Measures Govt needs to focus on to accelerate the adoption of solar to achieve the set target of 100 GW by 2022
The sector is waiting with bated breath for the upcoming Finance Budget, as Solar had considerable attention initially with wide ranging reforms. It is crucial that we promote the cause of adoption, for reasons of environmental impact and pressure on the natural resources. The solar industry needs to see a number of developments in terms of
investment, resources, financing options for end consumers and supportive government policies, in order for there to be speedier progress.
Frequent policy changes and the recent safeguard duty on imported solar panels and cells, has had a major negative impact on the market and the affordability of solar. Recent policies have only hindered the solar industry than help it in the past year – India imports 90% of its solar requirements and the cost of solar had considerably reduced in the past year due to the availability of globally competitive solar panels in the country. But now with 25% safeguard duty imposed on imported solar panels and cells, the market price of solar has only increased as a result. Solar energy as a solution is now more expensive for the end consumer.
Net metering, is another area of challenge for consumers across states due to the uncertainty of the policies that have been put in place. Affordable financing options should be introduced to consumers. Rooftop solar as a segment also needs to start being heavily promoted along with large-scale solar parks.
The government needs to work with NBFCs and banks to create varied financing options and loans for consumers who still consider solar to be an expensive investment. The SME/MSME segment particularly requires innovative and tailor-made financing solutions that help these companies transition to solar energy seamlessly without the risk of financial strain. There also needs to be a more positive support and co-operation from local discoms to ensure that customers have a seamless and transparent experience when opting for solar.
In FY 16-17, the rate of accelerated depreciation on solar assets had been reduced from 80% to 40%, which had benefited consumers looking to switch to solar; however in 2018 the corporate tax rate had reduced from 35% to 25%, which has directly diluted the benefit from the 40% depreciation deduction. The government should introduce a balancing reform to ensure that the benefits from the reduced accelerated depreciation are restored. This would also help in reducing the payback period for Commercial and Industrial customers; making it more viable.