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Global energy research firm Mercom Capital Group has forecasted that solar energy installations in India for 2015 would be over 2,000 mw driven by positive initiatives by state government and the push from Reserve Bank of India for lending to the sector.
Mercom said in a report Thursday that the Prime Minister Narendra Modi-led government has continued to announce various solar programs, goals and policies during its one year in office, but has yet to call an auction.
"While all of these announcements have raised market sentiments, the Indian solar industry is looking for a streamlined auction process at regular intervals to better plan investments and manufacturing capacity," said Raj Prabhu, chief executive officer and co-founder of Mercom.
The report said that Tamil Nadu Generation and Distribution Corporation's decision to sign power purchase agreements in the range of 400 mw - 1,000 mw augurs well for the sector. The commissioning of these projects is scheduled between September 2015 and March 2016.
The Reserve Bank of India has added renewable energy under priority lending but with a cap of ?15 crore for renewable energy generators and Rs 10 lakh per borrower for residential customers. The impact of this policy will likely be minimal in the short-term as the Indian solar market currently is comprised mostly of large-scale projects, Mercom said.
"We commend the government for this decision which is a step in the right direction," commented Prabhu. "We urge them now to consider increasing the cap in order to benefit large-scale projects which will greatly accelerate the implementation and execution of solar installations in the country."
The Solar Energy Corporation of India, which was originally formed to implement Jawaharlal Nehru National Solar Mission projects, is evolving into a government-owned power generation unit. It announced a program to establish and own 2,000 mw of solar projects with sizes ranging from 250 mw to 500 mw to be auctioned as engineering, procurement and construction contracts. Projects installed under JNNSM have now overtaken solar installations under Gujarat's solar policy for the first time, Mercom noted.
The MNRE also proposed a subsidy cut on rooftop solar power plants from 30% to 15%, reasoning that the lower price of components would offset the proposed subsidy reduction. Individual states have been asked to come out with their own favourable policy and regulatory framework to support rooftop solar. This proposal comes in the background of another goal set by the government to target 40 gigawatts of grid-connected rooftop solar over the next five years.
The Ministry of Power has proposed several changes to the National Tariff Policy. Some of the proposed amendments include promoting renewable generation as a policy objective, and abolishing interstate transmission charges for renewable energy sources. The most notable change proposed by the ministry is the increase in the solar Renewable Purchase Obligation (RPO) to 8% by 2019 from the current goal of 3%.
"Without strict enforcement of RPO, it doesn't matter what the percentage requirement is. It is more important to put mechanisms in place which will support strict enforcement of the policy," said Prabhu.
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