Raj Prabhu
CEO and Co-founder
Mercom Capital Group

The Supreme Court order in September this year quashing the allocation of 204 coal blocks coupled with growing coal imports resulting in increased costs for power companies amid acute power shortages have contributed to the positive momentum in the Indian solar sector.Cumulative solar installations in the country recently crossed the 3 GW mark with 734 MW installed so far this year, according to the Mercom Capital Group’s recently released quarterly update on the Indian solar market.

The global clean energy communications and consulting firm pointed out though that 2014 would be disappointing with calendar year installations expected at about 800 MW, a 20 percent drop year-over-year. It attributed the slowdown in installations to delays in land acquisition because of general elections and also the uncertainty caused by the anti-dumping issue.

The update forecasted that installations would more than double next year, reaching 1,800 MW.

“The Indian solar industry is visibly upbeat since the elections and especially after getting past the anti-dumping case,” said Raj Prabhu, CEO and Co-founder of Mercom Capital Group.

The Ministry of New and Renewable Energy proposes to add solar PV capacity of 15,000 MW in three tranches as part of the second batch of Phase II of the National Solar Mission. The draft guidelines for selection of 3,000 MW grid-connected solar PV power projects in the first tranche during the period 2014-15 to 2016-17 were released in October this year. Several other announcements aimed at promoting the use of solar energy to supplement the country’s energy needs have also been made in the recent past by the government. Among them are plans to set up ultra mega solar power projects with a goal of installing 20 GW through solar parks. Encouraged by the government’s initiatives, several public sector undertakings have not only hopped aboard the solar bandwagon in their quest for alternative energy sources but joined the race for scaling up solar power capacity as well. The MNRE is now targeting to push the NSM solar target of 20 GW by 2022 to 100 GW.

Mercom Capital said that by focusing exclusively on large scale and mega solar projects India was moving in the opposite direction as compared to other markets.

“In most major solar markets, with drop in costs, the market has shifted from large-scale projects to residential and commercial rooftop projects — closer to the end-user. With transmission and distribution losses estimated at about 25 percent, and considering the country is severely challenged when it comes to land availability and grid infrastructure this may not be a sound long-term strategy,” it said.

Identifying execution and uncertainty due to lack of long-term market visibility as primary challenges plaguing the Indian solar sector, the Mercom Capital update stressed that renewed government focus on addressing the challenges would instill confidence in the markets and help attract the badly needed foreign investments. It added that prospects for the Indian solar sector had never looked better and the present government’s commitment towards solar was percolating to the states.

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