websol energy system ltd Management discussions

Global economy

Overview: The global economic growth was estimated at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in ws equity, reinvested inflo decades. US consumer prices decreased about 6.5% in 2022, the highest in four decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower.

The global equities, bonds and crypto assets reported an aggregated value drawdown of US$ 26 trillion from peak, equivalent to 26% of the global gross domestic product (GDP). In 2022, there was a concurrently unique decline in bond and equity markets; 2022 was the only year when the S&P 500 and 10-year US treasuries delivered negative returns of more than 10%. Gross FDI earnings and other capital declined 8.4% to US$ 55.3 Billion in April-December. The decline was even sharper in the case of

FDI inflows as equity: these fell 15% to US$

36.75 Billion between April and December 2022. Global trade expanded by 2.7% in 2022 (expected to slow to 1.7% in 2023). The S&P GSCI TR (Global benchmark for commodity performance) fell from a peak of 4,319.55 in June 2022 to 3495.76 in December 2022. There was a decline in crude oil, natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent crude oil dropped from a peak of around US$ 120 per barrel in June 2022 to US$ 80 per barrel at the end of the calendar year following the enhanced availability of low-cost Russian oil.

Regional growth (%)	2022	2021
World output	3.2	6.1
Advanced economies	2.5	5
Emerging and developing economies	3.8	6.3

Outlook

The global economy is expected to grow

2.8% in 2023, influenced by the ongoing Russia-Ukraine global inflation to 7%. Despite these challenges, there are positive elements within the global economic landscape. The largest economies like China, the US, the European Union, India, Japan, the UK and South

Korea are not in a recession. Approximately 70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies.. Concurrently, The energy shock in Europe did not result in is projected to fall marginally a recession and significant developments, including Chinas progressive departure from its strict zero-Covid policy and the resolution of the European energy crisis, fostered optimism for an improved global trade performance. Despite high inflation, the US economy demonstrated robust consumer demand in 2022. Driven by these positive factors, global to be still relatively high at 4.9% in 2024.

Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth (Source: IMF).

Indian economy

Overview: Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Indias economic growth is at 7.2% in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation (Source: IMF, World Bank)

Growth of the Indian economy

	FY 20	FY 21	FY 22	FY23
Real GDP growth (%)	3.7	-6.6%	8.7	7.2

Growth of the Indian economy quarter by quarter, FY 2022-23

	Q1FY23	Q2FY23	Q3FY23	Q4FY23
Real GDP growth (%)	13.1	6.3	4.4	6.1

(Source: Budget FY24; Economy Projections, RBI projections)

According to the India Meteorological

Department, the year 2022 delivered 8% higher rainfall over the long-period average. Due to unseasonal rains, Indias wheat harvest was expected to fall to around 102 Million metric tons (MMT) in FY 2022-23 from 107 MMT in the preceding year. Rice production at 132 Million metric tons (MMT) was almost at par with the previous year. Pulses acreage grew to 31 Million hectares from 28 Million hectares. Due to a renewed focus, oilseeds area increased 7.31% from 102.36 Lakh hectares in FY 2021-22 to 109.84 Lakh hectares in FY 2022-23.

Indias auto industry grew 21% in FY 2022-23; passenger vehicle (UVs, cars and vans) retail sales touched a record 3.9 Million units in FY 2022-23, crossing 3.2 Million units in FY 2018-19. The commercial vehicles segment grew 33%. Two-wheeler sales fell to a seven-year low; the three-wheeler category grew 84%.Till the end of Q3FY23, total gross non-performing assets (NPAs) of the banking system fell to 4.5% from 6.5% a year ago.

