The year 2016 marked the coming of age in the Indian solar sector, and with certain traditional international markets like the EU and China beginning to slow down, India has become the destination of choice for most of the market participants, be it developers, technology companies, EPC and O&M providers or equity investors. 9 GW of new capacity was auctioned, and for the first time solar PV tariffs on utility scale plants fell below wind tariffs, as well as tariffs for new thermal projects (on a levelised basis). The solar park policy of the Federal government clearly was a success, as it attracted significant interest amongst IPP’s, due to the de-risked profile of development that was offered. Towards the second half of 2016, and as we continue into 2017, the PV manufacturing value chain is witnessing another cycle of over-capacity and supply glut causing pricing to be significantly depressed. While, this is good news for developers, another round of consolidation is anticipated in the PV manufacturing value chain. Specifically with regards to the Indian solar market in 2017, while the demand potential remains strong and new capacity auctions similar to 2016 are anticipated, there are growing concerns around (a) impact of GST on competitiveness of the sector (b) curtailment risks from the utilities and overall delay in payments from state-owned distribution companies.
India offers a unique opportunity with an exponential need for sustainable and clean energy. Fortum is very appreciative of the concrete steps taken by India and is committed to take an active part in India’s solar journey. During the first half of 2017, the company will be commissioning two solar parks, in Karnataka and in Rajasthan. In 2016 we witnessed tremendous progress in the solar mission as several large projects were commissioned. Creation of solar parks and transparent E-bidding of projects are appreciated ways to increase solar energy.
Land availability has been discussed as a possible limiting factor. It is important to notice that not all 100 GW would be land mounted. A substantial portion is roof top. The Indian government has more than played its part in assuaging investors’ concerns. Solar parks, UDAY schemes, NSM programmes, solar wind hybrids, solar plus battery storage, all of these add up to an enabling environment and ecosystem.
The development needs concern changing E-bidding dates, which should be sacrosanct to help in proper planning. We also hope that the uncertainty surrounding Goods and Services Tax would be removed at the earliest. As long as the intent is right, we will find solutions to some challenges and will bring a solar revolution in the country.
The Indian solar industry showcased incredible growth in 2016. In 2015, India crossed the 5 GW mark and within just one year, it has 8.06 GW. Aggressive government policies, encouragement to private companies, focus on infrastructure building and investment influx can be considered as reasons behind this tremendous growth, which by the way, is in sync with the country’s target of 100 GW by 2022.
An increasing number of government auctions, falling PV module costs, declining cost of investment and reduced cost of generating electricity in India has worked wonders for the renewable energy sector, especially solar power. The 100 GW target has been divided into 60 GW for utility scale projects and 40 GW for rooftop installations. And the Indian government has shown collaborative efforts with private companies to keep their focus on both these segments for growth. Utility-scale solar projects account for more than 85% of the total installed solar power capacity in the country while rooftop solar comprises of only 10%. However, with a CAGR of 98% from 2011 to 2015, and the recent 513 MW capacity enhancement, it is assured that the Indian rooftop solar market will also be in the spotlight soon enough.
India is expected to add new solar capacity of 5.1 GW within 2016, and frankly, with more than half of the target reached, there is no reason to doubt success in reaching this goal.
Tamil Nadu, Rajasthan, Gujarat, and Andhra Pradesh have shown incredible growth this year, accounting for 59 per cent of the total solar growth in the country. Tamil Nadu currently holds the crown for the highest installed capacity, which stands at 1061.82 MW. India currently has 14 GW of solar projects under implementation and another 7 GW waiting to be auctioned. The government has put special focus on creating and implementing new policies for solar growth this year.
The key government backed proposals and initiatives taken this year are:
• Introducing US-dollar denominated bidding in solar power project tenders to enhance the flow of international finance.
• Better compliance with RPO regulations, to develop a favourable regulatory environment for renewable energy.
• Declaring renewable energy as a priority sector by the central bank from this year will offer better financing facilities.
• Amendment approval to the tariff policy by the Ministry of Power in January 2016 presented renewable power as a key objective.
• Approval of Ujwal Discom Assurance Yojana (UDAY) will certainly improve the financial health of power distribution companies (discoms).
• Proposing creation of land banks for easy access to space.
• Implementing net-metering in 26 of total 36 states in India
• Initiating a dialogue with the World Bank, Asian Development Bank, etc to bring in new investments.
• The government has plans to introduce interest rate subvention scheme and has launched the Accelerated Depreciation scheme.
These proposals and initiatives are to add to growth and support the Indian solar sector to solve key challenges
• Limited manufacturing capacities.
• Slow progress of net-metering, which delays growth of rooftop solar.
• Delaying land acquisition issues.
• And infrastructural issues due to financing problems.
So, the scenario proves to support growth and we are ready to contribute in global solar development.