What according to you 2021-2022 market outlook. How many installations are going to happen?
Santosh: looking the trend of last 3 years of solar installations and also that module availability and price have increased substantially in last few months, I expect 6-7 GW as the annual installation in 2021-22
How many tenders are expected to take place?
Santosh: hard to give an exact number of tenders but I expect that the same volume of tenders that existed in 2020-21 will continue into 2021-22 except perhaps a reduction in production linked tender
What will be the impact of these ultra low bids of 2rs and 1.9rs in recent to 2 tenders on the entire solar market?
Santosh: speculation that price of modules will continue to reduce is one of the basis of these price adventurism and the other being an expectation that interest costs will also remain lower. Due to COVID interest costs were softened in 2020-21 and perhaps will remain favourable in next fiscal too however with a large market for solar modules in EU, China and potentially in USA in 2021-22 and as these markets have higher profitability for module manufacturers, I doubt if solar module prices will go down in 2021-22 drastically. So I suspect that this low tariff which is based on capex reduction speculation has a low probability of actually happening.
What will be the challenges and achieving the pipeline of projects & tenders in the coming year?
Santosh: From an Industry point of view the challenges are modules availability in terms of volumes and its prices plus scrapping of net metering which may slow down / kill roof top market.
How as an industry you have planned to make sure in upcoming bids there is not another
episode like Andhra Pradesh issue?
Santosh: Policy consistency, adherence to contracts and commitments is the bedrock on which investments and business is built. If the Government itself does not comply to its signed contracts, there is actually nothing much that businesses can do. This risk called country risk remains and cases like what happened in Andhra will only make investor trust weak.
Regarding the proposed BCD, what are your views, when it is going to come? & what rate is going to come?
Santosh: we as a country need to either commit ourself to a free market economy focussed on less trade restrictions, less tariffs and thus encourage capital investments or we start to go towards the earlier tried and not successful model of self reliance and protectionism. Since independence till 1990s India tried the latter model and this resulted in a slow economic growth and a lower wealth creation. Going back to protectionism now after seeing the benefits of open economy to me is not the right approach we should take. Hving said this, dumping needs to be curtained and for a short time protectionism can give relief for domestic industry but what we have seen is once duties on import is imposed, domestic industry simply equates prices to imported ones and increases profitability. BCD however I suspect will come and may even be advanced to 2021-22
There are many tenders for which the PSA’s are not getting signed, so what is the current status in this as per your knowledge and what do you think why the PSA’s are not getting signed?
Santosh: every state DISCOM along with its regulatory commission has its own method of approving SECI’s pooled tariffs and some of the states agree and some do not. Also when pariff falls like it happened in the recent case at Rs 1.9/kwh previous tariffs discovered will have difficulty in having PSAs signed. SECI proposed pooling tariffs and also other measures but as long as Energy is a state subject we will continue to have this issue. I do not see a easy way out of this; except to take some big steps. Either states should auction on their own and award contracts like they did in the past or there has to be a common tariff slab at which bidding can happen and states guarantee they will buy in this slab.
The wish list from the Budget 2021 that is going to come in January end?
Santosh: as you asked for a wish list ideally it can be remove cross subsidies from electricity pricing, allow electricity prices to be based on demand and supply and fix at least 5 years time period for which open access, wheeling, banking or net metering policies does not change….
As grandfathering might not take place, what do you think is going to be the protection or
support that industry can really accept from the government for the tenders & projects which are exposed to the risk of BCD?
Santosh: The Government as of now plans to implement BCD from 2022 and have given a long advance intimation. This knowledge is good for the industry to plan costs and capex. However if as it’s being rumoured the BCD date advances to 2021 mid then the bids already awarded but modules not imported will suffer. Permitting grandfathering clause would have been ideal but as this is not happening the other alternative is not to change the date of implementation of BCD and continue to have this 1 to 1.5 year advance intimation to market so that shock of sudden regulations does not kill the market- in other words policy consistency is the other remedy.
What are your views about new consumer rules rolled out by the government in which they have stopped the net metering about 10KW?
Santosh: this will kill the C&I / roof top solar market completely. For past few years owing to cross subsidy charges industrial and commercial consumers were moving to solar. The stoppage of net metering rules once all states implement will try to recover this loss of cross subsidy due to solar adoption and if we go with Gujarat regulations on this subject solar will become equally expensive as grid power. Instead of addressing the flawed cross subsidy imposed on electricity pricing an attempt is being made to retain status quo which will kill roof top solar.