Gross NPA for FY 2022-23 was expected to be 4.2% and a further drop is predicted to 3.8% in FY 2023-24. tion

As Indias domestic demand remained steady amidst a global slowdown, import growth in FY 2022-23 was estimated at 16.5% to US$ 714 Billion as against US$ 613 Billion in FY 2021-22. Indias merchandise exports were up 6% to US$ 447 Billion in FY 2022-23. Indias total exports (merchandise and services) in FY 2022-23 grew 14% to a record of US$ 775 Billion in FY 2022-23 and is expected to touch US$ 900 Billion in FY 2023-24. Till Q3 FY23, Indias current account deficit, a crucial indicator of the countrys balance of payments position, decreased to US$ 18.2 Billion, or 2.2% of GDP. Indias fiscal deficit was estimated in nominal terms at ~Rs17.55 Lakh Crore and 6.4% of GDP for the year ending 31st March, 2023. (Source: Ministry of Trade & Commerce) Indias headline foreign direct investment (FDI) numbers rose from US$ 74.01 Billion in 2021 to a record US$ 84.8 Billion in FY 2021-22, a 14% Y-o-Y increase, till Q3FY23. India recorded a robust US$ 36.75 Billion of FDI. In FY 2022-23, the government was estimated to have addressed 77% of its disinvestment target (H50,000 Crore against a target of H 65,000 Crore).

Indias foreign exchange reserves, which had witnessed three consecutive years of growth, experienced a decline of approximately US$ 70 Billion in 2022, primarily influenced by rising and interest rates. Starting from US$ 606.47 Billion on 1st April, 2022, reserves decreased to US$ 578.44 Billion by 31st March, 2023. The Indian currency also weakened during this period, with the exchange rate weakening from H75.91 to a US dollar to H82.34 by 31st March, 2023, driven by a stronger dollar and increasing current account deficit. Despite these factors, India continued to attract investable capital.

The countrys retail inflation, measured by the consumer price index (CPI), eased to 5.66% in March 2023. Inflation data on the Wholesale Price Index, WPI (calculates the overall price of goods before retail) eased to 1.3% during the period. In 2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May 2022. By the close of the year under review, inflation had begun trending down and in April 2023 declined below 5%, its lowest in months.

Indias total industrial output for FY 2022-23, as measured by the Index of Industrial Production or IIP, grew 5.1% year-on-year as against a growth of 11.4% in FY 2021-22.

India moved up in the Ease of Doing Business (EoDB) rankings from 100th in 2017 to 63rd in 2022. As of March 2023,

Indias unemployment rate was 7.8%.

In FY 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1% Y-o-Y in RE FY 2022-23.

The total gross collection for FY 2022-23 was Rs 18.10 Lakh Crore, an average of Rs 1.51 Lakh a month and up 22% from FY 2021-22, Indias monthly goods and services tax (GST) collections hit the second highest ever in March 2023 to Rs 1.6 Lakh Crore. For FY 2022–23, the government collected H16.61 Lakh Crore in direct taxes, according to data from the Finance Ministry. This amount was 17.6% more than what was collected in the previous fiscal.

Per capital income almost doubled in nine years to H1,72,000 during the year under review, a rise of 15.8% over the previous year. Indias GDP per capita was 2,320 US$ (March 2023), close to the magic figure of US$ 2500 when consumption spikes across countries. Despite headline inflation, private consumption in India witnessed continued momentum and was estimated to have grown 7.3% in FY 2022-23.

Outlook

There are green shoots of economic revival, marked by an increase in rural growth during the last quarter and appreciable decline in consumer price index inflation to less than 5% in April 2023. India is expected to grow around 6-6.5% (as per various sources) in FY2023-24, catalysed in no small measure by the governments 35% capital expenditure growth by the government. The growth could also be driven by broad-based credit expansion, better capacity utilization and improving trade deficit. Headline and core inflation could trend down. Private sector investments could revive. What provides optimism is that even as the global structural shifts are creating a wider berth for Indias exports, the country is making its largest infrastructure investment. This unprecedented investment is expected to translate into a robust building block that, going ahead; moderates logistics costs, facilitates a quicker transfer of products and empowers the country to become increasingly competitive. This can benefit Indias exports in general, benefiting several sectors. The construction of national highways in FY 2022-23 was 10,993 km; the Ministry of Road Transport and Highways awarded highway contracts of 12,375 km in the last financial year (Source: IMF).

