- India is expected to become the third biggest solar market worldwide in 2017 with estimated utility scale and rooftop solar capacity addition of 8.4 GW and 1.1 GW respectively;
- New capacity addition in Q2 slows down to 1.4 GW after a bumper Q1; forecast of 9.4 GW for 2017
- Rising competition is squeezing investor returns in both primary and secondary markets
New Delhi, August 14, 2017: BRIDGE TO INDIA has released their latest report – “India Solar Compass” – a quarterly update on the Indian solar market. As per the report, Q2 2017 was a landmark period in the Indian solar sector with tariffs falling below the critical threshold of INR 3.00/ kWh making solar power the cheapest new source of power in India.
The report highlights that India’s total installed solar power capacity reached 15,611 MW (13,951 MW utility scale and 1,660 MW rooftop solar) on June 30, 2017. After a bumper Q1 2017 (end of FY17) when India added 3,120 MW of utility scale solar capacity, pace in Q2 2017 was relatively slow at 1,437 MW against a scheduled capacity addition of 3,300 MW. Highest capacity addition as well as slippage was from the 2,000 MW allocation in Telangana. Around 1,680 MW was due to be commissioned in Q2 but only 640 MW came online because of delays arising from land and transmission related issues.
Speaking on launch of the report, Mr. Vinay Rustagi, Managing Director, BRIDGE TO INDIA, said, “Indian solar sector continues to grow rapidly with capacity addition in 2017 expected to go up y-o-y by 90%. Rooftop solar is also showing robust growth as solar power becomes increasingly more attractive with falling costs. All this is acting as a huge pull for international investors and equipment suppliers. The challenge is to sustain this growth as DISCOMs seem to be frozen in the headlights with falling tariffs and weak power demand. The over-riding need of the moment is for central government and regulators to ensure that the tender allocation and project contractual structures are robust and not prone to short-term fluctuations.”
Total utility scale project pipeline, projects allocated to developers, stood at 12,250 MW at the end of the quarter. More than 3,000 MW of new tenders were announced, greater than the aggregate of all new tenders announced in previous three quarters. But at the same time, eight tenders with an aggregate capacity of 2,130 MW were scrapped due to DISCOMs reconsidering their power procurement options.
As per the report, the expected new utility scale capacity addition in Q3 and Q4 2017 will be 1,565 MW and 2,265 MW respectively. The expectation for total rooftop solar capacity for 2017 is 1,056 MW taking total 2017 capacity addition estimate to 9,443 MW.
Top developers in Q2 2017, on the basis of new capacity added, are Acme Solar, NTPC, ReNew, Adani and Azure. Similarly, Talesun, Hareon, JA Solar, Waaree and Lanco are ranked as top module suppliers for Q2 and ABB, Hitachi, Sungrow, SMA and TBEA are ranked as the top inverter suppliers.
Other key market trends observed during Q2:
- Module prices have spiked up to US ¢ 32-33/Wp against expectations of about US ¢ 28/Wp due to demand pick up in China and the USA. But inverter prices have been stable at around INR 1.80/ W.
- 1,500 V systems market is picking up and we expect a near-complete transition to 1,500V systems in India within two years.
- Trackers have been gaining market share in India – we estimate this market to grow from 450 MW in Q2 to 800 MW in Q3. However, sharp fall in module prices is likely to hurt this market in future.
- Actis committed USD 500 million to SPRNG, a new solar platform in India. Debt conditions have continued to soften with interest rates coming down and lenders looking at debt tenors of up to 20 years.
- M&A deal flow is expected to pick up substantially as many PE funds (Ostro, Orange and Equis, amongst others) are looking to sell out and the primary project pipeline is relatively slow.
- The new GST regime became applicable from July 1, 2017. Solar power systems and equipment will be taxed at 5% but there is still confusion on GST rate on equipment other than modules.
- The recently released draft National Energy Policy anticipates withdrawal of all incentives and support mechanisms for renewable energy over time.
Overall, 2017 business volumes are expected to grow by 90% Y-o-Y, making India the third largest solar market worldwide. But it is still an unnerving time for project developers and investors as rising competition forces tariffs down and the sector faces headwinds from module price rises, tender cancellations, GST and anti-dumping duty related uncertainty.
About BRIDGE TO INDIA:
BRIDGE TO INDIA is a leading consulting and knowledge services provider in the Indian cleantech market. Our multi-functional experience expertise combined with comprehensive in-house research capability enable us to develop insightful and highly sought-after industry analysis. Our overarching goal is to provide customised cleantech solutions and enable innovative business models in India.
We work actively with all leading stakeholders including project developers and investors, energy customers, equipment suppliers, regulators, policy makers and development institutions. We have also helped a number of international top-tier cleantech companies in growing their business footprint in India by providing them with strategic advice, business planning, risk assessment and JV partner selection services.
About India Solar Compass:
India Solar Compass is a comprehensive quarterly update on the Indian solar market. This edition provides detailed updates on tender and project status, leading players, financing deal flow, policy and market trends for Q2 2017 as well as our market forecasts for the upcoming quarters.