phase II and the solar
initiatives by various states will drive the future growth of the sector. To
encourage more investors in this sector, Government stopped imposing
anti-dumping duties on solar cells, solar panels imported from US, China,
Malaysia and Taiwan.
Some of the
actions taken by the Government in this regard:
India has set a target of generating 10,000 MW of
power through solar energy by the year 2017. By the same year India would have
added 20 million sqm of solar cells.
- The
Government is planning to light up the Border with Solar Power Plants, which
could act as a fence also. The proposal, a brainchild of Prime Minister Mr.
Narendra Modi, is to set up 1000 MW plants on defence land and supply the
electricity at a fixed price of INR 5.5 per unit for 25 years.
- In New
Delhi, Public Works Department (PWD) is planning to set up solar panels on
buildings. Under a pilot project, around 16 government bungalows and flats will
soon be using solar power. The PWD will set up individual solar panel units at
each of these quarters through which residents would be able to use solar power
during the day.
- Ramapati Kumar, CEO of newly launched Centre for
Environment and Energy Development (CEED), has said that Patna has a huge
potential to tap solar energy on the rooftop of houses and each house can
convert into a power house, which will ultimately end the power crisis in the
State Capital.
- Haryana Government also approved a comprehensive
Solar Policy 2014, which aims at achieving Mega Watt (MW) scale Grid connected
power project, rooftop grid interactive SPV system, small capacity of grid
solar power projects and devices, promotion of solar thermal collectors,
introduction of training programme on solar energy power plant/devices in ITI
and diploma courses, among other things. It also aims at development of model
villages in the field of solar energy in engineering colleges and generation of
funds for implementation of Haryana Solar Energy Policy.
- The Government is planning to use Green Energy to
power up around 2000 Mobile Towers centred in the Naxal Areas. Solar energy
will be used to avoid interruption of electricity supply, which is irregular in
most of the areas. Diesel-run generator sets create lots of pollution in
addition to the problem of regular supply of fuel.
- United Arab Emirates (UAE) and India are expected
to enhance their co-operation in the field of renewable energy and
sustainability.
- Indian Railways are planning to install solar power
plants of about 8.8 Mega Watt (MW) capacity at railway stations, railway office
buildings and level crossing gates throughout the country under railway
funding. These include Provision of 10 KWp solar PV modules each at 200
stations under various Zonal Railways, provision of total 1.3 MWp capacity
Solar Photo Voltaic (SPV) plants at 2000 Level Crossing gates on Indian
Railways. Even Private Sector is also active in this sector. Companies such as
Tata Power Solar is ready to supply 1 lakh domestically manufactured solar
panels to ACME’s 20 MW Jawaharlal Nehru National Solar Mission (JNNSM) project
in Rajasthan.
Factors
showing that Future of Solar is Bright in India:
1. Solar Cell and Module Manufacturing capacity in
India is heavily Under-Utilized:
- India’s operational solar cell capacity was only
20% of rated capacity as of June 2014.
- Most of the installed non-operational solar cell
capacities are outdated and manufacturers lesser efficiency solar cells
- Realistically, effective production of domestic
solar cells will likely be capped at around 300 MW in the next year
2. Chinese
C-Si and thin film module prices dropped 3-6% over the last year:
- Appreciation in the Indian Rupee has led to
reduction of C-Si module costs in INR terms from last quarter
- To counter the effect of anti-dumping duty, an
international thin film module supplier is offering aggressive terms to fast
track the procurement process
3.
Installations in the last four quarters are ready:
- Capacity added during the last year has been 674
MW.
- Capacity around 300 MW has been added outside of
policy driven feed-in tariffs last year.
These are some of the right decision taken by the
Government because there is no need of protecting the indigenous producers of
solar cells with inferior quality and higher prices. Since the solar energy is
imperative for India to meet its energy needs, the import of quality solar
panels could bring down the price, thereby affordable production of solar
energy. However, the government must make it mandatory on the part of all
commercial/Government buildings, apartment buildings, and homes to install
solar cells to produce energy for their needs.
For producing electricity we should go for solar for
daytime energy consuming centers only like agriculture pumps, one-shift
industries, offices etc. All electricity users should have two meters, one for
day and night time use and another for peak time during morning and evening
hours. The peak time power should be made costly so that people will use this
power economically, mostly for light and fan. All consuming centers can be
fitted with timer, which will connect the power line through a contactor to the
appropriate meter. With this we should be able to manage the power requirement
with the existing thermal, Nuclear and hydro power stations for peak hours and
all new power generation with only solar power. With cheaper labor the cost of
solar panel made in India should be less costly than the imported. The
Government should investigate whether imported panels are labeled as made in
India and seeking protection from import makes higher profit.
EXECUTIVE
SUMMARY:
India is the fourth largest importer of oil and the
sixth largest importer of petroleum products and LNG globally. The increased
use of indigenous renewable resources is expected to reduce India’s dependence
on expensive imported fossil fuels. The government is playing an active role in
promoting the adoption of renewable energy resources by offering various
incentives, such as generation- based incentives (GBIs), capital and interest
subsidies, viability gap funding, concessional finance, fiscal incentives etc.