The global landscape favours India: Europe is moving towards a probable recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias GDP estimate of 6.8% and America and Europe are experiencing its highest inflation in 40 years.

Indias production-linked incentive appears to catalyse the downstream sectors. Inflation is steady. India is at the cusp of making significant investments in renewable energy and other sectors and emerging as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third-largest economy by the end of the decade. The outlook for private business investment remains positive despite an increase in interest rates. India is less exposed to Chinese economic weakness, with much less direct trade with China than many Asian peers.

Broad-based credit growth, improving capacity utilization, governments thrust on capital spending and infrastructure should bolster investment activity. According to our surveys, manufacturing, services and infrastructure sector firms are optimistic about the business outlook. The downside risks are protracted geopolitical tensions, tightening global financial conditions and slowing external demand.

Union Budget FY 2023-24 provisions

The Budget FY 2022-23 sought to lay the foundation for the future of the Indian economy by raising capital investment outlay by 33% to H10 Lakh Crore, equivalent to 3.3% of GDP and almost three times the FY 2019-20 outlay, through various projects like PM Gatishakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action, as well as Financing of Investments. An outlay of H 5.94 Lakh Crore was made to the Ministry of Defence (13.18% of the total Budget outlay). An announcement of nearly H20,000 Crore was made for the PM Gati Shakti National Master Plan to catalyse the infrastructure sector. An outlay of Rs 1.97 Lakh Crore was announced for Production Linked Incentive schemes across 13 sectors. The Indian government intends to accelerate road construction in FY2023-24 by 16-21% to 12,000-12,500 km. The overall road construction project pipeline remains robust at 55,000 km across various execution stages. These realities indicate that a structural shift is underway that could strengthen Indias positioning as a long-term provider of manufactured products and its emergence as a credible global supplier of goods and services

Global renewable energy sector overview

In 2023, the global renewable capacity is projected to increase by 107 GW to surpass 440 GW. By 2030, the global renewable energy market is estimated to exceed US$ 1,977.6 Billion, with a registered CAGR of 8.4% from 2022 to 2030. Renewable energy is obtained from natural sources that are continually renewed. Renewable generation capacity increased by 295 GW (+9.6%) in 2022. Solar energy continued to lead capacity expansion, with a massive increase of 192 GW (+22%), followed by wind energy with 75 GW (+9%). Renewable hydropower capacity increased by 21 GW (+2%) and bioenergy by 8 GW (+5%).

Geothermal energy experienced a rather conservative increase of 181 MW.

During the period 2022 to 2027, the renewable generation capacity over the world is expected to grow by 2400 GW.

Hydroelectric power accounted for the biggest share of the worldwide, overall renewable generation capacity at 1250 GW, growth in 2023 is anticipated to be moderate since solar PV expansion alone cannot fully compensate for the decrease in hydropower capacity and consistent year-on-year wind additions.

Solar PV is forecast to account for 60% of the increase in global renewable capacity this year with the commissioning of 190 GW, a 25% gain from last year. In 2022, the installation of 190 GW of solar PV is expected to 60% of the overall growth in global renewable capacity, showing a 25% increase from the previous year.

In 2022, the installation of 190 GW of solar PV is projected to lead to a 60% overall growth in global renewable capacity, indicating a 25% increase from the previous year.

Solar energy is expected to account for 63% of the growth in worldwide renewable capacity in 2023, taking the worldwide overall to more than 1,600 gigawatts.

In 2022, wind and solar generated over 12.2% of electricity globally, according to the International Energy Agency (IEA). The growth of renewable energy sources such as wind and solar has been increasing as countries and organizations strive to reduce their carbon emissions and transition to cleaner forms of energy. By 2026, wind and solar will account for almost 30% of global electricity. Chinas total installed capacity of renewable energy generation has expanded by around 90 times over the past 10 years, securing its position as a worldwide leader in renewable energy capacity growth. China is set to install a record 156 gigawatts of wind turbines and solar panels in FY2021-22.

