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Asia Report: India Scales Back Subsidies, What it Means for Solar

India is targeting a deficit target of 5.3 percent of its GDP for the fiscal year ending March 31, 2013, but at current spending India will fall short by about 20%, or roughly 2.06 trillion rupee. Among the measures to hit that target are a reduction in subsidies, which has implications for the solar market, reports Bridge to India's Jasmeet Khurana.

The Ministry of Finance has delayed paymentsto the National Clean Energy Fund, which is supposed to help cover the cost of subsidizing new solar installations under the National Solar Mission (NSM). The lack of clarity in the delay has ramifications on several fronts, Khurana notes: "Many investors and developers have already been planning their projects and have incurred costs for typical pre-development work such as land and off-taker identification. Also, module and other component suppliers have planned for sales to NSM projects in the next financial year. Some of them have invested into contract manufacturing and growing their teams."

On the other hand, bulk consumers of diesel (defined as malls, hospitals, offices, hotels, airports, etc.) will see their subsidies reduced as well, which should help improve the business case for distributed solar power generation. These consumers, many of whom use diesel for power, buy directly from oil companies instead of retail outlets, Khurana says. Their new price has been increased by roughly 20%, or INR 10/liter; some will go buy diesel directly from the pumps where prices are still subsidized, but in most cases users' energy costs will go up. "Solar power is already financially attractive for consumers with high tariffs and/or high back-up or captive diesel consumption. With an increase in diesel costs, especially in areas where power supply is irregular, solar power will now become even more competitive, improving the business case for distributed solar power generation in India.

IN THE NEWS

Taiwan Offshore Wind Farms Boosting Capacity: The Ministry of Economic Affairs has selected three companies to receive subsidies to build model offshore wind farms with a generating capacity of 300 MW. The new additions will bring Taiwan's offshore capacity (installed or under construction) to 3 GW. Meanwhile, here's a video profileexamining the island's goals to boost wind energy eightfold, with 1000 wind parks (onshore and offshore) by 2025 and 4.2 gigawatts (GW) power capacity by 2030, up from 530 GW today. That 2030 goal would allow Taiwan to meet eight percent of its energy needs with wind energy up from a current one percent.

China Soaked up 33% of Global PV Panel Shipments in 4Q12: China dominated shipments of solar PV panels in 4Q12, according to NPD Solarbuzz, accounting for 33 percent of global end-demand -- up from less than 10 percent two years ago. Compared with slowing growth and declining PV incentives in Europe, China's strong domestic policies seem to be setting it up to "potentially tak[e] center stage in both the upstream and downstream channels," notes senior analyst Michael Barker.

India's Biggest Real Estate Firm Sells Wind Project: DLF has sold a 150-MW wind turbine project in Kutch, Gujarat, to a subsidiary of Bharat Light and Power for Rs 282.30 crore (about US $53 million). DLF has a portfolio of 227 MW of wind projects in four Indian states.

Japanese "Mega-Solar" Project Under Agreement: Mitsubishi and C-Tech are jointly establishing a large-scale "mega solar" project in Aichi, one of the nation's largest solar projects to date. Construction on the 77-megawatt (MW) "Tahara Solar Co. Ltd." will start this summer, with the estimated 20 billion yen project coming online sometime in 2014, selling electricity to Chubu Electric Power Company.

Pakistan Takes Steps for Solar Power Generation: Setting a role model for procedures and strategy at the national level, the Pakistan Engineering Council (PEC) has installed a 178 KW on-grid solar power generation system, with excess electricity delivered to the national grid under Feed-In-Tariff regime. The project also included several initiatives for energy efficiency improvements, which reduced the lighting load from 46KW to only 5 KW.

India Solar Project Taps Arizona Company: Sedona Solar Technology and Maruntech Enterprises Pvt. Ltd. of Chennai, India have signed a partnership to developing large-scale solar PV projects in India. Initial fruit of this venture will be a 5-MW project this spring, built on five sites in India, funded by domestic steel company Tapal Steel Pvt.

