Solar Ipps In India – What Are The Underlying Challenges

India has set itself an important task in light of its recent commitment to increase solar energy generation five-fold to 100 GW by 2020, states a July 2015 report by Deutsche Bank Market Research titled – India 2020: Utilities & Renewables, adding that annual investments in solar could surpass investments in coal by 2019-20, with approx 35bn committed by global players.However the report has also outlined several underlying challenges for local solar IPPs and solar energy projects in this context.ChallengesEnergy generated from renewable resources can reach 20% of capacity. Nevertheless the reports points at several hurdles in terms of transmission constraints and integration of diurnal power into the grid without peak load management capability. Solar energy projects in Rajasthan for one could face issues given the policy target of 25 GW solar given the peak-demand for 11 GW.The efficient implementation of Renewable Energy Purchase Obligations is also seen as an added risk, given the precarious financial situation of state distribution companies. The ability of such state discoms to foot the bill for renewable energy and facilitate the large-scale absorption of solar remains a viable concern. Other key issues including financing, land acquisition, limited manufacturing abilities of domestic players and returns, reliability of baseline data are also seen as possible hurdles.

Solar value chainLocal IPPs have got their own game plan to ensure the growth of solar power generation, given the possibility of competitive pricing restricting the growth of conventional power sources. Furthermore additional taxes being levied to fund RE subsidies remains a real possibility which can put cost competitiveness at risk. Further domestic players are not likely to see benefit as majority of PV cells are likely to be imported given the small size of the local industry at 1.2 GW p.a, leading to a lack of cost competitiveness, the reports adds.The road aheadOn a more positive note, the report adds that Solar CAPEX in India could well surpass coal by the fiscal year 2019 and capacity addition could overtake coal in FY 2020 driven by strong commissioning (4.5 GW) and new projects (about 15 GW).  As per the report, renewables could account for a credible 20% of the total power capacities in India by then, buoyed by key factors like the private sector's interest is shifting to solar from coal and numerous emerging opportunities for fund-raising and M&A activity in the solar IPP sector.Welspun Renewables is a leading player in the renewable energy domain with its solar power plants spread across Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, Karnataka, Punjab, Tamil Nadu and Andhra Pradesh.

Source : articlesbase.com