That would be a 25% jump from the previous record that was set last year.

Renewal capacity additions in China, European Union, the US and India, 2019 - 2023

(Source: IRENA, Economic Times, clean energy news .ihsmarkit.com, saur energy.com, spglobal.com, allied market research.com irena. org, jwenergy.com, global.chinadaily.com powerline.net.in, mercom india.com, energy.economictimes.indiatimes.com, altenergymag.com)

Indias renewable energy sector overview

The Indian renewable energy market size reached US$ 20 Billion in FY 2022-23. Looking forward, the market is expected to reach US$ 35.6 Billion by 2028, exhibiting a growth rate (CAGR) of 10.19% during 2013-2018. During FY 2022-23, Indias renewable energy sector witnessed its highest-ever annual new capacity addition, with the solar segment accounting for 84% of the new capacity. Of the entire capacity added, solar energy accounted for approximately 12,784 MW (53%), followed by wind energy at 2,276 MW (34%), biopower at 9% and small hydro at 4%.

Out of the total installed capacity, Rajasthan, Tamil Nadu and Maharashtra have emerged as the leading states in terms of solar energy deployment during the financial year 2022-23. India ranked fourth globally in terms of installed capacity of renewable energy. It is estimated that by 2040, nearly half (49%) of the countrys electricity generation will come from renewable sources, enabled by the use of more efficient batteries for energy storage.

This transition to renewable energy is expected to save India approximately Rs54,000 crores (US$ 8.43 Billion) annually, with a 66% reduction in the cost of solar energy compared to the current cost. The Central Electricity Authority (CEA) expects that renewable energy generation will increase from 18% to 44% by 2029-30, while the share of thermal energy will decrease from 78% to 52% during the same time. The CEA also estimates Indias power requirement to reach 817 GW by 2030. (Source: The Ministry of New and Renewable Energy, IBEF, IMAC group, JMK research)

Solar energy sector overview

The India Solar Energy Market was estimated at US$ 38 Billion in 2022 and is anticipated to reach around US$ 238 Billion by 2030, growing at a CAGR of roughly 40% between 2023 and 2032. The Indian solar energy market is growing owing to the cost of solar power technology declining, solar systems becoming more flexible, and solar power is a greener way to make electricity. The market is also propelled by supportive government policies, particularly the Ministry of New and Renewable Energy (MNRE) plans to encourage renewable-based power generation.(Source: custommarketinsights.com)

Global solar energy sector overview

In 2022, solar energy accounted for roughly 65% of the global renewable energy capacity growth, indicating the fast-paced expansion of the solar power industry. The global solar power market size is pegged at US$ 234.86 Billion in 2022 and is expected to reach US$ 377.04 Billion by 2029, with a projected CAGR of 7.0% during the forecast period. Technological advancements in green technologies have been the driving force behind this growth, leading to an increase in energy generation from solar panels. Developing economies are investing more in solar energy and the manufacturing industry is also demanding more solar power.

China, United States and India are the major players dominating the global solar power market having made substantial investments in solar energy infrastructure.

In 2022, Asia saw significant growth in solar energy with China, India and Japan adding 86GW, 13.5GW and 4.6GW of solar capacity respectively. The United States and Brazil added 17.6GW and 9.9GW of solar capacity. (Source: prnewswire.co.uk, pvtech.org)

Indian solar energy sector overview

India has demonstrated a noteworthy growth from 6.76 GW in FY 2016 to 66.00

GW with a CAGR growth of about 41.39%,

India has risen to fourth place in the world in terms of installed solar power capacity. In FY 2022-23, the total installed solar energy capacity in India continued its momentum. As a result, the countrys solar installed capacity was 66.78 GW as of 31st March,2023. India is further expected to add 15 GW of new utility-scale solar capacity in FY 2023-24. Looking ahead, the solar energy market in India is expected to increase at a CAGR of 10% between FY2023 and FY2025. This represents a market size rise from US$ 377 Million in FY 2022-23 to US$ 416 Million in FY 2024-25.

