With the rupee sliding and solar photo voltaic module prices firming up, most States in the country are finding higher costs for renewable energy tough to handle.
This gets further problematic when the financial health of State utilities is factored into.
According a report prepared by Mercom Consulting, the rupee fall and prices of modules firming up in the past few months has added to the woes of the sector, which is beset with difficulties in terms of gathering pace. India added about 622 MW in the first seven months this year. In the last three months only 73 MW of solar power generation was added in spite of huge potential the sector has. Therefore, Mercom states that India needs to focus on creating a policy environment to encourage private and foreign investments into the sector.
The Government move to pursue anti-dumping investigations and focusing on domestic content requirements have paralysed the sector. The tough economic conditions now prevailing in the country, weak rupee and high interest rate regime makes it harder for solar power sector developers.
The issue of anti-dumping probe and local content requirement are sending wrong signals to potential investors. The viability gap funding mechanism could partly facilitate the sector.
Gujarat has managed to take the lead with installation of 857 MW, followed by Maharashtra at 150 and 300 MW has been from the first batch of national solar mission and about 120 MW from REC mechanism. Other States are still in the process of finding their way.