India’s solar capacity will be ‘well short’ of its 100GW target in 2022

Much of the Indian subcontinent is ideally suited for solar power with lots of sunshine all year round. In its efforts to harvest much of the inexhaustible energy of the sun, India’s government has pledged to have 100GW of solar capacity by 2022 as part of its Jawaharlal Nehru National Solar Mission target.

An ambitious goal, yes. Yet, according to the ratings agency Crisil, the country is likely to come up short with a solar capacity of around 80GW in a best-case scenario. The country’s current capacity is just sort of 22GW. which means that it would need to nearly quadruple that capacity to reach 80GW.

Crisil believes India, which is installing solar modules produced in China and India, will be able to add 56-58GW of solar capacity between 2019 and 2023, which in itself is well above the 20GW added over a comparable timeframe in the past four years. Nor will all solar projects in India proceed at the same expected rate. “We are more confident that projects with the Solar Energy Corp. of India (SECI) will be executed faster; their projects are better able to deal with evacuation concerns (i.e. connection to the national grid),” Rahul Prithiani, director of Crisil Research, said.

Slowing the progress of adding capacity will be a safeguard duty levied on imported solar modules. This extra tax has been imposed by India’s federal government to protect domestic industry from the influx of inbound solar module shipments. Industry experts believe the tariffs will hike capital costs by around 15% to 20%.

A large growth area for new solar capacity will be in the rooftop segment whereby the roofs of private homes and commercial buildings will house solar units to generate their own electricity with a reduced need for dependence on the grid. The government would like to see that capacity growth reach 40GW by 2022, but Crisil believes this figure will be less than a quarter of that optimistic target. The reason is that the cost of power generated this way will stay much higher for consumers than if they continue to rely on the national grid.

“There are execution and counter-party risks to the rooftop segment, and that’s why we’re expecting the big shortfall here,” Prithani said. “Unless the rooftop solar segment is supported with a firm battery market and the legal enforcement of contracts because developers run the risk of the host establishment not honouring a contract when tariffs change, the rooftop market will struggle.”