Challenges & the Slowdown in the Indian Solar Industry

The India solar growth story is sputtering, with only 1500 MW of solar capacity getting installed till date. The main growth drivers – Gujarat and JNNSM have become pale shadows of themselves. Gujarat which is India’s solar shining star is facing a problem of over capacity. The state has installed more than 800 MW of solar capacity, which is far more than what it had budgeted (500 MW over 5 years), while JNNSM has only installed around 500 MW till date. The solar thermal portion of JNNSM has been a major disaster with only one 50 MW plant being developed. The rest of 450 MW has little chance of ever getting built given the economic non-viability. The Phase 1 Solar PV plants have mostly been built, but that comes to around 500 MW only.

Solar Industry & Problems faced by it in various Indian States

A number of states such as Andhra Pradesh, TN, Maharashtra and Tamil Nadu have announced major gigawatt plans of solar energy. But as is the won’t with the state bureaucracy, the distance between intention and implementation remains huge. They are running into teething problems with TN seeing court cases over its solar energy obligations, while Andhra Pradesh has seen investor disinterest due to very low prices. Gujarat has also come down heavily on the solar sector, making the utilities free of their RPO obligations and it is also thinking about retroactive cuts in feed in tariffs being paid to current solar power developers.

The solar energy potential remains huge in India and there are already plans of building solar plants without any government subsidies, using accelerated depreciation and RECs. I think these bumps are temporary and solar fundamentals remain extremely strong, long term, given the problems being faced by the fossil fuel sector. India remains deficient in all major fuels – coal, natural gas and oil.

Solar is the only fuel which remains abundant in this country.