The economic slowdown in India and consequently the lack of inflow of investments are affecting the renewable energy sector, including the solar power segment, says GlobalData, a leading data and analytics company.

The Ministry of New & Renewable Energy (MNRE) had set a target of 8.5 gigawatt (GW) of solar installations during the financial year (FY) 2019-2020 of which, the sector had installed around 3.5 GW during the first half (till October 2019), which is 41% of the target installation for the year. The annual target for FY2018-2019 was 11 GW, out of which the sector installed around 6.5 GW, contributing around 59% of the targeted installations.

Mohit Prasad, Project Manager at GlobalData, comments: “The economic slowdown is impacting the rooftop solar PV sector, which was the bright spot in the previous year. The sector has been hit by the slowdown, with installations dropping by 43.6% in the quarter ended September 2019, on a year-on-year basis. The sector has achieved installations worth 482.45 megawatt (MW) till October-end against the financial year target of 1,000 MW.

“The corporate and commercial customers, who are the key players in the solar rooftop space, are witnessing drop in their sales, and therefore subsequently in their investments and new rooftop solar installations.”

The credit ratings of some of these customers have also been downgraded making it difficult for them to get financing for the power projects. Banks and non-banking financial companies (NBFCs) are also not funding the power projects at the same levels, which were witnessed last year.

Solar installations in India are promoted through auctions. The slowdown is causing investors to shy away from bidding in the auctions. The rate caps associated with individual auctions are another reason for the reluctance of investors in the bidding processes, resulting in frequent cancellation of auctions.

Regulations across different states vary and the frequent changes hurt business sentiments. Especially, the rooftop installations, which don’t operate in a streamlined environment, become easier targets for discoms to regulate. Commercial and industrial customers require protection from such interference.

Prasad concludes: “Rooftop solar has been the fastest growing sector and it should increase the pace further in order to achieve the 2022 target of 40GW. But with these challenges, the sector has been struggling to keep up the pace. The Government must take measures to overcome the downturn and roll out streamlined regulations so that the sector can again contribute and help the country achieve its renewable energy target.”