Challenges

 

Challenges

  1. Low manufacturing of Silicon panel in India – manufacturing
  2. State push for Low tariffs on solar energy is making it unsustainable for the developers.
  3. Policy changes have been sudden and unpredictable.
  4. Mounting discom dues: Some state power distribution companies (discoms) are also late on paying their power bills. As of July 2019, state discoms owe a whopping ?9,735.62 crore to the renewable energy companies.
  5. Slack in new Investment: While the renewable energy sector has been fuelled mostly by private equity (PE) investments so far, the number of firms now able to attract investment has dwindled due to the problems faced by the industry. There is also uncertainty in the bidding of new projects. The projects that have already started, the pace has slowed down dramatically.
  6. PE investments into renewables have stayed low and large banks like State Bank of India are no longer lending to renewable energy projects that sell power at below 3 a unit.
  7. No broad solar development: Countries which are a success story in solar energy have all had a parallel development in solar-based IP, manufacturing and deployment. But in India, we went straight to deployment and that makes it vulnerable to global players like China and Vietnam who lead in manufacturing. That dependence will only grow more as India’s energy transition slows or gets delayed.
  8.  Currency risk: There is also currency risk involved because modules are imported and then the cost of the module itself keeps varying.
  9. Low quality power: Beyond the rising risks and regulatory uncertainty, an increasing area of concern is also the quality of solar energy installations in India, most of which are purchasing cheaper panels from China to break-even. There are higher-than-expected degradation levels in the solar modules that Indian developers are using. Studies have suggested that quality issues in solar Photo Voltaic (PV) cells could be the result of aggressive pricing policies and commissioning deadlines for PV plants.
  10. Decline in power sector demand: A large part of the stress in renewable energy sector is because the slow rates of growth in power demand, particularly from high energy-consuming industries.

Data from Central Electricity Authority show all-India power demand growth slowed to 4.4% in April-September 2019, down from 6% a year ago.

 

Operational issues:

  • The solar panels used are not designed for very high temperatures. In remote areas with high temperatures, the panels do not yield their optimal usage.
  • Dust is a problem, especially in Rajasthan, which require frequent cleaning and increase the operational costs. There is alluvial dust present in plains of north India and delta regions of south India) which turns into mud when water is poured.
  • Other main issue is the hardness of the water. Hard water is not suitable for cleaning, and companies have to invest in reverse osmosis (RO) and other technology to make it suitable.
  • Skilled workforce is required for cleaning and maintenance is not available in these areas and so companies have to bring them in from other areas and train them.
Domestic content controversy

Guidelines for the solar mission mandated of cells and modules for solar PV projects based on crystalline silicon to be manufactured in India. This accounts for over 60% of total system costs. For solar thermal, guidelines mandated 30% project to have domestic content. A vigorous controversy emerged between power project developers and solar PV equipment manufacturers. Domestic manufacturers wanted to avoid competition with global players and lobbied the government to incentivize growth of local industry. US Trade Representative filed a complaint at WTO challenging India’s domestic content requirements citing discrimination against US exports. WTO ruled in favor of USA.

Consequences:
  • In the rush to build market share, some players have become very aggressive are bidding very low tariffs with fairly low returns. It is important that every project remains viable from both aspects—tariff and profitability.
  • Given that several discoms, the ultimate buyers of power, are in a poor financial condition; and India’s banking sector is already facing its own set of challenges, viability of solar power projects has become a serious cause for concern.
  • We need to attract more players and many more investors into this nascent sector. This will come only if the returns are attractive for investors.
  • If the slowdown persists, not just in renewables but in the broader economy, it will adversely affect India’s energy transition plans and the target of achieving 450 GW by 2022.

 

Consumer side Problems:

  • There is no power generation when then sun sets down.
  • It is weather dependent hence not reliable.
  • There is need to clean the panels regularly. Cleaning panels of large solar farms is wastage of lots of water.
  • Sunny area is required. Even small shadow on the panel can disrupt the generation of whole string.
  • Replacement of batteries in off-grid plants is costly. While installing a solar panel is quite cheap, installing other equipment becomes expensive.
  • Solar panels require considerable maintenance as they are fragile and can be easily damaged. So, extra expenses are incurred as additional insurance costs.
  • In On-grid systems, when there is a power cut from the grid then your own power cannot be used instead. This results in no power at all in such situation.
  • Finding faults in and maintenance of big solar farms is hard because of large size.
  • The land space required to install a solar plant with solar panel is quite large. India is already a highly populous and land starved country.
  • While the government has provided subsidy for rooftop solar installations, consumers are still expected to foot the water bill and cleaning bill which means bearing the operational costs of having solar modules on roofs.