India Solar Market Update - Whitepaper by Mercom India Research (Nov 2019) by Sampath_Mercom

India Solar Market â&#x20AC;&#x201C; November 2019 An Overview

Research provided by

Index Executive Summary………………………………………………………………………………………………..………………………………...….………

Current Solar Market – Installations, Pipeline…………………………..…………..…………………………………………………………..…………….

Policy Drivers…………………………………………………………………………………………………………….………...…………………….………

Tenders & Auctions…………………………………………………………………………………………………..…………….…………….…….…..……

Share of Solar…………………………………………………………………..…………….……………..…………..…………..…………..…………..…… 15 Project Development by State……………………………………………………………………………..……………………………………………………

Solar Trade…………………………………………………………………..………………….………………………………………………………...……...

Rooftop Solar……………………………………………………………………………………………………………..……………….……………………..

Market Leaders…………………………………………………………………………………………………………………………………...………………

Solar Market Outlook……………………………………………………………………….……………………..…………………..…………………………

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Executive Summary •

Indian solar market added ~5.4 GW of solar in the first nine months (9M) of 2019, with cumulative solar installations stood at 33.8 GW at the end of Q3 2019. According to the newly released Q3 2019 India Solar Market Update, Mercom India Research revised its solar forecast down to ~7.3 GW of capacity additions in CY 2019 from the previous estimate of ~8 GW. This is a 12% decrease from 2018 installations of 8.3 GW. Mercom also estimates that for the first time, India will mark 10 GW of annual solar installations in CY 2020 assuming stable market conditions.

•

The large-scale solar project pipeline in India is now approximately 22.6 GW, according to Mercom’s India Solar Project Tracker. Currently, about 37.3 GW

of tendered projects are awaiting auction as of Q3 2019. •

By the end of Q3 2019, large-scale solar projects accounted for 88% of the total solar installed capacity with ~29.7 GW and solar rooftop accounted for 12% with ~4.1 GW installed capacity.

•

Rooftop solar installations accounted for ~800 MW during 9M 2019. The overall slowdown in the economy and regulatory hurdles have been a drag on rooftop installations.

•

In 9M 2019, ~36 GW of solar PV projects were tendered by state and government agencies, according to tender tracker. Over 8.8 GW of solar PV projects were auctioned during 9M of 2019.

•

Renewable energy (including large-hydro) now accounts for 35.7% of the total power installed capacity in India, with solar comprising nearly 9.2% as of Q3 2019. Within renewables, solar accounted for ~25.9% of the installed capacity.

•

In 9M 2019, the Indian solar sector received investments to the tune of $6.23 billion (~₹446 billion).

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Current Solar Market â&#x20AC;&#x201C; Installations, Pipeline

India Solar Cumulative Installations By Policy (MW) All India Cumulative Utility-scale Solar Installations By Policy Type (MW) 4,000

3,000

2,000

1,000

Source: Mercom India Research (Sep 2019)

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India Solar Project Pipeline By Policy (MW) India Utility-scale Solar Project Pipeline (MW) 30,000

Projects Tendered, Pending Auctions 25,000

Projects Under Development 20,000

15,000

10,000

5,000

Source: Mercom India Research (Sep 2019)

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Policy Drivers

Policy Updates ❑ MNRE’s New Solar Bidding Guidelines Say No Power Back Down Without Formal Instructions: To expedite and streamline the process of developing solar projects, the Ministry of New and Renewable Energy (MNRE) has issued amendments to its guidelines for the competitive bidding process. The latest amendments issued by the government seem to be an attempt to provide relief to solar energy developers in the country by tackling issues such as payment security mechanism, curtailment of power, land acquisition, timely tariff adoption, among others. ❑ BIS Certification for Solar Inverters Gets Deadline Extension of Three Months: The MNRE has once again extended the deadline for the selfcertification of solar inverters through the Bureau of Indian Standards (BIS). The deadline has now been extended from September 30, 2019, to December 31, 2019. Considering the issues relating to testing, and the level of preparation of test labs, the industry had sought more time for compliance, and therefore the ministry has extended the deadline again. However, the deadline is subject to the condition that manufacturers have valid International Electrotechnical Commission (IEC) accreditation and test reports from international test labs for the smooth implementation of the order. ❑ MNRE Begins Allocation of Renewable Capacities to States Under KUSUM Program for India’s Farmers: The MNRE has issued a memorandum for state-wise renewable energy capacity allocation under the Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM) program for the country’s farmers. The capacities have been allocated to various states in line with the demand received from states, the targets listed under the KUSUM program, and the guidelines. ❑ Letters of Credit to be Opened Against Power Purchases from August 1, 2019: The Ministry of Power (MoP) has issued procedural guidelines for the scheduling of power to distribution companies in case of non-maintenance of the letter of credit (LC) under the payment security mechanism (PSM) and it would be mandatory for DISCOMs to open and maintain adequate LC as the payment security mechanism under PPAs. According to the guidelines, power will be scheduled for dispatch after a written communication is provided to the load despatch center (LDC) that the letter of credit for the power desired to be supplied has been opened.

