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Time for Sunrise in the Solar Sector

India ranked third in E&Y’s renewable energy attractiveness index

Published: Jul 15, 2013 06:51:41 AM IST
Updated: Jul 11, 2013 05:46:39 PM IST

Time for Sunrise in the Solar Sector

Three months can be a long time. Take the renewable energy attractiveness index by Ernst & Young (E&Y) that ranks 40 countries on the draw of their renewable energy investment and deployment opportunities. In the quarter ending February 2013, India was ranked 3rd in solar photovoltaics after the US and China. But by May 2013, it slipped to 8th.

The reasons for this fall, according to E&Y, are the high cost of financing and the infrastructure barriers. But neither condition has worsened. In fact, the financing outlook appears brighter.

Banks are more comfortable with technology and are thinking of shifting from ‘balance sheet financing’, which is dependent on the promoters pulling their weight, to project-based financing, where the merit of the project is the guarantee. “This is the practice in mature markets,” says Tobias Engelmeier, MD, Bridge to India, a German solar consultancy in New Delhi.

So is E&Y reading too much into some global solar disputes, including India’s anti-dumping investigation into solar cells from the US, China, Taiwan and Malaysia? It would have actually made sense to rank India 8th earlier and 3rd now because while there was a lull in domestic solar project allocation in 2012, several projects are expected to get sanctioned beginning July.  

Well, they always have next quarter to get it right.

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(This story appears in the 26 July, 2013 issue of Forbes India. To visit our Archives, click here.)

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  • Nikhil

    World markets work between financial year jan to dec, where as its April to march in India. MNRE also does not usually sanction projects in April and may, hence the dip. Agree with Forbes, they have the next quarter to get it right.

    on Jul 16, 2013
  • Dr.a.jagadeesh

    There is a big rush to go in for big Solar Projects in India. The main reason is subsidies offered to it. It happened in Wind in earlier. Due to misuse the 100% depreciation has been reduced to 15% now. The irony is how many industrialists are serious of these Solar projects? Most of them are PAPER PROJECTS. Unless the solar cell efficiency goes up the solar power remain uneconomic. Dr.A.Jagadeesh Nellore(AP),India

    on Jul 16, 2013
  • Dr.a.jagadeesh

    Solar energy is yet to penetrate to the rural areas as decentralised energy leave away grid connected. While misuse of Government subsidies/incentives is one of the reasons,the low efficiency of solar cell is the other. Dr.A.Jagadeesh Nellore(AP),India

    on Jul 15, 2013
    • Pratik

      Sir, Totally agreeing with you however when it comes to poor penetration in rural area, I would like to highlight that most of the solar farms in India are in rural area as we dont have land (barren) in urban area. Considering Rajasthan for eg. consider solar plants in remote thar desert of near india pakistan border. Due to the subsidies and NSM as well as 100% fdi the solar engergy sector in particular has really penetrated into the urban area. However again if ditribution and end users are considered than the people in rural area are the worst sufferers. They loose their land and in return are yet devoid of power as the power generated is sold to urban India. Regards, Pratik Solar Developer

      on Jul 21, 2013