GST

While the nation’s recent Union budget announced steps to create an electric vehicle market, the solar sector still has issues that have not been addressed.

With Narendra Modi’s government stunning pollsters with another huge win, the solar industry expects renewable power momentum to be maintained with steps including anti-dumping duty on solar module imports, a national policy for rooftop solar and an emphasis on easing private-sector participation in the power sector.

With Narendra Modi being tipped to triumph again in the current Indian elections, Indian solar capacity is expected to grow robustly, at 15.3% per year, on the back of continued strong government support.

The level of new solar capacity – 8,263 MW – however, was 15.5% down from the 9,782 MW added in 2017 owing to safeguarding duty and tax taking a toll on large-scale PV. While utility-scale solar declined 23% year-on-year, rooftop PV remained a bright spot, and registered impressive growth of 66%.

Offsetting the impact of changes in central or state government duties post bidding, India’s Power Ministry has directed the Central Electricity Regulatory Commission (CERC) to pass on the excess costs to consumers in the form of electricity tariffs in a time-bound manner.

India is planning to impose a safeguard duty this year to protect its domestic solar manufacturing sector. Many in the industry earnestly believe that if such duties were to be imposed, then a slowing down in market growth would be inevitable. However, the Indian Solar Manufacturers Association (ISMA) believes this will not be the case. Either way, this duty has created unwanted uncertainty in the market.

The Indian solar market is presently undergoing many challenges, including the GST effects, high module process and decelerating power demand. India’s utility sector is expected to stabilize at a much lower 5-6 GW growth rate per annum for the next two-three years, says Bridge to India.

Approximately 4,800 MW of solar capacity has been commissioned in India in the first six months of the year, surpassing last year’s 4,038 MW total, finds new data from Mercom Capital Group. GST uncertainty could slow growth in 2018, however.

The 18% Goods and Services Tax rate for solar cells and modules could pose significant threat to around 10 GW of ongoing utility-scale solar projects, says Bridge to India.