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Policy Updates ❑ MNRE Details Roles and Responsibilities of DISCOMs Under the 12 GW Solar CPSU Program: The MNRE issued a notification regarding the modalities and role of DISCOMs to ensure the implementation of the second phase (Phase II) of the CPSU program. The government program aims to set up 12,000 MW of grid-connected solar PV power projects for self-use or use by government entities. All the projects are expected to be developed by the end of FY 20222023. Under the CPSU program, the usage charges should not exceed ₹3.50 (~$0.050)/kWh and will be exclusive of any other third-party charge such as wheeling, transmission, and the like. ❑ Central Grants to be Repaid with Interest If Solar Parks Are Not Developed on Time: The MNRE has issued new guidelines incorporating changes in the project timelines for developing solar parks in the country. The modifications state that solar parks approved in and after FY 2017-18 under Phase II of the Solar Park Program will be completed within two years from the date of the in-principal approval or February 5, 2020, whichever comes later. In the event of a breach of a deadline, the central grants allocated under the program must be returned with interest. In certain exceptions, timeline extensions can be granted in instances where the solar power developer was chosen through a competitive bidding procedure with land allocated in the solar park. In this instance, financial closure should be completed before the deadline of the solar project. ❑ MNRE Alerts Stakeholders to Comply with the Approved List of Models and Manufacturers (ALMM) Order for Government Solar Projects: The MNRE has issued a notification for the compulsory registration under the Approved Models and Manufacturers of Solar Photovoltaic Modules. The MNRE has stated that the list would consist of List-1 which specifies the models and manufacturers of solar PV modules while List-II will specify the models and manufacturers of solar PV cells. Both the lists will come into effect from March 31, 2020. It also states that after March 31, 2020, only those models and manufacturers that are included in Approved List of Models and Manufacturers (ALMM) lists of solar PV cells and modules will be eligible to use in government or governmentassisted projects or projects under government programs.

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Challenges Faced By Industry

Availability of Financing

Land and Transmission

PPA Renegotiations and Curtailment

Tariff Caps

Payment Delays

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Case for Solar in India

Strong Government Support for Solar

Transition to Renewables is Happening Now

Large Domestic Market

Solar Cheaper than Coal in the Country

Top 3 Solar Market Globally

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Tenders and Auctions

Solar Tender & Auction Activity in 9M 2019 (Jan-Sep) India Solar Tenders and Auctions Jan-Sep 2019 (MW) •

In 9M 2019, approximately 36 GW

12,000

of solar projects were tendered by state and government agencies. •

Auctions

10,000

Over 8.8 GW of solar PV projects were auctioned during 9M 2019.

•

Tenders

8,000

The effects of weak economic conditions in the country has

6,000

spread to the renewable sector resulting in lower procurement activity. Difficulty in land

4,000

procurement, tariff adoption, tariff cap and other reasons have also

2,000

contributed to lack of participation by developers

0 Jan-19

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Source: Mercom India Research (Sep 2019)

