Mercom Capital Group, a global clean energy communications and research
firm, today released its quarterly update on the Indian solar market.
Mercom’s forecast for solar installations in India for calendar year
2015 now stands at about 2,500 MW. Solar installations
year-to-date is approximately 1,400 MW. Cumulative solar installations in India
have now crossed 4.5 GW.
Raj Prabhu, CEO and
Co-Founder of Mercom Capital Group, commented, “After a long wait, the solar
market in India is finally taking off. Year-to-date installations of 1.4 GW
already make it the best year for solar in India. The Indian solar market is
finally on target to be one of the Top 5 markets in the world over the next
The Government of India raised the National Solar Mission’s solar
installation target from 22 GW to 100 GW by 2022 with a split of 60 GW for
large-scale projects and 40 GW for rooftop projects.
Under Jawaharlal Nehru
National Solar Mission (JNNSM), Phase II Batch 2, 3,000 MW of projects are now
being auctioned by National Thermal Power Corporation (NTPC) through
competitive bidding, and tenders for about 1,750 MW have already been
announced. Last week Solar Energy Corporation of India (SECI) issued final
guidelines for 2,000 MW in viability gap funding (VGF).
Telangana state auctioned
off 2,000 MW of PV projects with winners to be announced shortly, and the state
of Madhya Pradesh auctioned off 300 MW of projects. These two state auctions
resulted in some of the lowest bids in India.
One bottleneck in the Indian solar market currently is the release and
allocation of Cess funds. Clean Energy Cess (a form of carbon tax) is being
levied on coal produced in India, as well as on imported coal with the goal of
using these funds towards clean energy development. Mercom estimates that
almost 60 percent of collected Clean Energy Cess has not been transferred to
the National Clean Energy Fund (NCEF). Total funds allocated to Ministry of New
and Renewable Energy (MNRE) to date is just 19 percent of funds collected. In
the last two years, approximately 55 percent of the NCEF fund allocation has
gone to MNRE while 45 percent has been allocated to ‘Namami Gange’ river
cleaning and miscellaneous projects.
“Some of the $3 billion (~Rs.18,900 crore) in unused funds
sitting in the NCEF can be used productively to create a ‘reserve backstop
fund’ against late payments that will reduce offtaker credit risk, stimulate
lending activity, and help lower interest rates,” further commented Prabhu.
As the government steps up
its solar installation goals, we are also seeing government-owned entities
entering the solar business, directly competing with private businesses. SECI
was recently converted into a commercial entity, which means SECI can now
directly engage in owning solar power projects, generating and selling power
and also manufacturing solar products and materials. NTPC also announced that
it is evaluating a plan to setup solar manufacturing. These moves go against
Mr. Modi’s statement of “It's not the government's business to run a business.”
Solar developers, manufacturers and investors Mercom spoke with view this as a
negative development for the industry.
“Even though there will be
many hiccups along the way, the Indian solar market has turned the page” said
For the complete report,
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is a global communications and consulting firm focused exclusively on clean
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