The World's #1 Renewable Energy Network for News, Information, and Companies.

India’s Account Deficit Likely to Derail the National Solar Mission

The rising current account deficit (CAD) of India is likely to derail the country’s ambitious National Solar Mission (NSM).

The current deficit of US$98 billion in the calendar year 2013 is steadily rising, as the much-touted GDP growth rate has come crashing down from highs in the double-digits to under four percent. Consequently, the CAD to GDP ratio of 4.9 percent is experiencing new highs as the central government fails to return confidence to the market place.

The second phase of the National Solar Mission has not yet taken off. It was targeted to achieve almost 4,000 MW of solar power project installations under the central scheme and 6,000 MW under state schemes. Of these, 3,600 MW of installations were targeted in for 2013-14 and 2014-15.

On the action side, the draft policy document of the second phase was released by the Ministry of New and Renewable Energy (MNRE) in December 2012. The ministry conducted consultative meetings with various stake-holder groups, hoping to be able to launch the programme in February 2013. It is now September, and there is still no final policy document.

In a related measure, from February of this year, the MNRE stopped accepting applications for the 30 percent subsidy it offered to all rooftop and off-grid power projects. It is not yet clear as to when this window will re-open.

The current account deficit has devalued the local currency by over 20 percent over the last few weeks, with pressure mounting on the government to push forward reforms and reduce subsidies. On the latter count, the second phase of the solar mission surely will take a hit as its most-critical component is viability-gap funding (VGF) — a direct form of subsidy to cover the cost of a solar power project up to 33 percent. The actual figure of this subsidy could well go up to US$1.5 billion — something that the treasury will certainly not allow.

Absence of any such programme, devaluation of the local currency by 20 percent, non-enforcement of solar power purchase obligations and slow sale of renewable energy certificates (RECs) on the nation’s two energy bourses will majorly impact the country’s solar power sector and various stake-holders.

This scenario is actually a bitter pill that the industry will have to swallow, go beyond various government and regulatory dependencies, and explore opportunities in a three-dimensional matrix that would use the local states, business segments and timelines as the three axes.

The rising cost of conventional power and the non-availability of adequate power offer solace to the industry that the consumers will eventually adopt solar power in a country which is blessed by the Sun for over 300 days in a year.

Lead image: Change purse via Shutterstock

RELATED ARTICLES

Rooftop Solar Panels

Hypocrisy? While Buffett Champions Renewables, His Company Fights Rooftop Solar

Mark Chediak, Noah Buhayar and Margaret Newkirk, Bloomberg Warren Buffett highlights how his Berkshire Hathaway Inc. utilities make massive investments in renewable energy. Meanwhile, in Nevada, the company is fighting a plan that would encourage more residents to use green power.
Japan Microgrid

Born from Disaster: Japan Establishes First Microgrid Community

Junko Movellan, Correspondent Although Japan's Fukushima prefecture is most commonly associated with the 2011 disaster due to the nuclear power melt-down, Miyazaki prefecture, located north of Fukushima, suffered from the largest death toll, close to 10...
Renewable Energy Finance

Clean Energy ETFs Are on a Tear

Eric Balchunas, Bloomberg Green investing used to be synonymous with losing money. But while the S&P 500 Index is up 2 percent this year, and the MSCI All-Country World Index is up 5 percent, clean energy ETFs have double-digit re...

Wheels, Towers and Trees: Unconventional Renewable Energy Technologies in the Pipeline

Andrew Williams, International Correspondent A number of companies around the world are developing novel technologies in an effort to grab a slice of the global renewable energy market.  Although many of these technologies are simple incremental improvements to e...
Bhupesh Trivedi is the CEO of Mumbai-based solar power consulting firm REECODE Energy Solutions. He has spoken at a few climate change and solar power conferences in India and consulted solar investors, EPC contractors and vendors in India. He is ...

CURRENT MAGAZINE ISSUE

03/01/2015
Volume 18, Issue 3
file

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

EU PVSEC 2015 (European PV Solar Energy Conference and Exhibition)

The EU PVSEC is the largest international Conference for Photovoltaic re...

Energy Security: Opportunity Power with the Sunny Boy Secure Power ...

Wouldn’t it be great to have a grid-tied inverter that could still...

SMA More Power, More Profit Tour - Duluth

SMA’s More Power, More Profit Tour is aimed to provide highly-valu...

COMPANY BLOGS

EU PVSEC 2014 extends its Scope

Added focus on application and policy topicsAbstracts for conference con...

EU PVSEC 2014: Call for Papers Receives Great Response

More than 1,500 contributions apply for presentation in AmsterdamScienti...

Solar Impulse Flying From China to Hawaii

The team behind Solar Impulse, the solar-powered airplane, is prepa...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS