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Reports
3.5 GW Solar Capacity Added in H1
of 2021 in India, Says Report
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A report by renewable energy research firm JMK Analytics says that India added 3.5 GW of solar capacity in the first six months of the financial year 2022. It places cumulative renewable capacity at 96.95 GW, a figure at variance with government claims of having hit 100 GW. Typically, these differences are accounted for by rooftop solar tally and scheduled commissioning date of some projects.
Solar Continues Run On Top
Solar continues to cement its dominance after overtaking wind in total capacity this year, with a 44% share in the total renewable mix, followed by wind with a 41% share. According to JMK, the current pipeline of solar, wind, and hybrid projects stands at around 56 GW which is likely to be commissioned in the next 3-4 years, well past the deadline of 2022. Another 25 GW of projects are under the bidding phase where tenders are issued but auctions are not completed. So safe to say these will take even longer, according to the researchers. The H1 Comparisons
In H1 2021, about 3.5 GW of new utilityscale solar capacity was added in the country, which is 63% higher than the H1 2020 installations. Rajasthan, Uttar Pradesh, Gujarat, and Andhra Pradesh were the leading states with most of the largescale solar installations during this period.
Quarterly Comparison:
In Q2 2021 (Apr-Jun 2021), 1.5 GW of utility-scale solar capacity was installed. This is about 30% lesser than the previous quarter installations. this was helped by almost 215 MW of solar projects commissioned by Renew Power in rajasthan. In wind, about 475 MW were added, which is 56% lesser than the Q1 2021 installations. In rooftop solar, about 417 MW were added, which is 55% lesser than the previous quarter. In wind, only 475 MW could be added, pointing to the increasing troubles in that part of the renewable duo. Notably, this is after Adani Green energy commissioned some 100 MW of wind energy projects ahead of schedule.
Projections
In terms of projections for the year, JMK predicts that about 10.3 GW of new utilityscale solar capacity and 2.8 GW of fresh wind capacity is likely to get installed in 2021. That, if it happens, would be a massive improvement over the previous three years, when capacity additions have been stuck between 7 to 4.5 GW.
Quarterly In Q3 2021, installation activity is likely to further pick up with an estimate of 3.1 GW of new solar capacity and 1 GW of new wind capacity addition. That would indicate the slump in Q2 was an aberration caused by a spike in Covid’s second wave across key states, that took out most of April and May for firms. While encouraging on its own, keeping in mind the backlog behind, and the ambitious targets in front, clearly the increase needed is of a far higher order to ensure that the country does not miss its own targets by a wider margin.
India added 2,110 MW solar power capacity in Q2 2021, according to the Q2 2021 edition of its “India Solar Compass” report that was recently released by BRIDGE TO INDIA.
The report provides a detailed quarterly update of all key sector trends and developments – capacity addition, leading players, tender and policy issuance, equipment and EPC prices and policy framework – as well as outlook over the next two quarters.
Key highlights: • India added 2,110 MW solar power capacity in Q2 2021, taking total installed capacity to 46,130 MW by 30 June 2021.
Utility solar installations increased marginally over the previous quarter despite COVID-19 lockdowns across the country. We estimate pace of project construction to remain robust with about
4580 MW capacity to be added in the next six months. • Tender issuance in Q2 was down 25%
QOQ. 17 utility scale project tenders aggregating 8,062 MW and six rooftop tenders aggregating 94 MW were issued in the quarter. There were only three project development auctions totalling 625 MW with tariffs ranging between
INR 2.51 to 2.68/ kWh. • The quarter saw rising module prices and risk of delayed shipments. Many module suppliers are believed to be renegotiating module prices and/ or delaying shipments because of supply chain constraints. • Reluctance of DISCOMs to sign PPAs is another major concern with as much as 21,696 MW of auctioned projects yet to be tied-up. On the policy front, the quarter saw ISTS waiver extension by two years to 2025. The waiver now also applies to GTAM, pumped hydro and battery storage projects. • BRIDGE TO INDIA is a consultancy and knowledge services provider operating in the Indian renewable energy market, aiming to offer clean innovative and viable clean energy solutions.
Indian RE Sector Stable But Riddled With
Payment & PPAs Signing Delays
While India’s renewable energy (RE) sector is currently stable, the key challenges containing its growth lie on the execution front, finds a new report by ICRA.
According to the report, the RE sector’s present stability is on account of strong project pipeline, the government’s continued policy support, and superior tariff competitiveness offered by wind and solar power projects, both in the utility and open access segments. The challenges, however, are associated mainly with land and transmission infrastructure, as well as the slow but improving progress in the signing of power purchase agreements and power sale agreements by intermediate procurers with state distribution utilities.
ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency.
Tariff competitiveness offered by the solar and wind power projects in utility auction route continued to remain superior, with tariffs remaining below Rs. 3.0 per unit, despite the upward pressure arising from the imposition of customs duty on imported cells and modules, w.e.f. April 2022, the report added.
Mr. Girishkumar Kadam, Senior Vice President & Co-Group Head, ICRA ratings, said, “The investment prospects in the RE sector thus are expected to remain strong, given the policy impetus with a target to reach 450 GW by FY2030 and competitive tariffs. The capacity addition in the power sector over the medium term will be driven by the RE segment, led by a strong project pipeline of close to 40 GW1 as on date.”
“An improving financing environment along with the softening in the interest rate for the RE projects over the last 12-18 months period has been a positive for the sector,” he added.
Apart from the execution related challenges, the renewable energy (RE) developers are facing challenges arising from delays in payments from the state distribution utilities and grid curtailments as observed in few states, especially for the relatively higher tariff projects. Based on a petition filed by the solar developers affected by grid curtailment in Tamil Nadu, the Appellate Tribunal for Electricity (APTEL) issued a favourable order in August 2021.
The same stated that the actions of the state utility of Tamil Nadu were ‘mala fide’ in issuing backdown instructions for commercial reasons and ordered payment of compensation to the solar IPPs at 75% of PPA tariff. Further, the APTEL issued directions to all state discoms, state electricity regulators and grid operators stating that any curtailment of renewable energy (RE) plants (for reasons other than grid security) shall be compensated at PPA tariff.
In this regard, Mr. Vikram V, Vice President & Sector Head - Corporate Ratings, ICRA, adds, “This order by APTEL is a positive for the RE sector and is expected to act as a deterrent against grid curtailment by discoms and grid operators. However, timely implementation of the order remains key, given that risk of a further challenge to the Supreme Court cannot be ruled out.
Further, while the operating projects continue to face delays in payments from the state discoms in some of the key states, the presence of strong intermediate procurers like SECI and NTPC is supporting the addition of new capacities led by presence of strong payment security mechanism in the form of letter of credit, payment security fund and tri-partite agreement with Central government, state government and RBI.”
Further, the demand outlook for the domestic solar OEMs remains favourable, with the strong policy support through imposition of BCD on imported cells and modules, the notification of the production-linked incentive (PLI) scheme and a strong project pipeline from various schemes requiring the use of domestic modules. Also, the non- inclusion of the overseas suppliers in the Approved List of Models and Manufacturers (ALMM) so far, is likely to support the demand for domestic module OEMs in the near term.
The policy push is expected to improve the cost competitiveness of domestic OEMs and has led to new capacity announcements of more than 15-GW by various OEMs and entry of new players. The timely commissioning of these new capacities remains important to meet the growing demand from the developers, given the current capacity constraints. Moreover, the ability of the OEMs to achieve backward integration and build economies of scale would be important to remain competitive against the overseas suppliers on a sustained basis, said ICRA.
RE Investment in India Bounces Back from
COVID-19 Slowdown: IEEFA
Renewable energy investment is rising again in India following the slowdown in the previous financial year due to the onset of the COVID-19 pandemic, finds a new briefing note by the Institute for Energy Economics and Financial Analysis (IEEFA).
In the first four months of this financial year (FY), from April to July 2021, investment in the Indian renewable energy sector reached US$6.6 billion, surpassing the US$6.4 billion level for FY2020/21 and on track to easily overtake the US$8.4 billion total achieved in 2019/20 prior to the pandemic.
“Rebounding energy demand and a surge of commitments from banks and financial institutions to exit fossil fuel financing are helping to drive investment into Indian renewable energy infrastructure,” says author Vibhuti Garg, Energy Economist, Lead India at IEEFA. The new IEEFA note explores renewable energy investment trends during FY2020/21 and for the first four months of FY2021/22, and also highlights the key deals made during both periods.
The majority of the money flowed through acquisitions which helps to recycle the capital into new projects.
The largest of around 30 deals during FY2020/21 and April to July FY2021/22 was SoftBank’s exit from the Indian renewable energy sector in May 2021 with a US$3.5 billion sale of assets to Adani Green Energy Limited (AGEL). With this acquisition AGEL became a major investor as well as the world’s largest solar developer.
Other major deals included Engie’s acquisition by Edelweiss Infrastructure Yield Plus for US$550 million, Acme’s acquisition by Scatec Solar for US$400 million, and Fortum’s acquisition by Actis for US$333 million. Analysis of the different deal types reveals the majority of the other big deals were packaged as debt, equity investment, green bonds, and mezzanine funding.
Indian renewable energy developers are attracting huge investments from green bonds, says co-author Saurabh Trivedi, Research Analyst at IEEFA.
“In April 2021, ReNew Power raised money from green bonds with a tenor of 7.25 years at a fixed interest rate of 4.5% per annum, and this was soon trumped in August 2021 by the US$414 million 2026 green bond issue by Azure Power Global at a record low 3.575% per year.” In the latest development, a mega US$8 billion special purpose acquisition company (SPAC) transaction between ReNew Power and RMG Acquisition Corporation II has approval from a majority of shareholders, paving the way for a Nasdaq listing with expected trading from 24 August 2021.
IEEFA’s note also points to several very positive developments: investment in India is clearly shifting towards renewables; the government is redoubling efforts to boost energy security and self-reliance by expanding clean energy technologies as demonstrated by Prime Minister Modi’s Independence Day speech; and Indian corporates like Reliance and JSW Energy are making big clean energy commitments. In addition, the lending portfolios of Indian financial institutions like State Bank of India (SBI) and Power Finance Corporation (PFC) now include more renewable energy assets than fossil fuels, a trend which has picked up significantly in the last one to two years, according to the note.
India is currently investing around US$18-20 billion in energy generation capacity and a further US$20 billion in the grid on an annual basis. To achieve the Sustainable Development Scenario (SDS) in the International Energy Agency’s India Energy Outlook 2021 the country would need to triple its current rate of annual investment to US$110bn.
“This is daunting in one respect,” says Garg. “But the financial trends in Indian renewable energy and grid infrastructure over the last two to three years strongly suggest domestic and global capital can support this ambition.”
Jinko Rides India’s Solar Recovery With A 528
MW Module Contribution In Q2
Jinko Solar, with deliveries of 528 MW continued to lead the India solar market in Q2, according tp the company. India added 2.1 GW solar capacity in the second quarter of 2021, taking the country’s total installed solar base to 46 GW. Despite lockdowns and challenges faced due to the pandemic, the sector saw a stable utility scale capacity addition. Jinko Solar’s modules accounted for 20% of India’s Q2 deployment on ground. These figures have been reported by Bridge to India, a research agency, in their latest quarterly report covering the sector. Jinko Solar’s flagship model Tiger Pro, which is believed to have been dominating the market since last year, contributes the most to Jinko’s numbers. For Jinko, this continues its strong show from Q1 this year.
New statistics released by Bridge to India show that about 2110 MW of solar capacity was added between April and June, with around 84% (1785 MW) in the utility scale segment. Jinko was the highest contributor to this number, accounting for 528 MW alone between some of the most reputed IPPs and project developers across segments. This was achieved despite raw material sourcing issues, demand pressures, volatile upstream pricing, restricted movement of equipment, supply shortages among other challenges posed by the COVID-19 pandemic.
