Tuesday, August 27, 2013: Recently, Mercom Capital Group came out with its latest quarterly reports saying that anti-dumping cases, local content requirements along with cost-dominated tendering processes are restricting India’s solar energy growth.
Several state governments have commissioned gigawatt-scale tenders, however, in L1 bidding processes, potential suppliers are supposed to match the lowest bid and so, to fulfill this task the suppliers have compromised on quality. This has also resulted in discouraging investors.
The original rate fixed at US$0.09 per kWh during Tamil Nadu’s 1GW tender in December, 2012 had to be revised to US$0.11 per kWh for the reason that earlier price was unviable. Financial institutions informed Mercom that even this higher rate failed to attract investors’ interest.
Moreover, it stated that anti-dumping measures have ‘paralysed’ the sector and though some developers are happy to make use of local products, lack of enough warranties is posing a problem to it. In addition to it, the electricity regulators have failed to enforce renewable obligations, which is also slackening the growth of solar.
However, Mercom is hopeful that more boards will follow the path of Maharashtra’s Electricity Regulatory Commission (MERC), which has set an example by announcing fines for energy producers, who are unable to meet renewable obligations.
Hence, India is considering to make an investment of US$7.9 Billion in its electricity grid with a views to bring more solar online. Recently, an effort to decrease the rate paid for solar electricity in Gujarat was disapproved by the state’s electricity commission.