ON THE HORIZON

Japan's Solar Tariff May Drop 12% as Costs Sink: Japan could cut its tariff for purchases of solar power by as much as 12 percent, dropping the feed-in tariff to as low as 37 yen (41 cents) per kilowatt hour from a current rate of 42 yen/kWh. Average system costs for non-residential solar have fallen to 280,000 yen/kWh since October, 14 percent below the 325,000 yen/kWh amount used to set the solar tariff for the current fiscal year. Also in favor of lower tariffs is Softbank president Masayoshi Son, whose company has been operating four solar power stations since July and will continue investing in such projects, according to the company.

Why China Won't Impose a Tariff on Imported Polysilicon: A widely expected retaliatory tariff on polysilicon imports into China -- which mostly come from the US and Europe -- probably won't materialize because they'd do more harm to domestic cell and panel manufacturers who are already being squeezed. China is expected to rule later this month on complaints from domestic polysilicon producers (GCL chief among them), but with solar panel prices still punishingly low (they slipped 22 percent in 2012), domestic manufacturers likely won't want to absorb newly higher prices further upstream.

Cook Islands Unlikely to Meet 100% Renewable Energy target: The Cook Islands government doesn't think it will meet its goal of having its entire energy needs met by renewable resources by 2020. James Beer, former Chairman of the Cook Islands National Energy Committee, explains in a podcast that eliminating the country's reliance on generators run with imported diesel and fully embracing renewable energy options (solar, wind, tidal) isn't yet practical enough.

Tamil Nadu Poised to Lead India's solar power revolution : Tamil Nadu would generate around 40 percent of the solar energy produced in the country by 2015, as the state pushes rooftop solar in its energy policies and programs, according to Sudeep Jain, chairman and director of the Tamil Nadu Energy Development Agency (TEDA). Tamil Nadu generates about 8 GW of renewable energy at present; power storage including batteries remains a challenge, though.

A DEEPER LOOK

China Needs A 'Game Changing' Renewable Energy Technology: Despite all the evident progress in China in fostering renewable energy, energy conservation and other sustainability initiatives, there still is a 60-70 percent chance that the smart phones or tablets we use were manufactured in China using electricity generated from a coal-fired power plant, points out Louis Schwartz from China Strategies. Among his observations: China desperately needs new low-cost clean energy technologies that can be implemented quickly, and on a scale that competes with coal-fired power plants (and the prospect of LNG imports from the U.S.).

China Coal Producer Looks to Tasmania in Quest for Wind Energy: The gales off Tasmania are luring Chinese investors with a different passion -- harnessing wind to generate electricity. "Australia is becoming a preferred destination," said KPMG's Helen Zhi, who visited about 20 Chinese renewable energy companies in October. "Only one put America as the number one prioritized market. All the others, particularly among wind players, put Australia as No. 1."

IN CASE YOU MISSED IT

Jan. 11-22, 2012 Asia Report: Reacting to China's Goal of 49 GW of Renewables in 2013

Dec. 18-30, 2012 Asia Report: China Solar Shares Soar as Government Bails Out Sector

Dec. 11-17, 2012 Asia Report: India Hopes to Ramp Up Installed Solar Capacity to 9 GW by 2017

Dec. 4-10, 2012 Asia Report: India's Wind Power Capacity Expected to Balloon by 2020, Says GWEC

Nov. 27-Dec. 3, 2012 Asia Report: China Dominates 2011 Global Wind Installations

Nov. 20-26, 2012 Asia Report: Another Week of Woe for China's Solar Panel Manufacturers

Nov. 13-19, 2012 Asia Report: Australia Lays Out 2050 Renewable Energy Vision

Nov. 3-12, 2012 Asia Report: Panasonic Freezes Investment in Malaysia PV Manufacturing

Lead image: Solar panels on top of a eco friendly building in India , via Shutterstock

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