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Foreign investors could be the key to helping India achieve its ambitious goal of installing 100 GW of solar by 2022, according to experts.
“The pendulum is swinging in favour of international investors,” said Jasmeet Khurana, head of market intelligence at the analyst firm BRIDGE TO INDIA, in a webinar organised in the run-up to Solarplaza’s Solar Project Development & Finance Tour India, this October.
“Indian corporates were the early movers in the market,” he commented. “International developers were on the sidelines. What has really happened over the last one or two years is that the cost of financing and ability to raise cheaper capital outside of India has become a key success factor for developing and investing into solar projects in India.” Interest on loans in India is between 11.5% and 12%. And although most of the debt for solar projects in India still comes from Indian banks, “the government desperately wants to change this, getting international investments into the country,” Khurana observed. “Something that is needed is more appetite for international debt.”
The main target for international investors is likely to be projects of more than 10 MW. These are being promoted by a battery of measures brought in by the solar-friendly government of Indian Prime Minister Narendra Modi. Currently, for example, there are plans to amend the country’s electricity act to include an increased renewable purchase obligation of 10.5%, along with the introduction of a renewable generation obligation and penalties for non-compliance.
At state level, meanwhile, a major initiative is the creation of solar parks, a plug-and-play development model where the government takes care of land rights and evacuation issues. Aside from large projects, the Indian government is also making moves to foster 40 GW of rooftop solar as part of its 100 GW target. Even though this market is relatively early-stage, with 350 MW installed so far, “the fundamentals for rooftop solar are very strong in India,” Khurana said.
BRIDGE TO INDIA calculates, for example, that commercial consumers in almost half the states in India are at socket parity already, which means rooftop solar makes sense without subsidies. This is good news for state legislators who “want largely to do away with subsidies if possible,” according to Khurana. “A lot of states have come up with net metering guidelines for rooftop solar,” he said.
These fundamentals make it look as though India may in fact be able to achieve its 100 GW target, hinted Khurana’s co-speaker in the Solarplaza webinar, Shri Shakti Alternative Energy founder and managing director Satya Kumar. "The current solar pipeline is already 10,000MW,” he said, of which “60% is from the states and 40% central. By the end of 2015 this could well be 15 GW. This 100GW target is a rallying cry.”
Find out about opportunities in the Indian solar market at the Solar Project Development & Finance Tour India, taking place from October 5 to 9 in New Delhi and Hyderabad.