After a hectic and heavily business-focused first two days, the third and final day of the Renewable Energy India (REI) expo saw a calmer and more considered air settle across the show, with much talk turning to the next challenges and hurdles that the Indian solar market has to face.
Residential rooftop solar has been anything but a thorny topic on the show floor; indeed, it was barely discussed at all – utility-scale debates dominated, echoing the 90/10 split evident in the nation’s current installed capacity.
But with the National Solar Mission (NSM) earmarking 40 GW of its 100 GW 2022 installation target for rooftop solar, many visitors, exhibitors and speakers at the show were acutely aware that this is a sector that needs more vocal, and optimistic, support.
Joerg Gaebler of GIZ India said that rooftop solar in India is “a no-brainer”, and presented a series of compelling cost analyses that GIZ has undertaken as part of the Indo-German Energy Program.
With the Indian rooftop market projected to reach 1 GW by the end of the year, there is momentum building. And that momentum, Gaebler said, can generate good returns for private adopters of solar. “The average cost of a residential rooftop system is Rs 5.74 ($0.09)/kWh, while O&M is 3% of the required Rs 700,000 ($10,050) upfront investment,” said Gaebler.
“That is a pricey assumption for an average Indian household,” Gaebler noted, but added that the returns make attractive reading. “With the government’s 30% capital subsidy scheme, we calculate that this discounted payback is just 5.2 years, with an IRR of 17% and a total annual electricity bill saving of INR 134,000, it’s a no-brainer.”
While those numbers may make sense for a handful of middle-class Indians, the majority either lack the appropriate funds, rooftop (80% of housing stock in India has flat rooftops because they do not have to deal with snowload) or space (many rooftops are partially shaded) to make investment in residential PV currently worthwhile, other observers added.
Rakesh Kumar, the director of the government-backed Solar Energy Corporation India (SECI) said that the government could have perhaps already done “three times what we have done so far” for rooftop solar, but stressed that there have been many conflicting stakeholder interests. “However,” he added, “we have created a platform to escalate rooftop solar quickly over the next few months. The 40 GW is a target for the next five years, and to meet those requirements then the MNRE and sister organizations will place a huge thrust on solar installs."
SECI itself has bought a 500 MW tender specifically for rooftop solar, and has earmarked 100 MW of that specifically for residential PV, Kumar said. “The 500 MW have been finalized and the winning bids will be announced soon. They are mostly SME clients, but also public sector buildings that are eligible for subsidy.”
Kumar added that the reason the C&I rooftop sector has no subsidy support is because the government feels that the sector can add capacity independently, and then economies of scale will follow.
Tata’s head of business development group Kaushik Sanyal added that financing for rooftop solar PV systems is currently scarce, and comes only from the banking sector via a typical home loan. “Financing for the domestic sector needs to be addressed,” he said. “There needs to be more awareness about long-term payback. Consumers will only look at the upfront cost, and then only the projected reduction in their bills. We need systematic awareness campaigning from government, bankers, developers – everybody in the industry needs to do their bit to develop a more collaborative approach for residential growth.”
State-by-state, some areas offer net or gross metering, while in other regions there are concerns over grid-connection. “It is also important for Discoms to map a network for this expected growth,” Sanyal said. “Existing grids need expanding, but who pays? Regulators need to enter the picture and plan and pay for this anticipated growth in solar."
If you build it, will they come?
India’s solar manufacturing landscape will be key to sustaining future growth, believe many observers. The country cannot be reliant on low-cost, imported Chinese solar components for ever, but at the moment the incentive to invest in domestic manufacturing capacity is suppressed by China’s infiltration of the market.
However, machines have begun to whirr, and plans and confidence are building for more growth. Hemal Ghelani, Meyer Burger India executive director, said that they are seeing more trust on module manufacturing in India. “Economies of scale have to be there to be competitive with the Chinese,” he said. “We would also like to see technology as a consideration, along with scale. Scale alone cannot sustain the industry because it’s hard to compete with China. But if you have technology differentiation, and presence across the entire value chain from ingot to module, having that control means you are less dependent on the vagaries of the market.”
The market will be shaken up by deep-pocket players, Ghelani added, as government has to take a step back and allow manufacturing in India to stand on its own two feet. “That is where adoption of technology and scale go hand in hand – the government can only act as facilitator, make a clear policy, and time bound the subsidy payments. Delays do not work. The government has expanded the business opportunity, now it is up to companies to take the lead.”
Moser Baer’s K N Subramanian said that only around 40% of India’s solar module manufacturing capacity is being utilized, and the situation is even worse for cell suppliers. “Indian manufacturing is in a bad state,” he stressed. “We need an urgent funding mechanism from government because banks are not going to fund these companies. Government backing, however, will boost skills and jobs.”
GTAT CEO David Keck said that there has been interest among Indian clients in developing polysilicon production facilities, but added that conversations at the show had been “tentative”.
“I do believe that in the next year or two the smarter producers will look to integrate upstream,” Keck said. “You don’t necessarily have to do the whole supply chain, but at least be integrated in order to control not only your costs but also your quality. The Indian ecosystem, infrastructure, local demand – the key component is being the right scale. It is important to have stable power and a low price. Low price labor here already, so I see a very competitive potential here. These components make a winning combination.”
Solargize India is one company planning such vertical integration. The firm’s head of marketing Suchitra Ramachandraiah told pv magazine that discussions are advanced on a proposed 3 GW polysilicon production plant in Andhra Pradesh, to augment the firm’s 500 MW cell and 500 MW module production facility being built in Bangalore. The company expects to be producing polysilicon within 24 months.