India has been a promising market for solar developers due to its favorable solar policies and the government’s push towards renewable energy. However, the policy uncertainty in the recent years has affected the solar industry, creating challenges for solar developers.
Solar sector in India witnessed major policy shifts in 2022. In January 2022, the Ministry of New and Renewable Energy (MNRE) announced a reduction in the benchmark cost of off-grid and decentralized solar applications. However, in March 2022, the MNRE issued a circular stating that there would be no new solar schemes for the financial year 2022-23, causing uncertainty among developers.
Furthermore, the government’s decision to impose safeguard duty on imported solar cells and modules in the past has created an impact on the solar industry. In February 2022, the MNRE released an order to exempt rooftop solar projects from the safeguard duty, but the exemption was only valid until March 2022. The uncertainty around the future of the safeguard duty has left solar developers cautious about investing in solar projects.
Another major policy shift was the announcement of the new Electricity (Amendment) Bill, 2022, which proposes to amend the Electricity Act, 2003. The proposed amendments include the introduction of a renewable energy obligation for captive power consumers and a renewable purchase obligation for distribution licensees. However, the bill is yet to be passed by the Parliament, creating uncertainty about the future of the renewable energy market.
The policy uncertainty has affected the solar developers in India in several ways. The delays in policy announcements and changes have caused uncertainty about the future of solar projects, leading to a slowdown in investments. The lack of clarity on policies has also made it difficult for developers to plan their projects and secure financing. Additionally, the imposition of safeguard duty has increased the cost of solar projects, making them less attractive for investors.
The policy uncertainty in India has affected the solar industry and created challenges for solar developers. The government needs to provide clear and consistent policies to create a stable environment for solar investments and ensure the growth of the renewable energy sector.
Policy Shifts in the Solar Sector in India in 2022:
| Policy Shift | Date | Details |
|---|---|---|
| Benchmark Cost Reduction | January 2022 | Ministry of New and Renewable Energy (MNRE) announced a reduction in the benchmark cost of off-grid and decentralized solar applications |
| No New Solar Schemes | March 2022 | MNRE issued a circular stating that there would be no new solar schemes for the financial year 2022-23 |
| Safeguard Duty Exemption | February 2022 | MNRE released an order to exempt rooftop solar projects from the safeguard duty, but the exemption was only valid until March 2022 |
| Electricity (Amendment) Bill | Announced in 2022 | The bill proposes to amend the Electricity Act, 2003 and includes the introduction of a renewable energy obligation for captive power consumers and a renewable purchase obligation for distribution licensees |
The policy uncertainty has affected solar developers in India by causing delays in project investments, making it difficult to plan projects, secure financing, and increase the cost of solar projects due to safeguard duties. A stable policy environment is needed to ensure growth in the renewable energy sector.