Over the past seven years, India has witnessed impressive growth in its non-fossil fuel energy sector, with a more than 25% growth rate. Currently, solar energy accounts for approximately 12% of the total electricity generated in India up from 10% in 2021. However, to meet its net-zero targets for 2070, India must continue to invest in renewable energy sources like solar and ramp up its efforts to reduce its carbon footprint. By doing so, India can make a significant contribution to the global fight against climate change and pave the way for a more sustainable future. (Source: technovio.com)

Global solar photovoltaic sector

The photovoltaic market is expected to see significant growth over the forecast period from 2022 to 2030, with an estimated CAGR of 5.1%. The market size is predicted to increase from US$ 167.9 Billion in 2022 to over US$ 250.63 Billion by 2030. This growth is driven by favourable government schemes and incentives, such as tax exemptions and tariffs, as well as continued technological advancements and increased consumer and regulatory preference for clean energy sources. Additionally, the decreasing cost of solar energy and increased financial support are contributing to the growth of the solar photovoltaic (PV) market. Among the top 10 global solar developers, 52.4% of their capacity was in the Asia-Pacific (APAC) region, followed by USA at 42.1% and Europe, the Middle East and Africa (EMEA) at 5.5%. However, in terms of the number of projects, the largest proportion of solar projects by top developers was found in EMEA at 41.6%, followed by APAC at 29.9% and the Americas at 28.4% which signals a strong headroom for expansion in the APAC region. (Source: precedenceresearch.com)

Indias solar energy potential

Indias abundant solar energy potential, with 300 sunny days annually and an average of 4-7 kWh/m2 of energy per square meter per day, could easily meet its power requirements if captured. The National Institute of Solar Energy estimates Indias solar potential at

748 GW, utilizing just 3% of unused or waste land with solar PV modules. Renewables are predicted to account for 49% of total electricity production by 2040 and the India solar photovoltaic market is expected to grow at a CAGR of 8.9% from 2022-2027, driven by favourable government schemes and upcoming large-scale solar projects. (Source: mordor intelligence.com, The Hindu)

Outlook

By 2030, India is expected to surpass the European Union as the third largest energy consumer in the world. According to current national policy projections, Indias energy consumption is expected to nearly double as the countrys GDP grows to an estimated US$ 8.6 trillion by 2040.

As a result of increased urbanization, growth in the digital space and an improving quality of life, India is expected to see a significant increase in energy demand over the next 20 years, potentially accounting for 25% of global energy demand growth. The growing demand for energy in India, driven by increased urbanization, growth in the digital space and improvements in quality of life, highlights the need for the country to expand its power generation capacity. This will require a significant renewable energy sources, as relying solely on conventional and thermal energy sources will not be sufficient. By increasing energy efficiency and reducing power generation by 875 terawatt-hours per year, India has the potential to save US$ 190 Billion annually on energy imports, which is equivalent to almost half of the countrys current annual power generation.

The government of India has set ambitious goals for increasing the use of renewable energy in the country.

Specifically, it aims to achieve a capacity of 175 GW from renewable energy sources by 2022 and 500 GW by 2030. Additionally, the government aims to increase the share of non-fossil-based energy in the overall electricity mix to over 40% by 2030 and to reduce the emissions intensity of GDP by 33-35% compared to 2005 levels. (Source: The Hindu)

Growth drivers

Large headroom: Indias per capita electricity consumption was 1255 kWh in FY 2021-22, that is around one-third of the global average of per capita electricity consumption, this consumption will increase with increase in manufacturing and urbanisations.

