REGIONAL ANALYSIS I INDIA
On the supply chain front, industry will have to gear up to meet this massive requirement and this presents an opportunity from manufacturing to system integration to installation services. The manpower requirements will also be very large and more than one million direct jobs are likely to be created by 2022
an innovative execution model that provides scale to manufacturers to bring down costs and a viable service delivery chain to provide a reliabe solution to the farmers. To start with, diesel replacement can commence immediately due to favourable cost economics. Pilots in this direction should commence immediately.
Push Solar Water Heating (SWH) in residential catergory Various State Governments and Municipal Corporations have implemented policy measures such as mandating SWH installations by amendment of building bye-laws, rebate in property tax, rebate in electricity bills etc. Additionally, MNRE has programmes for providing interest rate / capital subsidies for SWH installation. In our view, while these programs have met with success in a few regions, the potential is far from realised. Reasons for this could be lack of awareness of policy measures among users, lack of interest among banks to actively fund SWH installations and certain concerns in the mechanism of capital subsidy disbursement. We believe that the schemes / policy measures need to be strengthened through an effective dialogue between stakeholders (end users, Government , Municipal Corporations and Financial Institutions). Also, mandatory implementation policies need to be followed up with effective monitoring to ensure compliance.
Industry interaction From an industry standpoint, the solar sector presents an immense opportunity. The total investment requirement in only the “projects” or “applications” space (not including manufacturing) is an estimated USD 110 billion in the period 2012-22. This could provide tremendous potential for solar- specific product markets (inverters, parabolic mirrors etc.) to develop in India during the corresponding period, which could be around USD 30 billion.
For mainstream solar companies, we believe that the following are the key imperatives in the near term: Since there is intense competition among the players to get access to projects which are limited in number, it is necessary
References
1. United Nations Greenhouse Gas emissions 2. Solar Energy Industries Association & Germany’s Federal Network Agency, IMS Research 3.
http://www.desertec.org
4. While recent Case 1 bids have shown a levelized tariff in the range of INR 3.50 / kWh to INR 4.0 / kWh, we have taken the higher end of the range because utility scale solar plants are likely to be located in the north-western states and parts of peninsular India where the transmission penalty for
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conventional plants from the pithead is high. Further, medium scale solar plants can be connected at sub-transmission voltage levels and therefore have benefit of lower network losses.
5. PFC report on performance of State Utilities, KPMG Analysis 6. LCP would include the power losses at transmission and distribution (T&D) levels and also the cost of servicing and maintaining the T&D assets. 7. IDBI report on Telecom Infrastructure
to work out a model which gives a cost advantage and thereby enables a higher chance of winning projects. Sources of cost advantage could be a certain level of vertical integration into the manufacturing or EPC value chain, access to land sites where solar insolation is superior and access to low cost financing.
Solar companies should also keep a slightly broadbased focus and include segments like off-grid applications and other renewable technologies in their portfolio. This will enable them to optimise their resources in an environment where access to new projects may be uncertain.
Indian companies should also look at overseas solar markets in the US and Europe for access to projects. In the immediate future, these markets will offer more opportunities and help Indian companies to move up the learning curve and be poised to capitalise on the Indian market when it scales up rapidly. Transaction opportunities to access these markets should be explored.
On the supply chain front, industry will have to gear up to meet this massive requirement and this presents an opportunity from manufacturing to system integration to installation services. The manpower requirements will also be very large and more than one million direct jobs are likely to be created by 2022.
Conclusion We believe that the solar energy sector is going to have a major impact on our energy sector and certainly a positive and welcome one.
The impact will come sooner than most people expect and therefore a readiness to respond to this opportunity needs to be developed if we are to capitalise on it in a timely manner. It is fair to say that as far as harnessing energy from the sun is concerned, “The Sun Is Rising” and we must equip ourselves to make the most of it.
© 2011 Angel Business Communications. Permission required.
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