DISCOMs continue to be a drag, record low module prices a boon to
Mercom Capital Group, a
global clean energy communications and research firm, today released its
quarterly update on the Indian solar market.
the complete report, visit: http://bit.ly/MercomIndiaAug2016Form
India has reached 2.8 GW in
solar installations year-to-date and cumulative installations have reached 8.1
GW as of August 2016. Mercom forecasts about 4.8 GW of solar to be installed in
calendar year 2016. The solar project pipeline in India is now approximately 21
GW, with 14 GW under development and 7 GW scheduled to be auctioned.
“Solar installations and its
share of energy generation has picked up speed but distribution companies continue
to be a drag on the sector and are showing reluctance to purchase solar in
light of low power demand and cheap power availability on the exchanges,” said
Raj Prabhu, CEO and Co-founder of Mercom Capital Group. “This is an alarming development
that the central government should address immediately to restore confidence
among developers and investors,” he added.
Low bids are still a
challenge and projects with bids below Rs.5 (~$0.0746)/kWh have yet to close
financing. Although bids stabilized somewhat, they fell again with the lowest
reaching Rs.4.35 (~$0.0649)/kWh in the latest JNNSM Phase II Batch 2 auction in
Rajasthan. Based on our channel checks, Chinese modules in India are currently
available for ~$0.39 (~Rs.26)/watt which is the cheapest average selling price currently
anywhere in the world. Module prices are forecasted to drop even further in the
short-term due to the massive oversupply situation in China. With solar panels making
up approximately 60 percent of project costs in India, China’s oversupply issue
is a big boost for Indian project developers but not so much for Indian
Current incentives have not
been enough to move the solar rooftop market forward. Accelerated depreciation
is set to come down to 40 percent in FY 2017-18 from the existing 80 percent.
The government’s decision to increase solar parks from 20 GW to 40 GW to make
up for slow rooftop adoption indicates that the goal for 40 GW of rooftop solar
by 2022 is flexible.
According to a recent MNRE
report, the Goods and Services Tax (GST) bill will largely be a negative for the solar
sector. However, the details are not yet determined and it is still unclear
whether renewable energy will be exempt. Developers expect the ‘change in law’
clause in PPAs to protect them from the negative impact of GST.
Consolidation activity has
picked up in the sector, especially in the downstream segment. Welspun’s 1.1 GW
project portfolio was acquired by Tata Power earlier this year for $1.4 billion
(~Rs.9,380 crore). There are a number of other M&A deals in the pipeline.
“Companies loaded with debt
are finding it difficult to grow in this highly competitive environment and we expect
to see a lot more M&A activity on the project side,” further commented
Though grid congestion and
transmission infrastructure is a problem in some regions, low power demand
especially from lucrative industrial and commercial segments is negatively
affecting DISCOMs and their revenues. DISCOMs have resorted to sporadic
curtailment from some solar projects in Rajasthan and Tamil Nadu as cheaper
power is available on the power exchanges. Grid connection and timely evacuation
continues to be a big challenge considering solar project developers do not
have the benefit of deemed generation.
India’s first solar with
energy storage tenders were issued in August 2016 totaling 300 MW.
In a welcome development,
the Solar Energy Corporation of India (SECI) announced a Rs.15 billion (~$224
million) payment guarantee fund to ensure timely payment to developers for
projects developed through Viability Gap Funding (VGF). Mercom has been calling for a payment
guarantee fund for all projects using the National Clean Energy Fund (NCEF) for some time to help significantly improve the bankability of projects, reduce
borrowing costs and development risks.
The more than 50-page report
extensively covers progress under various JNNSM and state projects and
policies, the current market share of large-scale solar project developers,
rooftop installers, solar inverter manufacturers, solar module prices, and
import and export updates. Other major industry developments impacting the
solar sector have also been analyzed in this comprehensive report.
download a copy of the report, visit: http://bit.ly/MercomIndiaAug2016Form
Mercom Capital Group
Mercom Capital Group, llc,
is a global communications and consulting firm focused exclusively on clean
energy and financial communications. Mercom’s consulting division advises
cleantech companies on new market entry, custom market intelligence and overall
strategic decision making. Mercom’s consulting division also delivers highly
respected industry market intelligence reports covering Solar Energy and Smart
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