Rapid urbanization: Indias urban population is projected to nearly double by

2050, rising from 460 Million in 2019. This rapid urbanization serves as a catalyst for the expansion of the solar sector, considering the anticipated surge in electricity demand. Solar energy emerges as a viable and eco-friendly solution to fulfill this escalating demand. (Source: UN report)

Environmental concerns: The imperative to decrease carbon emissions and address climate change has prompted many countries to increase their use of renewable energy sources including solar. The excessive depletion of non-renewable resources has been paving the way for renewable and clean energy sources like solar energy, driven by economic and environmental considerations

Lower cost of power: Solar energy provides a low-cost source of power with minimal operating and maintenance expenses once the infrastructure is established. The recent Electricity (Rights of Consumers) Amendment Rules, 2023, specify that during solar hours, the tariff for consumers will be at least 20% less than the normal tariff, promoting the adoption of solar power as an economically viable and sustainable solution. (Source: Ministry of shift towards Power)

Falling solar equipment costs: The decrease in solar system prices and PV product costs over time has facilitated the expansion of the market. Though installation costs are high, operational costs are low and the systems require minimal maintenance. In the competitive PV market, players introduce innovative and efficient products at competitive prices, resulting in a reduction of product prices.

Increasing government thrust: India has established a lofty goal of achieving 40% of its power from renewable sources by 2030, accompanied by a strategy to enhance its renewable energy capacity by 250 GW within the upcoming five years.

To achieve the goal of 500 GW by 2030, the government intends to invite bids for 50 GW of renewable energy capacity annually until 2027-28. Furthermore, India has pledged to the global community its commitment to achieve net-zero emissions by the year 2070. This strategic approach will significantly reduce the countrys dependence on non-renewable sources of energy. (Source: Ministry of New and Renewable Energy)

Growing adoption: The adoption of solar energy is on the rise in India, particularly within the residential and commercial sectors. The rise in rooftop solar installations is due to factors such as cost savings, consumer acceptance and market competition. Solar power presents an appealing opportunity for commercial property owners to cut costs and boost returns, driving substantial growth within the industry.

Rural electrification: Indias endeavours to electrify rural areas with solar technology have been successful. Over 2.7 Million solar home-lighting systems and 7.4 Million solar lanterns have been distributed, making India the leading Asian market for off-grid solar products. Over 44,000 remote areas were electrified with standalone solar systems, providing access to electricity to more than 4.4 Million households in FY 2020-21.

100% FDI via automatic route: Rising foreign investment in the renewable sector (such as the US$ 75 Billion investment from the UAE) is expected to promote further investments in the country. As a result, Indias renewable energy industry saw FDI inflows worth $ 1.6 Billion (Rs 130.7 Billion) in FY 2021-22.

Storage: The trend towards energy storage solutions like batteries is rising. They can store excess solar energy and shift PV electricity from high to low generation times. The cost of storage is coming down and that will help the industry to provide solutions when the sunlight is not available.

SWOT analysis of the PV industry market in India Sectoral strengths

• India possesses vast renewable energy resources, including solar, wind, biomass. and hydro, providing a strong foundation for renewable energy development.

• The Indian government has implemented supportive policies, incentives and targets to encourage renewable energy adoption, such as the National Solar Mission and various state-level initiatives.

• The declining costs of renewable energy technologies, particularly solar and wind, have improved the competitiveness of renewable energy sources compared to conventional energy sources.

• Renewable energy reduces dependence on fossil fuel imports, enhancing energy security and reducing vulnerability to price fluctuations and geopolitical risks.

Sectoral weaknesses

• The renewable energy sector faces infrastructure constraints, including inadequate transmission and distribution systems, hindering the seamless integration of renewable energy into the grid.

Limited access to affordable financing and investment options poses challenges for renewable energy project development and implementation.

• The intermittent nature of renewable energy sources, such as solar and wind, requires efficient grid integration and energy storage solutions to ensure a stable and reliable power supply.

Sectoral opportunities

• Shareholders in the renewable energy industry are considering investments to facilitate the integration of variable renewables, like wind and solar, into the power grid with more

• The penetration of renewable energy in the grid is expected to grow, leading to an increase in the development of green hydrogen as a long-duration and seasonal fuel storage solution that can be used to generate power on demand.

