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Updated: May 13, 2012 12:23 IST

Solar side up

Sujay Mehdudia
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Going forward: A robust manufacturing base has value in India, but investors need better infrastructure.Photo: K Ananthan
Going forward: A robust manufacturing base has value in India, but investors need better infrastructure.Photo: K Ananthan

Solar industry needs a policy push with greater transparency and thrust on manufacturing, says a report

In order to capitalise on the groundwork done for creation of a successful solar market through the launch of the Jawahar Lal Nehru National Solar Mission, a recent report has suggested that India now needs to adopt greater transparency, benchmarking and monitoring, strategic approaches to finance and technology neutral policies for manufacturing to take the renewable mission forward.

According to an independent report published by the Council on Energy, Environment and Water (CEEW) and the Natural Resources Defense Council (NRDC), it has been found that India's solar industry is at a crucial stage of its growth and needs strategic nurturing.

The report is of the view that a productive solar manufacturing base is an important part of India's aspirations to become a major global solar player. Investing in solar manufacturing now could provide long-term strategic value for India. But to be a dominant player in the global arena, India needs to make prompt, smart and concerted investments in manufacturing. “The National Solar Mission deserves much credit for laying the groundwork for a successful solar market, but a lot of market uncertainty still permeates the solar ecosystem and affects development of manufacturing capacity,” says Anjali Jaiswal, Director, India Initiative at NRDC.

Hindering issues

It has pointed out that a range of systemic issues hinder domestic manufacturing in India. “Indian manufacturing is of a smaller scale and more fragmented, leading to higher costs,” according to Arunabha Ghosh, CEO, CEEW. The report finds that the Indian solar manufacturing sector requires systemic improvements in infrastructure, domestic low-cost financing, and raw materials. The Mission's domestic content requirement (DCR) has not augmented India's manufacturing base and has in part contributed to shifting the market towards thin film PV technologies.

The Government could further grow domestic manufacturing by making policies technology-neutral to avoid market distortions and avoid technological lock-in,'' Dr. Ghosh said.

Job potential

Ms. Jaiswal said policy makers should also not lose sight of value added industries and job creating potential further downstream. She said in the United States, more than half the jobs and value lie in installation, operation and sales. The report is the first independent, external analysis of the opportunities and hurdles faced by India's National Solar Mission. Adopting a whole-of-system approach, the report identifies multiple stakeholders and focuses on all aspects of grid-connected solar power: selection, deployment and commissioning of projects; bankability and the role of various funding channels; the development of a robust manufacturing base and the creation of an enabling environment with regard to land, power evacuation, skills.

Priorities

Outlining the priorities, the report states that Government must bring together different financial institutions to strengthen the solar financing ecosystem, which would operate at the strategic level, project level and offer ancillary support (R&D, skill development).

It stresses that developing a robust manufacturing base for solar has value in India but investors need better infrastructure and financing. Also, policies to promote manufacturing should be technology-neutral. Three alternative policy options could be considered: (a) a domestic content requirement across all PV technologies; (b) a DCR specifying that a certain percentage of solar PV components be manufactured in India; and (c) consideration of a different form of incentive to promote domestic manufacturing without being overly restrictive towards foreign manufactured technologies.

Similarly, it states common definitions of commissioning projects under state and national missions are needed. Project technology choices must be transparent and solar irradiance data must be available for investors to have confidence in the market.

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