CRISIL also said the 25 per cent safeguard duty imposed by the government on imports of solar modules from China and Malaysia would jack up capital costs for developers by 15-20 per cent
New Delhi: India is likely to set up additional solar power generation capacity in a range between 56,000 Megawatt (Mw) and 58,000 Mw over the next four years through 2023 as compared to 20,000 Mw solar capacity addition in the past four years since 2014, ratings agency CRISIL said in a report today.
“This will be driven by capacities allocated or tendered under the National Solar Mission, state solar policies, other schemes driven by Solar Energy Corporation of India (ISTS, wind-solar hybrid etc) and PSUs,” the CRISIL report stated. It added that while 7,000-8,000 Mw of capacity addition is expected under solar rooftop over the same period, the pace of growth for the sector is likely to fall behind over overall target.
CRISIL also said the 25 per cent safeguard duty imposed by the government on imports of solar modules from China and Malaysia would jack up capital costs for developers by 15-20 per cent, which would have a 30-40 paise per unit impact on bid tariffs so as to maintain the same rates of return.
Following a petition filed by Indian Solar Manufacturers’ Association (ISMA) in December 2017, seeking imposition of safeguard duty, the Directorate General of Trade Remedies had recommended a 70 per cent safeguard duty in January 2018. It reviewed the recommendation and on 16 July imposed 25 per cent duty for the first year followed by 20 per cent duty for the first half of the next year and 15 per cent for the second half.
The finance ministry approved the proposal on 31 July. However, the Odisha High Court has temporarily stayed its imposition until further notice or its decision. The finance ministry earlier this week said in a circular safeguard duty will not be insisted upon on import of solar cells for the “time being” in deference to the interim directions issued by the Odisha High Court.
CRISIL said it expects some delay in project implementation on account of the duty as the ‘change in law’ clause is expected to be sought for around 12,000 Mw of under-construction projects.
“Logically, domestic module manufacturers would become the main suppliers to solar developers in India. However, their supply capacities are far short of the annual demand of the sector. Hence, we expect a rise in capital costs over the near-term due to the duty. Additionally, in light of falling module prices, the impact of the duty remains to be seen,” the report stated.
The agency highlighted grid infrastructure, funds availability and counterparty behaviour as other risks for solar capacity addition.
Source: energy.economictimes.indiatimes