• Solar photovoltaic (PV) systems continue to be the most cost-effective energy resource, even after a significant 85% reduction in realizations over the past decade. The industry is expected to expand solar-plus-storage projects, investigate community solar projects in new markets.

Pairing storage with solar energy offers cost synergies, operational efficiencies and the opportunity to reduce storage capital costs with the solar investment tax credit.

• The development of transmission infrastructure is crucial to connect new, often remotely located renewable energy sources to power-consuming centers.

• By 2050, renewable energy is poised to become the largest source of primary energy in accelerated and net zero scenarios

• Electricity generation in 2050 is expected to be four to five times that of 2019, with solar and wind power accounting for 57% to 95% of that growth.

• Solar installed capacities in 2050 are poised to range from 1.3-2.2 terawatts (TW) depending on the scenarios.

• The rooftop solar market is set for multi-fold growth, promising significant advantages for the sector

Hydrogen demand will grow significantly, to almost twelve times from current levels to net zero by 2050. Green hydrogen will represent 80% of net zero journey

Sectoral threats

• Sunlight and wind variations make renewable energy supply less consistent than that from fossil fuel plants, necessitating the use of energy storage batteries.

• Investment in renewable energy has been driven by innovation and technology development, but economic pressures and a lack of financial backing from big organizations and governments can and introduce impede breakthroughs.

• Political challenges in transitioning to renewables include political posturing, isolationism, populism and anti-science rhetoric that can threaten the renewable energy sector.

• Energy infrastructure in many areas is unexpectedly underfunded, inadequately maintained and future demands.

• As the demand for renewable energy increases due to domestic consumption, electric vehicle uptake and industrial transition, deficiencies in many electric grid systems will become more evident.

• The renewable energy sector needs to find ways to balance the need for power with the optimal use of land.

• The challenge in decarbonizing the industry is that energy transition pathways are not yet definitive

Supportive government policies

India is leading the way among all countries in the adoption of solar renewable energy. India, a founding member of the International Solar Alliance (ISA), is the host country for its headquarters. Moreover, India has proposed the ideas of "One Sun One World One Grid" and "World Solar Bank" to leverage the vast potential of solar power on a global level. The Mission Innovation Cleantech Exchange, a worldwide program aimed at expediting clean energy innovation, was introduced by India.

National solar mission: The Indian government increased the allocation for the National Solar Mission and clean-energy fund by H10 Billion (US$130 Million) for the fiscal year 2010-11, up by H3.8 Billion (US$48 Million) from the previous budget.

The budget also lowered the import duty on solar panels by 5%, potentially leading to a 15-20% reduction in the cost of rooftop solar-panel installations and promoting private solar companies.

Waiver of inter-state transmission system charges: The waiver of Inter-State Transmission System (ISTS) charges for the inter-state sale of solar and wind power is a part of the green energy initiatives taken by the Indian Government. This initiative is expected to boost the development of renewable energy projects and promote the inter-state trade of renewable energy.

National hydrogen energy mission: The Indian Governments National Hydrogen Energy Mission promotes hydrogen as a clean fuel, generated from renewable sources to reduce reliance on fossil fuels and meet Paris Agreement emission goals. The Power Ministrys green hydrogen policy waives ISTS charges for 25 years for green hydrogen and green ammonia producers from projects commissioned before 30th June, 2025 and allows renewable energy banking for green hydrogen production for 30 days.

Grip parity: Between 2010 and April 2017, there has been a significant reduction in the average bid for reverse auctions of electricity, from H12.16 (15¢ US) per kWh to H3.15 (3.9¢ US) per kWh. This represents a decline of approximately 73% during the time period. Additionally, the current cost of solar PV electricity is approximately 18% lower than the average cost of electricity generated by coal-fired plants.