The National Solar Mission aims to promote the
development and use of solar energy for power generation and other uses, with
the ultimate objective of making solar energy compete with fossil-based energy
options. The objective of the National Solar Mission is to reduce the cost of
solar power generation in the country through long-term policy, large scale
deployment goals, aggressive R&D and the domestic production of critical
raw materials, components and products.
Renewable energy is becoming increasingly
cost-competitive compared to fossil fuel-based generation. Wind energy
equipment prices have fallen dramatically due to technological innovation,
increasing manufacturing scale and experience curve gains. Prices for solar
modules have declined by almost 80% since 2008 and wind turbine prices have
declined by more than 25% during the same period. The government has created a
liberal environment for foreign investment in renewable energy projects. The
establishment of a dedicated financial institution – the Indian Renewable
Energy Development Agency, makes for renewed impetus on the promotion,
development and extension of financial assistance for
Renewable energy and energy efficiency/conservation
projects.
KEY PROVISIONS
IN BUDGET 2014-15:
- Allocation of INR 5 Billion towards the proposed
ultra-mega solar power projects in Rajasthan, Gujarat, Tamil Nadu and Ladakh in
J&K which includes an allocation of INR 4 Billion for launching a scheme
for solar power driven agricultural pump sets and water pumping stations for
energizing 100,000 pumps and a future allocation of INR 1 Billion for the
development of 1 MW solar parks on the banks of canals.
- Excise duty is being reduced from 12% to NIL on
forged steel rings used in the manufacture of bearings of wind-operated
electricity generators.
- Full exemption from excise duty is being provided
for solar tempered glass used in the manufacture of solar photovoltaic
cells/modules, solar power generating equipment/system and flat plate solar
collectors.
- Full exemption from excise duty is being granted in
respect of machinery, equipment’s etc. required for setting up of solar energy
production projects. Full exemption from excise duty is being provided to
backsheet and EVA sheet used in the manufacture of photovoltaic cells/modules
and specified raw materials used in their manufacture.
- Full exemption from excise duty is being provided
to parts consumed within the factory of production for the manufacture of
non-conventional energy devices.
- Full exemption from excise duty is being provided
on flat copper wire used in the manufacture of PV ribbons (timed copper
interconnect) for use in the manufacture of solar cells/modules.
- Full exemption from excise duty is being provided
on machinery, equipment etc. required for the setting up of compressed biogas
plants (Bio-CNG).
- Basic customs duty is being reduced from 10% to 5%
on forged steel rings used in the manufacture of bearings of wind-operated
electricity generators.
- Full exemption from SAD is being provided on parts
and components required for the manufacture of wind-operated electricity
generators.
- Basic customs duty on machinery, equipment’s etc.
required for the setting up of solar energy production projects is being
reduced to 5%.
- Full exemption from basic customs duty is being
provided on specified raw materials used in the manufacture of solar back sheet
and EVA sheet.
- Full exemption from basic customs duty is being
provided on flat copper wire used in the manufacture of PV ribbons (timed
copper interconnect) for solar PV cells/modules.
- Concessional customs duty of 5% is being provided
on machinery, equipment etc. required for the setting up of compressed biogas
plants.
INCENTIVES
OFFERED BY THE GOVERNMENT FOR THE DEVELOPMENT OF THE SOLAR ENERGY SECTOR
INCLUDE:
- Exemption from excise duties and concession on
import duties on components and equipment required setting up a solar plant.
- A 10-year tax holiday for solar power projects.
- Wheeling, banking and third party sales, buyback
facility by states.
- Guaranteed market through solar power purchase
obligation for states.
- GBI schemes for small solar projects connected to a
grid below 33KV.
- Reduced wheeling charges as compared to those for
conventional energy.
- Special incentives for exports from India in
renewable energy technology under renewable sector specific SEZ.
- A payment security mechanism to cover the risk of
default by state utilities/discoms.
- A subsidy of 30% of the project cost for off-grid
PV and solar thermal projects.
- Loans at concessional rates for off-grid
applications.
FISCAL
INCENTIVES FOR BIOMASS POWER PROJECTS:
- Accelerated depreciation: a claim of 80%
depreciation in the first year for certain specific equipment.
- A 10-year income tax holiday.
- Concessional customs duty and excise duty exemption
for machinery and components during the setting up of the project.
- An exemption of sales tax in certain states.
- Financial assistance from IREDA for the setting up
of biomass power and bagasse co-generation projects.
FISCAL
INCENTIVES FOR SMALL HYDRO POWER PROJECTS:
- Preferential tariffs.
- Central financial assistance to the state
government and the private sector for the setting up of small/mini hydro
projects.
- A subsidy to upgrade watermills and thereby improve
their efficiency.
- Custom duty concessions.
- A 10-year tax holiday.
