India: PM Modi calls on states for proactive solar push

Share

Indian Prime Minister Narendra Modi has challenged the leaders of the nation’s 17 states to ensure the development progress of solar projects is a number one priority.

Chairing the sixth interaction through PRAGATI – the ICT-based, multi-modal platform for Pro-Active Governance and Timely Implementation – Modi used the platform to reaffirm the govenrment’s goal to install 100 GW of solar PV capacity by 2022.

Afterwards, the PM tweeted: "Solar energy is very vital for India’s energy security" and a statement from his office was promptly issued, reiterating the need for states to work "proactively towards creating conducive policy framework to enable [the] speedy implementation of solar power projects".

Modi’s prompting stems from a concern at government level that there have been undue delays in securing permits for developers, leading to some would-be solar projects being abandoned.

There have also been seeds of discontent sowed among some of India’s local solar developers concerned by the ability of foreign solar firms to undercut them at the auction process for solar projects.

Modi has stated publicly that the solar sector is keen on attracting up to $100 billion in foreign investment, but the appearance of companies such as SkyPower and SunEdison in the Indian market has set – according to some developers – an unrealistically low price bar.

"The tariffs that are coming, we find them quite challenging now," the CFO of Mumbai’s CLP India Pvt Samir Ashta told Bloomberg. "We will look to enter the market, but at these tariffs it’s a challenge."

Canada’s SkyPower Global in July was able to corner half of a 300 MW tender offered in Madhya Pradesh with winning bids of $0.08/kWh, and then in August followed up that coup with a further winning bid of ~$0.08/kWh for 200 MW of solar projects in Telangana.

According to BNEF’s lead solar analyst Jenny Chase, these winning bids are not "wildly out of whack", but do represent the dichotomy between what global players can bid for in India, and what can feasibly be secured by local developers.

SunEdison Asia Pacific president Pashupathy Gopalan rejected the criticism that foreign suppliers are offering bids that are unrealistically low, telling Bloomberg that "we’ll not bid aggressively just for the sake of winning. We need to make money."

In seeking to avoid the boom and bust cycle experienced in the solar markets of the U.K. and Germany, India has chosen to attract developers via the auction process – an approach that promises greater stability but is not without its drawbacks. "We’ll always over-tender projects because it is a given that 10-15% of capacity will never get built," Tarun Kapoor, joint secretary at the Indian Ministry of New and Renewable Energy (MNRE), explained to Bloomberg.