PLI scheme: As part of the Union Budget 2022-23, the Indian government has earmarked H19,500 crores (US$ 2.57 Billion) for a Production-Linked Incentive (PLI) scheme aimed at promoting the production of high-efficiency solar

National Renewable Purchase Obligation (RPO): Indias renewable energy targets are guided by the National Renewable Purchase Obligation (RPO) trajectory. Solar energy is projected to be the primary source until 2030, with cumulative capacity additions required. Wind energy and other renewables are also included. RPO compliance varies across states, with Karnataka at 43.57%, followed by Uttar Pradesh, Bihar and Maharashtra. The average compliance for renewable energy and hydro is 19.62%. These figures highlight Indias commitment to increasing the share of renewable energy in its electricity generation.

Solar rooftop program: The Ministry of New and Renewable Energy introduced the second phase of the Rooftop Solar Programme to promote rooftop solar installations, particularly in rural areas. The program has installed 4,000 MW of solar capacity in residential areas in 2022.

Solar cities and parks: The Indian government has recognised various regions in the country, such as Gujarat, Rajasthan and Tamil Nadu, as having immense potential for establishing solar parks. Currently, 59 solar parks with a combined capacity of 40 GW have been approved for development across different states. Additionally, the government is .actively promoting Floating PV Projects to further advance the adoption of solar energy.

Budgetary allocation for 2023-24

The Union Budget for FY23-24, placed a strong emphasis on green growth and transitioning towards clean energy, with several initiatives to promote renewable energy and address climate change. This highlights the governments commitment to sustainable development. India has pledged to reduce the emissions intensity of its GDP by 45% by 2030 from its 2005 levels, demonstrating a proactive approach towards combating climate change.

Increased allocation: The Ministry of New Off -grid solar projects: and Renewable Energy (MNRE) received a significant boost in the Union Budget for the Rs 10,222 Crore, representing a 48% increase from the previous budget of H 7,033 Crore. In contrast, the Ministry of Petroleum and Natural Gass allocation saw a mere 2.2% growth, underscoring the governments clear focus and priorities for the future.

PM-KUSUM scheme: A total of Rs 7,534 Crore was allocated towards various projects in the renewable energy sector under Pradhan Mantri Kisan Urja Suraksha Evam Uhan Mahabhiyan (PM-KUSUM) scheme The implementation of Phase III of the off-grid solar Photo Voltaic program in India aims to bring access to clean energy to millions of people. This includes the installation of 0.3 Million solar street lights, distribution of 2.5 Million solar study lamps and the installation of solar power packs with a total aggregated capacity of 100 megawatts of power. These off-grid solar projects will help to reduce dependence on traditional sources of energy and promote sustainable development in the country.

Atal Jyoti Yojana (AJAY) Phase-II: In line with Indias commitment to sustainable development and renewable energy, the Atal Jyoti Yojana (AJAY) Phase-II will witness the installation of over three Lakh solar street lights across the country. In addition, the government plans to undertake 20 MW projects of concentrated solar thermal, further bolstering its efforts towards clean and green energy.

Green bonds: The issuance of 15 green bonds by Indian corporations with a total value of H 4,539 Crore between 2017 and September 2022 indicates policy support for renewable energy. Additionally, the upcoming auctions of H8,000 Crore each by the Reserve Bank of India further exemplify the countrys commitment to promoting renewable energy.

The Companys overview

Websol Energy System Limited specializes in the production of photovoltaic crystalline solar cells and related modules. The Companys manufacturing facility is located in Falta SEZ, West Bengal, India. The Companys products are used in both commercial and industrial settings in India and internationally. The Companys manufacturing capacity includes the ability to produce 240 megawatts of cells and a fully automated module line with a capacity of 250 megawatts.

Financial analysis

The Company reported revenue from operations of Rs 17.22 Crore on a consolidated basis during FY 2022-23, compared to Rs 213.22 Crore in FY 2021-22. Operating EBITDA on a consolidated basis stood at H (16.13) Crore for FY 2022-23.

Depreciation and interest for FY 2022-23 stood at Rs 15.35 Crore and Rs 3.83 Crore, respectively.