Report

The capacity created in India’s renewable energy sector may be impressive, but the pace has begun to slacken. Solar capacity installations in the country is at 25,000 megawatts (MW), or one-fourth of the 2022 target of 100,000 MW and it will require to grow at 35-40% CAGR over next 3 years to achieve the 100,000 MW target. Cleary there are signs of exhaustion, Energy infrastructure constraints are also making developers wary. Last month, the Solar Energy Corp. of India had cancelled a 2,000 MW tender after it was under-subscribed due to insufficient transmission infrastructure, many analyst have started downgrading the overall projected capacity addition outlook targets. Government actions, such as imposition of import duty, cancellation of tenders (in solar) and proposal to cap tariffs, have hit investor sentiment. As a consequence, the cost of capital is rising as investors are factoring in more risks and project returns have fallen to low teens tracking the steady drop in tariffs. On other side, discoms are making every attempt to put spanner in the growth of solar, for instance, rattled by the exodus of its consumers towards solar generation, MSEDCL after seeking a surcharge of Rs. 1.26 per unit on such consumers, has also proposed to replace net metering by gross metering. Gross metering will make solar roof top unviable.

InfraInsights has been writing report in all sub-sector within energy & infrastructure sector, except solar, and we have been bombarded with questions on why we don’t and what are our view points on the subject. InfraInsights has been consistently providing its view point on the subject, which apparently don’t find many takers, as our views were always contrarian to euphoric view provided by one and all. Overall, we are cautiously optimistic, and hold strong view that future of solar is solar roof-top and key architect of this future will be power consumers; In 2012, InfraInsights pre-empted that solar roof-top will emerge bigger component than utility scale solar. InfraInsights is of the strong view that, solar’s true potential can be harnessed in decentralized, micro grid model. Solar is currently a push based or sellers’ market, wherein government agenda is delivered by pushing Discoms to buy costly solar power, irrespective of their financial health. So, what prompted us to jump into this solar Euphoria?

India’s solar dream of building 100 gigawatts (GW) of capacity by 2022 continues to garner massive interest from global investors, buoyed by the promise of strong returns. But it also faces financing challenges as investors become more cautious amid a fall in solar energy tariffs. InfraInsights research report” Solar Power Likely to get Eclipsed: Next Wave of NPA in Power Sector Coming Soon!, a Bubble about to burst, like Italy or Germany?” by no means intents to play a spoil sport but attempts to unearth the reality from optics, so that investors doesn’t face a situation as faced in developed markets like Spain.