Every time I see our Power Minister Piyush Goyal sport a big smile while boasting that his government had brought down solar power tariffs even further, and in the same breath say that his government will ensure Make in India for solar, I wonder: Has he ever heard of the term innovation?
It makes me ask as well – does our government really understand what is required for Make in India to become a reality for solar?
Any strategy guy would tell you this – for sustained innovation to happen, companies need to make at least decent profits, if not very good profits.
It is not really difficult to understand, is it? If a company is just about surviving on razor thin profits, would it spend that on keeping its lights on, or on spending on R&D?
Just keeping your lights on will continue ensuring only that for the future – keeping your lights on!
At really low tariffs resulting in super self-congratulations at all levels of government, no company in India’s solar ecosystem will make good profits – neither cell or module makers, nor the EPCs, nor the developers (and I should add, nor consulting firms such as Solar Mango!).
Ten years on, Indian solar companies that survive would just about be managing to pay their employees. But, research & innovation? Surely you must be joking!
No Serious Profits = No Innovation.
And what does No Innovation portend for Indian solar manufacturing? What do you think it portends – Utopia?
With no innovation, Indian cells, modules, inverters and other balance of systems will continue performing poorly against international firms when it comes to value for money – because someone else in the US or China would have innovated much more, and will be able to provide much higher value than what Indian firms can, for much lower prices. The Indian solar manufacturing sector will whimper along for a while, supported by patchy regulations, leading a shaky existence on skinny branches, and then – die.
China is not an innovation country; the country understands this well. But China has shown the ability to absorb new innovation quickly, by hook or crook, and then let the government unleash enormous amounts on incentives for commercializing and scaling that innovation to orders of magnitude higher than any other country in the world, resulting in much lower prices. They win using a different equation: Super Scale = Super Sale.
The US understands its position perfectly well too – they know they cannot compete with China head on in scale, but they know that their strength lies in R&D. While they also are experiencing low tariffs at the IPP/developer phases, they are smart enough to allocate good budgets under research programs such as SunShot Initiative. Besides, with the country having many top notch universities putting in serious research efforts into solar, they have ensured that, to a certain extent at least, the country is not shut out of solar manufacturing.
Where does that leave the Indian solar manufacturing sector? It will be difficult, if not impossible, for us to scale manufacturing of most things (especially cells and panels, and to a certain extent inverters, other DC/AC side electricals) the way China does – at least not for the foreseeable future. So the only option left for India is to innovate. With the country experiencing such low tariffs and very thin profits for most companies, there will be little or no innovation from the corporate sector.
That brings us to the government putting money on the table for innovation.
Does India have something similar to SunShot, with some serious government backing and with clear timelines to get innovation done?
The government is surely making noises in this context. We have some grand edifices such as NISE (National Institute of Solar Energy), some sprinklings in places such as IIT Bombay, and lots of political offices such as the headquarters of International Solar Alliance at Delhi. Trust me, none of these will be able to, at the current levels of investments and research orientation, get India to any level of innovation that can give us a competitive advantage.
So, the answer is, No, we do not really have a SunShot program.
But, hold on, we have some other shot – a GunShot to the heads of the solar manufacturers and innovators.
Viva Make in India for solar.