JinkoSolar, having built a strong foothold in large-scale utility markets in India, also saw rapid adoption of its products in the DG segment during the second quarter. “Moving to the third quarter of 2021, JinkoSolar’s Tiger and Tiger Pro ultra-high power series modules will continue to meet the increasing demand and expand our market share in the high-end distribution market,” said Daniel Liu, General Manager, JinkoSolar - South & Central Asia.
“JinkoSolar was the leading supplier to India during the first quarter in terms of shipment capacity with more than 800 MW of solar modules shipped and delivered to customers across the country. The second quarter was crucial for the company as we saw successful installation and commissioning of a large part of that capacity which reaffirms our position as a market leader in both aspects – Market Share and Technology Acceptance. We continue to innovate and upgrade our technology platforms so that our product offerings make commercial sense for a highly competitive and strategic market like India.” said Gener Miao, CMO, JinkoSolar.
Climate is heating up, more traditional investors are participating, and there are more cross-sector opportunities than ever before, reports Climate Tech VC (CTVC), a weekly newsletter about climate and innovation, which has recently reviewed the investments made in climate technologies in the first half of 2021. The study finds that in the first half of 2021, climate tech startups raised ~$16b across ~250 venture deals.
The CTVC team tracked about $16 billion of funding in 1Q and 2Q 2021, including more than 250 individual deals across seven sectors: carbon, climate, consumer, energy, food and water, industrial, and mobility. The newsletter aims to bring its readers a perspective on the evolving world of climate tech by interviewing top investors & operators and covering recent venture deals, news, and jobs.
The findings of the CTVC team are as follows: • In the first half of 2021, climate tech startups raised ~$16b across ~250 venture deals. • Around 1,000 investment firms joined at least 1 climate tech deal from Q2’20 to
Q2’21, with ~50 firms backing 5+ climate tech deals. • Compared to just a year before, there were ~50% more climate deals in Q2’21 vs
Q2’20. • In Q2’21, Series A deals were double the average size of same stage deals from a year before; meanwhile, Growth deals have tripled in size. • Mobility sector deals are the largest on average, and make up ~50% of total H1 2021 funding. • Food & Water and Mobility attract the greatest diversity of investment firms; over half of climate tech investors are active in these two sectors.
Deals: Around 250 unique climate tech venture deals occurred in the first 2 quarters of 2021. Q2’21 exhibited a ~50% increase in deal activity compared to the prior 12 months, with a considerably greater number of Energy sector deals.
Around $16b of climate tech venture capital funding was announced in H1 2021. Relative to the count of deals by sector, Mobility punched above its weight in terms of average deal size. >50% of venture capital funding in H1 2021 was committed exclusively to Mobility deals. Though more nascent climate tech sectors like Climate, Consumer, Industrial, and Carbon have begun to increase in deal count, their smaller deal sizes mean that these nascent sectors remain a small percentage of total climate tech venture funding.
Compared to the 4 prior quarters, in Q2’21 pre-Growth stage deals like Series A, B, and C commanded relatively more climate tech venture funding as both the count and size of pre-Growth deals increased. Overall, Growth deals (expectedly) make up >50% of total climate tech venture capital funding.
Compared to just a year before, the average deal size of every stage of climate tech deals increased (except Series C). Of particular note, Series A deals in Q2’21 are double the average size of same stage deals from a year before. Meanwhile, Growth deals in 2021 are triple the size of Growth deals in 2020 – likely buoyed by vast quantities of institutional ESG capital and SPACs.
Investors: From the last half of 2020 through the first half of 2021, 48 investment firms participated in at least 5 unique climate tech deals each. 10 investment firms busily participated in over 10 deals, with Breakthrough Energy Ventures joining 30 deals – nearly double that of the next most active firm. Around 1,000 unique investment firms joined at least 1 climate tech deal from Q2’20 to Q2’21.
Of all of the unique investment firms who participated in climate tech deals from Q2’20 to Q2’21, over half funded deals in Food & Water and Mobility. Given these two sectors’ ubiquity in everyday life, it’s logical that a diversity of traditionally non-climate investors are drawn to these broad appeal categories.
