The pandemic was just one of the issues that pushed the solar back last year. The industry faced several other impediments coming in the way of project development.
One of the issues affecting the solar sector is tariff approvals, which are stuck with the regulatory commissions. Another important issue causing delays in the completion of projects is the non-availability of transmission infrastructure for evacuation of power for interstate transmission system (ISTS) projects. Also, the imposition of the Basic Customs Duty (BCD) will affect upcoming solar projects.
Experts shared their views and suggestions at the Mercom India Solar Summit to shed light on these aspects and other factors affecting the country’s solar sector. A session titled ‘Solar Project Development-Work in Progress and the Path Ahead‘ dealt with a range of topics affecting the country’s project development process.
The panelists included Ashok Pal, DGM, Power Grid Corporation of India Limited (PGCIL); Sandeep Kashyap, President, ACME Solar; and Rohit Bhandari, Head-Business Development, Sterling and Wilson. Priya Sanjay, Managing Director, Mercom India, moderated the session.
Speaking on the pandemic’s impact on the ongoing projects and the difficulties being faced by developers, Rohit Bhandari, said, ” It was a bad year for everyone. Due to the pandemic’s impact, there was an acute labor shortage in 2020, which affected the ongoing projects significantly. Things have now improved, and we are looking forward with optimism. But with the second wave of the pandemic starting to take its toll, it remains to be seen how things will pan out this year. We have been managing the labor problem well, and now we expect the things to improve.”
Another topic that came up for discussion during the session was the availability of transmission infrastructure to evacuate power. This has been a major stumbling block for projects in many parts of the country.
On the need for planning to get the transmission infrastructure in place for ISTS projects, Ashok Pal said, “Proper planning is required to get the transmission infrastructure in place for the power generating projects. Based on the projects’ location and capacity, we have made the transmission projects ready for the upcoming projects. Under Phase-I, systems for 8.9 GW capacity are ready to be commissioned by May this year. Phase-II is also ready to be awarded, and Phase-III projects are in the final stages of approval. It’s not always that there’s a delay in the development of the transmission systems. There are times when the projects get delayed, and it increases the burden on everyone.”
Highlighting that Rajasthan was soon becoming a hub for solar installations, Pal said, “Initially we planned systems for 50 GW of solar capacity. Out of the 50 GW, 20 GW was for the northern region, 20 GW was for the western region, and 10 GW was for the southern region. But the development in Rajasthan has been encouraging. In Rajasthan, we have received applications for 27 GW capacity, and it is on its way to fulfilling the total potential of 40 GW. Most of the development is taking place in the Fatehgarh region, and we are planning an HVDC corridor to evacuate the power from this region. One of the main reasons for this development is that people are only worried about the project development part and do not consider the transmission part..”
Bringing to light the difference between Gujarat and Rajasthan, and the issues faced by developers in states like Gujarat, Bhandari added, “The terrain in Gujarat is challenging, and there are also some other issues that make it difficult for developers. The Dholera solar park and Raghanesda solar park are classic examples of this. There is also the case of flooding, making it difficult for developers and increasing the balance of system (BoS) prices. This is not the case with Rajasthan, which is why it is among India’s preferred solar destinations.”
Acquisition of land and getting the required clearances are other issues holding up the development of projects.
Commenting on the land availability issue, Kashyap said, “Land acquisition is getting difficult day by day, and the cost of aggregation of land is also increasing rapidly. One of the key areas where the government can help is by identifying large areas where the projects can be developed. They should concentrate on developing solar parks. Pavagada is a classic example where government agencies did the land aggregation, and this is a model that others should follow. A single-window clearance is also another aspect that the government should look into. There is a compelling case for ISTS bids specific to a region.”
The panelists also discussed the impact of the BCD on the domestic module manufacturing sector and project development.
“The imposition of the BCD is going to affect the projects and domestic module manufacturing sector. We have a requirement of nearly 25 GW of module capacity per year, and our module manufacturing capacity is less compared to the demand. Anyone who bids for a big capacity is thinking of moving into manufacturing, as it would meet their demands. They would not be dependent on others. When bidding for a project, they are unsure whether the modules will be available for the projects or at what cost. Availability of modules is an issue and how the module manufacturing segment will develop in the next 12-15 months is critical,” noted Kashyap.
“In the last seven to eight months, the BoS prices have increased by 8-10%, and there is tremendous pressure on us. With the imposition of BCD, the module prices are bound to go up, and the metal prices have also increased, making it difficult for us. It is going to take us a while to close contracts. We want the government to take action and bring down the metal prices. There is no margin for errors in India, and I think that we are in a comfortable space,” Bhandari said.
Rakesh is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU). More articles from Rakesh Ranjan.