Indian Solar Market insights by Mr. Mohit Anand (Bridge to India)
1. With NSM Phase II round the corner what according to you will be the format of bidding and FiTs expected. Will there be even tougher Domestic Content Requirement in Phase 2?
As per our information and analysis in the October 2012 India Solar Compass, we expect that Phase 2 of the NSM will introduce Viability Gap Funding for project allocation. In this, the project asking for the least amount of funding from the government will obtain the projects. With regards to the Domestic Content Requirement, we expect that this will continue in Phase 2. In addition, we expect that it will be extended to some degree on thin film modules as well as opposed to only restricting crystalline modules at the moment.
2. As solar moves towards the grid parity the commercial market outside the FiTs is opening up. What does BRIDGE TO INDIA’s market insights says about this market.
Commercial parity driven markets are the most promising in India. There are some states where solar is already competitive with grid prices that commercial consumers are paying. In such states, BRIDGE TO INDIA is already developing business models for rooftop projects of 1MW and above. As the price of electricity in India rises and the costs of solar fall, there will be only be more states which will have this parity. At the same time, the government’s appetite for subsidizing large scale solar through FiTs and Viability Gap Funding is limited. We expect such government support to be phased out by 2017. Commercial parity driven, non-subsidized projects is where the market is heading.
3. Implementation of Renewable Purchase Obligation (RPO) is still questionable. This has started showing its effect on non-solar REC market. What will be its impact on solar industry?
The implementation of RPOs is one of the key bottlenecks on the regulatory side. This is adversely impacting the scaling of the REC market as well as the ability of developers to approach obligated entities directly for projects. So far, the market has relied on supply side pushes like FiTs under the NSM and the Gujarat Solar Policy. But, the demand side certainty, crucial for the long term planning of investors, is lacking. It also leaves banks questioning the feasibility of non-recourse based financing, which is crucial for a market to grow. The government needs to think about strengthening the implementation of RPOs to make the market growth sustainable, at least in the current stages when it relies on policies. Incentives for obligated entities to meet their RPOs might be an effective method to achieve this.
4. In the recent times we have seen module and cell manufactures going bankrupt. Is this a consolidation phase or is there something fundamentally wrong with solar Industry.
Indian manufacturers at the moment lack the technological leadership or price competitiveness which is crucial for any solar company to survive globally. Solar is now a global market and Indian players are facing the same problems that others have faced in Europe. Solar manufacturing has become about scale and vertical integration. Both strategies are currently lacking amongst Indian manufacturers, barring a few. They will have to make changes to this effect in order to make a turnaround. The Domestic Content Requirement will only have a positive effect, if at all, in the short term. For the long-term, Indian manufacturers need to understand the diverse segments in the Indian market and position themselves strategically based on their current strengths. There are many segments that international companies will find it impossible to sell and Indian players, with their local track-record and distribution networks, will certainly have an advantage.
5. What are your views on anti-dumping laws against foreign modules? Should these be imposed in India too?
This at best will be a short term measure. There is no way to constrain the free market. In reaction to the US anti-dumping duties, Chinese manufacturers have swiftly moved their facilities to Taiwan and are successfully evading the duties. The same would take place for India, if at the duties are imposed. There is no alternative to long-term, strategic support for Indian manufacturing as opposed to short term protectionis.
6. Investment is always an issue for Indian solar developers. How these can be improved? Does the government need to initiate some policies to raise the trust bar of investors?
Policy certainty and reliable irradiation data needs to be available for investors to trust take action on the promising fundamentals for solar in the market. The government is already taking action in this regard but much more needs to be done. Developers too need to make the effort to share generation data with the industry openly so that all stakeholders can access it and trust performance of plants in the market. As more plants have stable performance over time and as players build a track-record, banks and investors will be able to trust performance in the market better.
7. Tell us something about future plans of Bridge To India. Any new market intelligence tool BTI is launching soon?
BRIDGE TO INDIA is squarely focused on providing up to date, in-depth and reliable analysis on the Indian solar market. Our objective is to ensure that all the stakeholders understand the fundamentals in the market and have a long-term visibility of the development of the market. This ensures that players can develop sound strategies and can deliver with quality projects. This is crucial for the market to develop in a sustainable manner. We will continue to and increase the publication of our market reports. We want to provide strategic value to players through our analysis and strong market positioning through our sponsorship opportunities. In the future, as the market develops, we will look to provide a comprehensive, online market database of analysis for the Indian solar market.