T&D and Solar
How the Indian T&D sector fared in 2016: The year witnessed greater participation of the private sector in T&D projects with the government going all out to revamp the T&D infrastructure to bring it in sync with the growth in generation capacity. The move to come up with a grid centre, a ring of extra high-voltage class (1,200 KV), in Central India to connect all the four (northern, southern, eastern and western) grids of the country will go a long way in easing the power supply situation. The decision of Power Grid Corporation of India to build separate transmission lines to evacuate green energy in the form of eight Green Energy Transmission corridors is also a step in the right direction. Pursuing the target of the Central Electricity Authority to bring down T&D losses to 18% by 2022, the government this year laid special emphasis on upgrading its substations and transmission lines. Ready to pump investments to the tune of Rs 1 lakh crore into the T&D segment over the next few years, the government is all set to achieve its target of adding 51,400 circuit km of transmission lines in FY 2016-17, an 82% increase as compared to the previous financial year. How the T&D sector is expected to fare in 2017: We expect 2017 to be a great year for the Indian power sector with a projected 5-6% growth in generation. Fuel supplies will improve, and so will the financial health of state utilities. There is a huge scope for rural electrification jobs in the T&D space with plans to electrify thousands of villages across the country. Backed by the growing participation of private companies, power infrastructure will continue to come up in a big way in India next year with emphasis on integration of smart and sustainable technologies. The thrust on central schemes like Accelerated Power Development and Reforms Programme and Deen Dayal Upadhyaya Gram Jyoti Yojana will further strengthen the T&D network. While many existing transmission corridors will be upgraded to higher voltage, high-intensity corridors with enhanced right of way capacity are also in the offing. The special green energy corridors planned for the smooth evacuation of solar power will be another major focus area in 2017. We will see more and more states constantly upgrading the grids and coming up with new ones to match the outflows created by new solar projects. While Power Grid Corporation of India Ltd will build inter-state transmission lines for evacuation of green energy to begin with, local governments within states are expected to invest in capacities.
SOLAR: How the sector fared in 2016: This year has been the best for the Indian solar sector so far with a total capacity addition of 4.9 GW, an increase of 101% over the previous year, and floating of new tenders for 9-GW grid-connected solar projects. While India’s cumulative installed capacity reached the 10-GW landmark in 2016, the rooftop capacity also crossed the 1-GW mark, giving a much-needed impetus to the solar industry. Registering a phenomenal growth of 135 per cent over the past one year, the rooftop solar segment is finally coming into its own. With the Solar Energy Corporation of India coming up with 1,500-MW tenders this year, rooftop solar is finally getting the attention it deserves. In pursuit of the ambitious 100-GW target, 2016 also marked a strategic shift of the government from small solar plants to mega solar projects and large solar parks. Encouraged by the enthusiastic response from developers, the government is now planning to double the capacity under the solar park scheme from 20 to 40 GW.
How the Indian solar sector is expected to fare in 2017: Given the government’s thrust on sustainability, renewable energy in general and solar power in particular will be the biggest gainer. With 20-25 GW solar projects under various stages of development, the unprecedented demand for solar installations will spur growth of the Indian solar sector like never before over the next one year. India’s installed solar capacity recently crossed the 10-GW mark, a milestone that should act as a stimulus for unprecedented capacity additions in years to come. Far exceeding growth projections of leading market analysts, solar power generation has more than doubled in the past one year, and it will not come as a surprise if the installed capacity records a threefold increase by the end of next year.
In pursuit of the 60-GW target for ground-mounted solar projects, we will see many large projects and Mega Solar Parks coming up in states like Andhra Pradesh, Karnataka, Madhya Pradesh and Rajasthan. We believe 2017 will also witness unprecedented growth in the rooftop segment with the Solar Energy Corporation of India coming up with 1,500-MW tenders.
Far exceeding market projections, solar power generation has more than doubled in the past one year, and it may well record a threefold increase by the end of 2017. As the industry introduces more and more cost-effective solar PV technologies, off-grid solar opportunities are also poised to grow proportionately. Considering the pace at which solar projects are coming up, operation and maintenance will be another major thrust area for the Indian solar sector in 2017.
The year 2016 witnessed tremendous progress in India’s journey to fulfil the solar mission and we anticipate sustained momentum in the sector going forward as well. India is a forerunner in the global solar energy sector with almost 9 GW of installed capacity. The initiatives undertaken by MNRE have been significant in creating a positive industry ecosystem. The year was also a good one for Tata Power Solar with several large projects being commissioned, including the 100 MW largest DCR project.
We believe 2017 can be a game changing year for the solar industry, especially as the momentum created over the last few years starts to move towards a tipping point. However, for that to happen, apart from continued focus on generation, the government should also look to build a strong and robust manufacturing sector. This will be vital to catapult India in becoming self-reliant from an energy PoV and also play a larger role in generating employment, facilitating inbound forex through exports and contributing to the overall growth of the economy.
It would be a great impetus for the solar sector if the Government focuses on providing better access to finance and capital at a competitive rate, especially for technology adoption and low cost storage solutions. Also, as we approach grid parity, it is important that the government gives increased prominence to quality of solar installations so that short-term benefit of low tariff is not at the cost of long term viability. Apart from these, providing direct subsidies, lower and better streamlined taxes and higher status to the sector for getting capex access will go a long way in creating a level playing field for domestic players. Ensuring implementation of net-metering and increased focus on rooftops and micro-grids, especially in areas with limited grid connectivity will help in bridging the current energy divide and shall encourage end-customers to adopt clean energy.