India’s Distributed Solar Energy Story – A look at the past, present and future.

December 2020

The Decade That Was

India receives nearly 4000 hours of sunshine every year, across 365 days – which is precisely why we have witnessed exponential growth in capacity addition of solar electricity this past decade. Global socio-economic factors like reduction in the cost of modules, increase in demand and production, awareness and commitment towards reduction of carbon emissions have all played a role in fuelling the growth of the Indian RE sector.

However, the most important contributing factor in opening up of the sector has been the enabling regulatory environment – free import of Chinese modules without duty, import of quality components from across the globe with minimum or zero duty, removal of the subsidy component for commercial and industrial businesses that resulted in market forces taking over the space.

Investment into India’s green energy space has grown owing to the prevalence of a well-oiled, professional, commercial and viable business model – one that offers consumers low-cost, clean electricity.

Current Challenges faced by RE Developers

India’s target of 175 GW Renewable Energy by 2022, (100 GW solar power, out of which 40 GW is powered by rooftop solar) was originally an ambitious but achievable target. Today, our installed rooftop solar capacity is only between 5 and 6 GW.

Our commitment under the Paris Pledge for 2030 is 3-pronged: a 33-35% reduction in emissions intensity of GDP, 40% of installed electricity capacity to be RE or Nuclear and an additional cumulative Carbon sink of 2,000-3,000 MtCO2e.

After making great strides initially, the regulatory framework for acceleration energy transition in India is slowly dwindling. Policy double-speak like reversal of net-metering norms, reversal of duty structures, imposition of safeguard and basic customs duty threatens to derail the progress made by renewable energy developers. States like Gujarat do not permit OPEX contracts for solar projects, despite being progressive on targets and RE adoption. This sends mixed signals to all stakeholders of the sector including project developers, lenders, investors, discoms and off-takers.

It is imperative to boost domestic manufacturing, especially of PV solar components and Li-ion batteries – but this cannot be at the cost of taxing RE developers. Production-linked incentives, tax-holidays for manufacturing are better ways to promote ‘make-in-India’ and ramp up the quality of local components.

The biggest challenge is ensuring that all stakeholders work in tandem, and not silos to promote energy transition in India. The World Health Organisation in 2018 released a report on air pollution stating India is home to 9 out of the 10 most polluted cities in the world. Switching to clean energy sources, adopting electric mobility and increasing energy efficiency are no longer options but an imperative

The Way Forward – does policy hold the key to progress in India’s RE story?

India is amongst the fastest growing economies in the world and its demand for electricity is keeping pace. A dedicated Renewable Energy policy committed to enabling energy transition by all consumers, across States is the need of the hour.

Policy framework and practices like improving climate risk disclosure and classification standards will help financial institutions, investors and regulators better understand the market potential, sectoral exposure and gauge system-wide risks –will help transform the sector going forward.

Some regulatory measures that we believe will propel the sector forward include

• No Cap on Net Metering
• Consumer to be given a choice between Net or Gross Metering
• Uniform and long-term Open Access norms across states
• Standalone Renewable Energy Policy for the country
• Quick, single-window clearance for approvals pertaining to connectivity, CEIG approval, Net Metering approval and other regulatory nods
• Unbundling or segregation of the ‘wires’ business from the ‘retails business of Discoms, as this will avoid any conflict of interest. More importantly, it will pave the way for end consumers to choose their electricity provider, based on price and service quality.

Integrated Renewable Energy Solutions

In 2010, Fourth Partner Energy began as a products company, selling solar pumps and lanterns. Three years ago, we became India’s leading distributed solar developer. Today, we are amongst the country’s leading renewable energy solutions and services platform - focused on C&I (Commercial and Industrial) businesses. Our customer-centric model is the primary driver of this growth – we have pivoted our business to cater to the client’s energy demands.

As an integrated solar energy company today,we offer onsite, offsite solar, energy trading, battery storage and solar-powered EV charging infrastructure solutions. We aim to be a one-stop destination for all businesses across India and SE Asia, looking to embark upon clean energy transition. This adaptability and ability to leverage technology to be ahead of the curve, is what all Renewable Energy developers will have to strive towards, as solutions will need to become integrated.

In terms of technology advancement in the sector – we foresee demand for floating solar, BIPV/BAPV, solar-wind hybrid and solar-plus-storage increasing. The country’s drive towards electric mobility will also eventually be powered by renewables.