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.