Challenges That The Solar Sector or Its Consumers are Facing

A stronger existing project pipeline has encouraged Indian solar sector to move forward each year, but in terms of market fundamentals, the industry is facing tremendous challenges leading to slog in green energy adoption growth.

Although, last year’s budget failed to focus on making soft loans, export credits available and did not give any inclination towards making solar manufacturing sector competitive, this year’s budget promised expansion of PM KUSUM Scheme, use of barren land for solar power, increased solar energy generation via Indian Railways tracks, reduction in corporate tax rate for new energy companies, abolishing dividend distribution tax, addressed concerns of start-ups and proposed prepaid smart meters to strengthen DISCOMs.

However, as an Indian solar manufacturer and EPC player, we need to highlight a few challenges like-

Imposing Safeguard duty and Basic custom duty on solar, which are making domestically manufactured (within SEZ) solar panels more expensive than imported solar modules, thus defeating the purpose of these duties.

Several states discouraging commercial and industrial entities to opt for net metering facilities, in favour of more expensive gross metering services.

Effects of the Coronavirus outbreak in China has affected the Indian solar industry and has hinted upon the devastating future outcome of its dependency on solar imports, rather than investing in domestic solar manufacturing.

Besides, Lack of R&D and performance testing facilities in India, Issues in implementing BIS certification and Lack of availability of export incentive mechanism in the country have also hindered solar growth in the country.

Such scenario has brought forward issues such as- Cost and T&D Losses, Lack of flexible Funding, Delays in subsidy disbursal, Lack of information on the right solar equipment supplier and installer, Lack of awareness of benefits and approval processes, Delays in implementation of policies (net metering) etc that have made consumers hesitant towards solar.

Indian solar industry is still at a nascent stage and there always will be challenges as the country tries to move forward. However, what is need of the hour is favourable policies to support the growth of solar adoption (instead of issues like PPA re-negotiation), availability of flexible financing solutions, focus on manufacturing and R&D.