Solar Energy

Market overview:

Solar energy, owing to its ability to power large parts of the earth with renewable power, is an exciting business opportunity for small, medium and large businesses. The availability of abundant solar energy enables organizations to meet the energy challenge and provides an opportunity to offer new and cost effective solutions. In the solar photovoltaic sector, the photon chasing has moved from expensive silicon wafers (owing to paucity of polysilicon worldwide), to the growth of technologies such as thin film-based high concentration photovoltaics, concentrating solar power (CSP) and nanosolar.

India has today only around 33-35 grid interactive solar photovoltaic power plants with aggregate capacity of around 2-2.5 MW, that generate around 2.5 million units of electricity in a year, in sharp contrast to the estimated potential of 50,000 MW (assuming a generation of 20 MW per square km).

Most of the existing capacity today is off-grid and for standalone applications in lighting, telecommunication, small power requirements, battery charging, water heating, cooking etc. There are currently around 14-15 lakh solar PV systems in operation and around 6 lakh solar cookers in use. Around 200,000 square meter collector area has been installed for solar water heating applications.

India presents substantial potential for investments in the solar energy segment, particularly in the manufacture of solar photovoltaics. The recent Special Incentive Package Scheme (SIPS) for semi-conductors has attracted the interest of several players. Under this programme, the GOI would provide an incentive of 20 percent capital expenditure during the first ten years for the units in SEZs and 25 percent of the capital expenditure for other units. Any unit can claim incentives in the form of capital subsidy or equity participation.

India - Potential

India is among top 5 destinations worldwide for solar energy development as per Ernst & Young’s renewable energy attractiveness index.

Daytime production peak coincides with peak electricity demand making solar ideal supplement to grid.

The Government of India has launched the National Solar Mission. The main features of the Mission are:

• Make India a global leader in solar energy and the mission envisages an installed solar generation capacity of 20,000 MW by 2022, 1,00,000 MW by 2030 and of 2,00,000 MW by 2050.
• The total expected investment required for the 30-year period will run is from Rs. 85,000 crore to Rs. 105,000 crore.
• Between 2017 and 2020, the target is to achieve tariff parity with conventional grid power and achieve an installed capacity of 20 gigawatts (Gw) by 2020.
• 4-5GW of installed solar manufacturing capacity by 2017.

Business opportunities by scale of investments

Advantage India:

India has a great potential to generate electricity from solar energy and the Country is on course to emerge as a solar energy hub. The techno-commercial potential of photovoltaics in India is enormous. With GDP growing in excess of 8%, the energy ‘gap’ between supply and demand will only widen. Solar PV is a renewable energy resource capable of bridging this ‘gap’.

Most parts of India have 300 - 330 sunny days in a year, which is equivalent to over 5000 trillion kWh per year - more than India’s total energy consumption per year.

Average solar incidence stands at a robust 4 - 7 kWh/sq.meter/day.

About 66 MW of aggregate capacity is installed for various applications comprising one million industrial PV systems - 80% of which is solar lanterns, home/street lighting systems and solar water pumps, etc.

The estimated potential envisaged by the Ministry for the solar PV programme, i.e. solar street/home lighting systems, solar lanterns is 20 MW/sq. kilometer.

The potential of the solar thermal sector in India also remains untapped. The Ministry proposes an addition of 14 MW during the 11th Five-Year Plan period (2007-2012).

Establishing manufacturing units at Export Oriented Units, SEZs or under the SIPS programme presents a good opportunity for firms which can leverage India’s cost advantage to export solar modules at competitive prices to markets in Europe and the United States.

Incentives Offered

The Government of India is providing various incentives and duty concessions for both manufacturers and users of solar products such as:

• To help in running of solar projects, the GOI will provide, through IREDA, a generation-based incentive for solar power of up to INR 12 per kWh for solar photovoltaic power and INR 10 per kWh for solar thermal power that is fed into the grid, after considering the tariff provided by the SERC or the utility;
• Capital subsidy available in case of semiconductor based units;
• Provisions for Accelerated depreciation available for solar manufacturers;
• NIL excise duty for manufacturers;
• Low import tariff for several raw materials and components;
• Soft loans to users, intermediaries and manufacturers
  

Following the Central Government’s guidelines, a number of states are also pursuing solar energy development aggressively with good response from industry and have come out with their incentives. These include an enhanced feed-in-tariff rate when electricity is sold to the grid. 

Incentives are also provided for Roof Top solar Systems, targeting a capacity addition of 4.25 MW during the rest of 11th Plan. These are:

• INR 75 per watt of SPV panels to a maximum of 30 percent of the cost of systems to profit making bodies that can also avail accelerated depreciation benefits.
• INR 100 per watt to a maximum of 40 percent of the cost of systems to non-profit making bodies.

Systems could be with or without grid interaction; and support will be available for systems whose capacity varies between 25 to 100 kW.

Tax credits and capital subsidies are also provided to solar energy developers. Loans are available through the IREDA at subsidized rates and income tax exemptions are provided for first 10 years of commissioning of project.