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2016-17 2017-18 2018-19

GUVNL, Raghanesda Park, P-VI (Guj) - Aug 19

SECI, ISTS - V (Across India) - Aug 19

UPNEDA (UP) - Jun 19

SECI, T-II (Rajasthan) - Jun 19

SECI, ISTS - IV (Across India) - Jun 19

SECI, Dondaicha Solar Park (Mah) - May 19

GUVNL, Dholera Solar Park, P-V (Guj) - May 19

GUVNL, Raghanesda Park, PIII-R (Guj) - May 19

SECI, (Rajasthan) - Mar 19

SECI, ISTS - III (Across India) - Feb 19

5.0

GUVNL PIV (Guj) - Feb 19

MSEDCL, P2 (Mah) - Feb 19

UPNEDA (UP) - Dec 18

SECI Floating Solar (UP) - Nov 18

KREDL Pavagada Solar Park (Kar) - Oct 18

KREDL Talukwise (Kar) - Oct 18

UPNEDA (UP) - Oct 18

GUVNL PII (Guj) - Sep 18

NTPC, ISTS (Across India) - Aug 18

GRIDCO (Odisha) - Jul 18

4.5

SECI, ISTS - II (Across India) - Jul 18

SECI, Kadapa Solar Park (AP) - Jul 18

SECI, ISTS (Across India) - Jul 18

KREDL, Pavagada Solar Park (Kar) - Jun 18

APDCL (Assam) - May 18

Mahagenco AG Feeder (Mah) - May 18

SECI, Pavagada Solar Park (Kar) - May 18

MSEDCL (Mah)- May 18

NTPC, Ananthapuram Solar Park (AP) - May 18

KREDL, Pavagada Park (Kar) - Mar 18

KREDL P-VI Talukwise (Kar) - Feb 18

NSM PII B4, Bhadla P4, T XII (Raj) - Dec 17

NSM PII B4, Bhadla P3, T XI (Raj) - Dec 17

GUVNL (Guj) - Sep 17

NSM PII B4, Bhadla P3 (Raj) - May 17

NSM PII B4, Bhadla P4 (Raj) - May 17

NSM PII B2, Kadapa (AP) - Apr 17

Rewa Solar Project (MP) - Feb 17

NSM PII B2 (Raj)-Jul 16

Karnataka P-V (Gen)-May 16

Jharkhand-May 16

NSM PII B2 (Telangana)-May 16

NSM PII B2 (Kar)-Apr 16

Low Tariff/Bids (₹/kWh)

Solar Bidding Trends

5.5

Lowest Solar Bids in Reverse Auctions in India (₹/kWh)

Safeguard Duty Imposition Low Tariff (₹/kWh)

4.0

3.5

3.0

2.5

2.0

2019-20

Source: Mercom India Research (Sep 2019)

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Share of Solar

Solar Accounts for 41% of New Power Capacity Additions in 9M 2019 Share of New Power Capacity Additions in India (2010-9M 2019) Solar and Wind account for 55% of New Power Capacity Additions during 9M 2019 100% Other Renewables

Share of New Capacity Additions %

90% 80%

41.4%

Small Hydro

70% Solar Power 60% Wind Power 13.6%

50%

Hydro

40%

Nuclear

30% 44.1%

20% 10%

Gas Coal

0% 2010

2011

2012

2013

2014

2015

2016

2017

2018

9M 2019 (Jan-Sep)

MNRE's revised cumulative Bio-Power figures not included

Data from CEA, MNRE, Mercom India Solar Project Tracker

Source: Mercom India Research (Sep 2019)

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Solar Makes Up ~9.2% of India’s Total Installed Energy Capacity India - Cumulative Installed Power Capacity Mix (%) Renewables (including Large Hydro) comprise ~35.7% of India's total installed capacity, with solar accounting for ~9.2%. Among renewables, solar accounts for ~25.9% of the installed capacity

•

Renewable energy sources (including large hydro) accounted for ~35.7% of the India’s power capacity mix at the end of

Nuclear Lignite Diesel

Q3 2019.

Gas

• Large Hydro

Cumulative solar installations at the end of Q3 2019 reached 33.8 GW, representing 9.2% of the total power capacity in India.

• Wind Power 10.1%

Renewable Energy 35.7%

Among the renewables, solar accounted for approximately 25.9% of the installed capacity.

Coal Solar Power 9.2%

•

India added a total power capacity of around 5.4 GW in the first nine months (9M) of 2019. Solar and wind accounted

Bio-Power Small Hydro Waste to Power Data from CEA, MNRE, Mercom India Solar Project Tracker (Installed Capacity as on 30 Sep 2019)

for 55% of the new power capacity added during the period of Jan-Jun 2019.

