Why has India's solar capacity addition slowed down?

India wants to add 100 GW of capacity by 2022. But according to a new report by global analytics firm CRISIL, it will only manage 60 GW by 2022. An anti-dumping duty on imported solar panels widely used in India seems to have increased the cost.

Published: Wednesday 13 March 2019

India may not be able to meet its 2022 commitments of installing 100 gigawatts (GW) of solar power. A new report by global analytics firm CRISL, says that India could fall short by about 40 per cent from its stated goal.

India, which crossed 25 GW of installed capacity at the end of December 2018, may only be able to add another 44 to 46 GW in the next five years.

One of the reasons is an anti-dumping measure imposed in July 2018 called the safeguard tax on imported solar cells, which are widely used in India. This tax was 25 per cent for the first year, 20 per cent for the next six months and 15 per cent for the following six months. This was done as a safeguard measure for the domestic solar module industry, which is unable to sell panels due lower priced imports from China and Malaysia.

Coupled with this there was lack of clarity on goods and services tax for the solar sector for over a year. All this meant that capacity addition in 2018 was much below the achievements of 2017. In 2017-18, 9,000 megawatts (MW) of solar capacity was added, which slowed down to less than 7,000 MW in 2018-2019.

The report says that installation rate will climb up in the coming years as the safeguard duties are brought down incrementally. The impact of the duty increased the cost of installation by 10-15 per cent, even though module prices fell from $0.30 per watt-peak in March 2018 to $0.24 per watt-peak in December 2018.  In 2017 the lowest bid tariff was Rs 2.44 per unit, which could not be reached in 2018.

The report says that the in 2019, 9,000 MW of solar capacity will be installed, which will rise to 10,000 and 12000 MW in the following years. By 2023, India’s solar capacity could go up to 70 GW.

Subscribe to Weekly Newsletter :
Related Stories

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.