Industry experts and developers said the imposition of safeguard duty and the cancellation of solar auctions were the main reasons for the relatively low addition.
India’s solar energy success story is showing signs of slowing down, with capacity addition this fiscal falling short of target at a three-year low.
Developers added 6,500 mw of solar capacity in the financial year 2018-19, as against a target of 10,000 mw for the year. Capacity addition in 2017-18 was higher at 10,400 mw, while in the previous year, it was 9,100 mw, according to a senior official at the Ministry of New and Renewable Energy.
Economic Times reported that industry experts and developers said the imposition of safeguard duty and the cancellation of solar auctions were the main reasons for the relatively low addition.
India imposed a 25 per cent safeguard duty on the import of solar panels and modules, mostly from China and Malaysia, from end July for a year, followed by 20 per cent for the next six months and 15 per cent for another half-year. This increased the cost of installing solar projects and consequently tariffs, without so far leading to any appreciable growth in the domestic solar manufacturing industry.
Why the shortfall?
In an interaction with the English Daily, a solar developer informed that three factors have caused this scenario. First being a dry period in the first half of 2018 when tenders were not happening.
Second reason being the imposition of solar safeguard duty which led developers deliberately been delaying commissioning of projects until the duty withers out.
Thirdly, both central and state agencies have been cancelling auctions whenever the winning tariffs seemed too high for them. Cumulitively these three major factors played a crucial role in slowing down the solar development scenario in the country.
The latest instance was Gujarat scrapping a 700 mw auction held in December. According to solar consultancy Bridge To India, 5,300 mw of valid winning bids were cancelled in 2018.