Source: Mercom India Research

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Project Development by State

India Solar Cumulative Installations By State (MW) India Utility-scale Cumulative Solar Installations by States (MW) Karnataka Rajasthan Tamil Nadu Telangana Andhra Pradesh Gujarat Madhya Pradesh Maharashtra Uttar Pradesh Punjab Odisha Uttarakhand Chhattisgarh Bihar West Bengal Kerala Haryana Jharkhand New Delhi Daman and Diu Himachal Pradesh Chandigarh Dadra and Nagar Haveli Andaman & Nicobar Tripura Goa Arunachal Pradesh Jammu & Kashmir Lakshadweep Assam Puducherry

<20 MW 20-100 MW 100-1,000 MW 1,000-2,500 MW 2,500-5,000 MW >5,000 MW

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Source: Mercom India Research (Sep 2019)

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Solar Project Development Pipeline By State (MW) Large-scale Solar Project Development Pipeline by State (MW) Across India Rajasthan Maharashtra Gujarat Andhra Pradesh Karnataka Uttar Pradesh Haryana Telangana

Tamil Nadu Madhya Pradesh Kerala Assam Odisha West Bengal Andaman & Nicobar 0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Source: Mercom India Research (Sep 2019)

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Solar Trade

Import-Export Trends in the Indian Solar Market •

Solar modules and cells worth $1.65

India Solar Cell and Module Import-Export Activity ($M) 9M 2017-9M 2019

billion (~₹116 billion) were imported by

3,500

Exports

India in nine months (9M) of 2019, a

Imports

3,000

decline of 22% when compared with ~$2.12 billion (~₹141 billion) of solar

2,500

by India during 9M 2018. •

In 9M 2019, India exported solar cells

US$ Million

cells and modules that were imported 2,000 -22% 1,500

and modules worth $135.6 million (~₹9.5 billion), a 46% increase when

1,000

compared to the previous year 9M 2018. In 9M 2018, India had exported

500 +46%

solar cells and modules worth $92.8 million (~₹6.35 billion).

0 9M 2017 Data from Department of Commerce

9M 2018

9M 2019 Source: Mercom India Research

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Rooftop Solar

Rooftop Solar Installation by Quarter •

Rooftop solar installations saw a decline of 16% in Q3 2019 with 245 MW, when

Rooftop Solar Installations by Quarter (MW) 450

compared to 292 MW of rooftop solar projects added in Q2 2019. •

The overall slowdown in the economy and regulatory hurdles have been a drag on

400 350 300

rooftop installations.

•

Rooftop solar installations accounted for ~800 MW during 9M 2019. Mercom

250 200

forecasts around 1.1 GW of rooftop capacity to be added by the end of 2019. •

Cumulative solar rooftop installations in India totaled ~4.1 GW as of Q3 2019.

150 100 50

Rooftop installations still only make up 12% of total solar installations in the country, against the target of 40 GW by 2022.

0 Q1'16

Q2'16

Q3'16

Q4'16

Q1'17

Q2'17

Q3'17

Q4'17

Q1'18

Q2'18

Q3'18

Q4'18

Q1'19

Q2'19

Q3'19

Source: Mercom India Research (Sep 2019)

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Market Leaders

Indian Solar Market Leaders in 1H 2019 Indian Solar Market Leaders 1H 2019

Solar Market Outlook

India’s Solar Installation Outlook India Solar Demand Forecast (MW) 12,000

50,000 Annual Rooftop Solar Installations (MW) 45,000

10,000

40,000

Annual Installations (MW)

Cumulative Solar Installations (MW)

35,000 8,000 30,000 6,000

25,000 20,000

4,000

Cumulative Installations (MW)

Annual Utility-scale Solar Installations (MW)

15,000

10,000 2,000 5,000 0

0 2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019F

2020F

Source: Mercom India Research (Sep 2019)

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About Mercom India Mercom Communications India (Mercom India) is the go-to source for information and insight into India’s cleantech industry. A subsidiary of U.S.-based Mercom Capital Group – a global clean energy communications and consulting firm – Mercom India is widely recognized for its leadership and influence in helping to shape India’s rapidly growing clean energy sector. For clean energy organizations looking to expand market influence or eyeing initial entry into India’s renewable energy industry, Mercom India provides invaluable research, news, consultation, and communications services. www.MercomIndia.com info@MercomIndia.com @MercomIndia

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