Pending reimbursement brings solar collector business down

The solar collector market in India has registered almost 45 % decline during 2013-14 in business caused by the delay in refunding the capital subsidy introduced 2 years ago. Under the National Solar Mission launched in 2011, 30 % capital subsidy, i.e. INR 3,000 (€ 38) per m2, had to be offered for solar water heaters. Since then the systems have been sold as net-off subsidy through a mechanism of Channel Partners (CP). These CP, largely manufacturers, should later be reimbursed the subsidy money. Ever since this scheme was announced, however, the CP failed to receive their capital subsidy reimbursements, which presently stands at INR 1.8 billion (approx. € 22.5 million) according to a survey conducted among 50 CP, who represent nearly 99 % of the market. In the financial year from April 2012 to March 2013 the installed area was 1.41 million m2 as per data available from the Ministry of New and Renewable Energy (MNRE). In contrast, in the following period from April 2013 to March 2014 it dived down to about 0.85 million m2 as per the survey. This figure is barely 55 % of the cumulative 1.56 million m2 target submitted by these CP at the beginning of the financial year to the MNRE. All CP have failed to achieve a turnover equal to that of the previous financial year because of paucity of funding. In addition, banks have refused to provide any new financing in the present financial year for operating business. This precarious situation is leading the majority of the CP on the brink of bankruptcy. Unless the government immediately intervenes with settlement of the pending funds, the goals laid under Solar Mission until 2022 seem challenging.