INTRODUCTION
Energy
is a key indicator of the living standards of citizens of any country and is
instrumental and quintessential in raising it. It is also imperative to
understand that an apparent patent nexus between the per capita consumption and
Human development index is not also reflection of extent of development but
also makes energy a fundamental input to any economic activity, safe to say,
per capita energy consumption is directly proportional to economic development
of a country. India accounts for 18 % of world population and yet only uses 6%
of world’s primary energy[1]
A
cursory study of the energy security in India reflects that due to
environmental concerns off late and its commitment towards green energy[2] it
cannot utilise its abundant source in nature of coal as effectively as it would
have loved to and is heavily dependent for imports for its reliance on Oil
& Gas. This is however heavily subjected to several factors of Oil
Diplomacy and power tussle in International arena.
These
all factors cumulatively and India’s dedication to combat climate change has
led to its gradual shift to another source of energy i.e. Renewables.
Renewables in India possess a great potential to be the game changer in terms
of energy access and security and lucrative economic activity. As a developing
nation it has been pioneer in leading and accelerating its policy and steps
towards manifestation and use of renewables.
Although
the central legislation is yet pending in Parliament to regulate the renewable
since 2015 yet there has been significant investment pertaining to renewable,
more specifically solar in India. It can be attributed to India’s ambitious
efforts in soliciting creation of International Solar Alliance however experts
have mooted that the geographically solar rich territory of India makes it
desirable location for investment which the government over years have realised
and placed its policy upon. Whatsoever be the reason for the growth of market
and channelization of investment, in considerably small amount of time India
has emerged as cheapest producer of solar energy worldwide[3]
and a lucrative place for foreign investment leading to 100% FDI in the sector
and total of 4826 US$ investment since 2014.[4]
HOW
DID INDIA BECOME CHEAPEST PRODUCER OF SOLAR ENERGY IN SUCH SHORT TIME?
India
being a developing country and geographically located such as to be able to
maximize its potential of solar power, its
consumption is only going to rise, so adoption of alternate forms of energy
such as solar specifically is the readily accepted way forward to manage
balance between economic growth and sustainable environment. This has been
translated and has seen its manifestation today, as the total installed solar
capacity stands at 30 GW, an increase of 5 times in last 3 years and
contributing almost 30% of energy mix[5]
The
production has grown by leaps and bound but price of solar energy has reduced
drastically from Rs 17 when in 2010 first National Solar Mission was launched
to Rs 2.44 in the latest bid. Solar Energy Corporation of India (SECI) has been
instrumental and is to be credited along with government’s effective PPA (Power
Purchase Agreement) Model which made it effective and possible by competitive
bidding adopted by the State. Here SECI enters in a PPA with the respective
government and further engages private entity in contract to produce and supply
solar electricity at the lowest bid offered.
With
solar energy the major problem associated is the huge acres of land required to
produce power which with other source of energy is close to minimum. Solar also
offers a huge amount of trade and investment opportunities. Cheap access of
Solar Panels from China in India is also ascribed to its rapid and economic
growth as source of energy in country Howsoever the atmosphere initially has
been friendly for development of Solar as primary renewable in India off late
it has been compromised due to Trade disputes and Political appeasement all
because lack of forefront policy on renewable.
HOW TRADE
AFFECTS?
The trade
ministry levied 25% Duty on import of Solar Panel from China and Malaysia with
a pretext of the domestic players are at disadvantage and are not able to compete
with foreign market in India’s nascent industry as these imports have had
serious Injuries to domestic players and was in public interest to impose
safeguard duty [6]
However in an year since the imposition there has been reports which identifies
the inability to propel the domestic market instead has un-intended stalled the
major projects to circumvent the two years’ time frame as Bloomberg reports.[7]
It has
ben also reported that since this imposition the prices of solar panel and consequently
power rose high when domestic player where entrenched in picture which was not
only going to hurt the consumer’s pocket but also investors in the construction
contract with entities to produce solar hence the private players like Waree
Energies Limited, Jupiter energy limited has found another way to deceive the
safeguard by importing solar panels from South East Asia Countries such as
Thailand & Vietnam . These panels are way cheaper than the domestic solar
panels and although they don’t match the cheap price offered by china yet the
pressure on purse is negligible.
This step
has been now vehemently criticised by all corners as it did not achieve its end
result additionally it has increased the prices slightly and was a threat to
India’s solar market if the players had not circumvent the imposition.
SLASHING
OF TARIFF
Tariffs
are approved by respective SERCs once it has been decided by the way of
competitive bidding under the PPA with SECI. On July 1, 2019 YS Jaganmohan
Reddy government in Andhra Pradesh released an order “to review and renegotiate
exorbitantly priced wind and solar projects” which was their election promise
often attributed as political appeasement. This affects in as much as, Three
solar PPAs with National Thermal Power Corporation (NTPC) and Solar Energy
Corporation of India Ltd (SECI) and another 21 wind power sale agreements (PSA)
with Suzlon and Axis at varied stages from Construction to commissioning
cumulating more than 5.6 GW at stake.[8]
This
attempt to renegotiate and slash the prices in the garb of unfair advantage to
some as it was not decided through competitive bidding, has no legal standing
and may create distrust among the investors as it does not offer a stability.
Moving ahead with this even though the tariff decided were based on PPA may
scar the investor as it will affect heavily on finances and consequently the
balance sheets.
This
step has been so daunting that the MNRE has come out in public and mooted for
the model of Andhra Pradesh an investor friendly and requested the government
to honour the continuing PPA.[9]
Amidst
all of these potential and challenges therefore as highlighted, the current system is the best way forward. The
problem, however, is going back on PPAs and their conditions including tariffs.
However with such market growth and immense opportunities, is it now also not
the time to address the question of whether or not a regulatory body is needed
dedicated specifically to renewables which may curb the visible gap and
streamline the investment and trade with increasing solar capacity?
[1]
Manoj Kumar Upadhyay , Power for All and Energy Security, Yojna ( August 2019)
ISSN- 0971-840
[5]
Supra at 4.
