REI: Solar trade dispute clouds cast dark shadows12. November 2012 | Top News, Global PV markets, Industry & Suppliers, Markets & Trends | By: Hans-Christoph Neidlein, Jonathan Gifford
The 6th annual Renewable Energy India (REI) closed its doors last Friday evening on the back of rumors that the Indian Government will pursue a solar trade case soon.
The REI tradeshow, held at the New India Expo Center in the Greater Noida region of Delhi, attracted approximately 12,000 attendees and around 450 exhibitors across three-days, from the whole renewable energy landscape.
Whether taxes and import duties for solar component imports could really help the Indian photovoltaic industry to survive the current competitive market conditions remained one of the unresolved questions at the event. Azure Power CEO, Inderpreet Wadhwa told pv magazine that he believes any duties would only increase the price of solar electricity in India and wouldn’t really help domestic manufacturers.
A consensus emerging from the REI was that there remains a financial bottleneck for photovoltaic projects in India. Attendees of the show heard that Indian banks add a so-called risk factor premium of 2 to 3% to interest rates for the financing of photovoltaic projects. "The Indian banks are not yet confident of the long term viability of photovoltaics," said Ritwik Ghosh from Hareon Solar, at the show.
For this reason, a lot of photovoltaic projects in India remain funded by foreign export banks, especially by the U.S. Export-Import Bank, which in fact finances almost 50% of projects in the country. The Ex-Im Bank provides loans at interest rates of only 5 to 6% over 15 years and are, thus, far more attractive than those at which Indian banks are willing to lend.
Export banks from other countries appear to be following the U.S. Ex-Im Bank’s lead. Hou Peng, from TBEA Solar told pv magazine that the Chinese Development Bank has also recently introduced an export financing program with a total budget of over US$2 billion. These loans would fund projects using Chinese modules and components in countries such as India. "We can now offer our clients in India additional funding options for their projects," said TBEA’s Peng.
The Asian Development Bank is also becoming more active in India and is launching a multi-million dollar financing program for photovoltaic projects. Premier Solar System’s Managing Director, Chiranjeev Saluja told pv magazine that the bank has indicated that it would be willing to finance up to 50% of the cost of a project under the scheme.
Other driving forces for the photovoltaic market development in India are the huge energy demands of the Indian economy. Frequent peak hour shortfalls continue to have a major impact on the economy, with such shortfalls reaching around 10% across the country on average. Furthermore, over 400 million Indians still live without access to grid electricity.
Already today, reported Charlie Gay from Applied Materials, photovoltaics in many cases is competitive with diesel-generated electricity in India. Photovoltaics at present can deliver an LCOE in India of 8 to 11 rupees/kWh compared to 12 to 24/kWh for diesel-generated power.
Companies like Azure Power or Abakus/Harsha Solar, in joint venture, see huge growth opportunities, especially in off grid markets. The companies also reported that the mid-sized rooftop applications for commercial properties, such as mid-sized manufacturers, wholesalers or warehouses, also have great potential in India.
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