While China has scored over the US to become the most attractive market for renewable energy investments, India has ranked fourth behind Germany, according to the recent Renewable Energy Country Attractiveness Indices, brought out by Ernst & Young (EY). The indices rate national renewable energy markets, renewable energy infrastructures and their suitability to individual technologies. Though the indices take a generic view, special attention is given to the factor in the priorities of investors.
India held on to its previous position despite dropping a point for reducing its new wind energy generation target by 2GW to 9GW for the 11th Plan and favouring local PV manufacturers in the first-phase rollout of the National Solar Mission. This could affect the achievement of 22GW target by 2022 because of domestic suppliers’ inability to cope with the demand. On the other hand, the move is expected to give a push to domestic solar PV production and lead to indigenous manufacturing, creating local supply chains. The government has already cleared 12 investment proposals under the semiconductor policy, which provides a capital subsidy of 20-25% to manufacturing plants.
Though the governments solar initiatives stand out at a time when Germany cut its solar PV tariffs and Spain is mulling making retroactive changes to its PV tariffs, thereby increasing the regulatory risk for investors, India is lagging China, which is aggressively pursuing its targets of installing 300 GW of hydro, 70 GW of nuclear, 100 GW of wind and 20 GW of solar capacities by 2020.
EY highlights the National Solar Missions June 2010 guidelines for off-grid and decentralised solar applications, rooftop solar PV installations and small solar generation for offering 30% subsidy, lower (5%) interest bearing loans and generation-based incentives (GBI), which would be the differential between the Central Electricity Regulatory Commission tariffs and this year’s fixed base rate of Rs 5.5/ KWh.
Going further, the report notes, the government has approved the migration of 16 projects with a cumulative capacity of 84 MW to the National Solar Mission. While 50 MW would be generated from solar PV, 30 MW would come from the solar thermal technology. Rajasthan (11), Maharashtra (3) and Punjab (2) have garnered all the 16 projects. The report singles out Maharashtra for being the first to embed solar in renewable purchase obligations by asking power distribution licence holders to procure 0.25% of their electricity basket from solar power. Other states too are required to follow this.
India, China and South Korea are projected to continue to lead on the back of technological and cost advantages. Its also partly because developed countries are focusing on higher technological solutions, which are costlier. For example, Spain and Australia are focusing on concentrated solar power (CSP), France on integrated solar PV, and the US on thin-film solar.
As far as economics is concerned, PV is expected to achieve grid parity by 2012-2015 in US/UK, if retail electricity prices continue to rise as anticipated. CSP may take longer. Similarly, the UK and Italy may achieve grid parity in onshore wind in 2017 and Germany and Spain in 2025. Offshore parity would come later. EY sees smart grid as an emerging priority and biomass as a potential resource, depending on land availability, for both developed and developing countries.
Source: The Financial Express
Published on 21 September 2010