Demand for solar products
has been rapidly rising for the recent years, especially in rural areas,
and is expected to continue growing substantially during our forecast
period (2011-2013). Solar PV Off-grid applications, Roof Top
applications and even Megawatt sized Solar Power Plants have started
coming up although not at the same speed as initially thought.
MNRE has worked hard in
this direction giving away sops, but the industry is still very nascent.
Solar street lighting systems, home lighting systems, power plants,
solar cookers, solar pumps and solar water heating systems are the most
popular applications in India. The number of solar water heating systems
is projected to grow at a CAGR of about 22% between 2011 and 2013.
Finally INDIA crossed the
symbolic mile-stone of 1GW of installations this year.
The solar industry has immense potential for a tropical
country like India where around 45% of households, mainly rural ones, do not
have access to electricity, says our new research. The industry has witnessed
rapid growth over the past few years and is projected to grow further in future.
India is blessed with ample solar radiation and most part of
the country receives 300 to 330 sunny days in a year. India receives solar
energy equivalent to more than 5,000 Trillion kWh per year, which is far more
than its total annual energy consumption. The country’s geographical location,
large population and government support are assisting it to become one of the
most rapidly emerging solar energy markets in the world. Consequently, the
country is becoming a favorite investment destination for both local and global
The report provides an insight on various small & Mid
level companies forming the major chunk solar industry in India. It thoroughly
examines current industry trends, with focus on recent changes in the state and
country level regulatory environment. The report will assist investors to
understand the market dynamics and get an insight into the future outlook of
solar power market in India.
Many states have started promoting solar based applications
by giving incentives and tax savings. States like Gujarat and Rajasthan have
formulated transparent and progressive regulatory framework in order to boost
the solar industry. Besides, states like Delhi, Uttar Pradesh, West Bengal,
Maharashtra and Chandigarh are promoting solar energy in rural, urban and semi
urban areas. More recently Madhya Pradesh has joined the Solar Promotion
The forecast given in this report is not based on a complex
economic model, but is intended as a rough guide to the direction in which the
market is likely to move. This forecast is based on correlations between past
market growth, growth of base drivers and possible impact of recession in the
economy and support provided by various State Governments.
While most Indian state have followed the lead of JNNSM in
terms of policy and guidelines, the state of Gujarat decided to go the
feed-in-tarriff route. A total of 830mw have been installed year-to-date(2012)
of which 585mw were installed in Gujarat.
Here is a brief of what various states have achieved :
GUJARAT : 690mw of solar projects have been installed
under the Gujarat state solar
policy, with 279mw delayed. These 279mw projects will receive
newly anounced 2012 tariffs(levelised tariff for 25 years is Rs 10.37
(~$0.19)/kWh for PV Projects) which are about 20 per cent lower compared to 2011
tariff levels. Though Gujarat announced tariffs for 2012-15, it does not have
any plans to announce any targets or installation goals.
KARNATAKA : Karnataka recently concluded biding fo
80mw of solar(60mw~PV, 20mw~CSP).The average bid for PV projects came to
Rs.8.37($0.17)/kWh, one of the lowest solar tariff ratesd in India, and the
average bid for CSP projects was Rs.11.13(~$0.20)/kWh. There are no updates as
to whether PPAs were signed or if financial closure was reached. The Karnataka
Renewable Energy Development Agency has also submitted recommendations to the
state to develop 1.000mw of Solar Energy in five years or 200mw per year.
RAJASTHAN : The state of Rajasthan has postponed the
date of to bid for 200MW of solar projects indefinitely.
ORISSA : The Orissa Renewable Energy Agency (OREDA)
auctioned off a 25mw PV projects for Rs.7($0.14)/kWh. the lowest recorded bid in
India. OREDA plans to call a tender to develop another 45mw in the next few
MADHYA PRADESH : Madhya Pradesh Power Management
Company Limited has recently signed PPAs for 225mw of PV projects with five
project developers under a reverse auction mechanism. The winning bids were
between Rs.7.9(~$0.14)/Kwh and Rs.8.05(~$0.14)kWh. Madhya Pradesh also recently
announced a solar policy to fulfill its RPO obligations (88mw for 2011-12 and
158mw for 2012-13), also through bidding process.
Maharashtra State Power Generation Company Limited(MahaGenco) has 150mw of
solar power projects under development by three companies. Future plans to
develop a 100mw project in Usmanabad district, 25mw in Parbhani district and
125mwin Yavatmal district are in very early stages of planning.
JHARKHAND : Based on RPO Policy, the state is
targeting300mw of solar power projects to be developed in the next future.
UTTAR PRADESH : The Uttar Pradesh New and Renewable
Energy Development Agency recently released its drafts solar policy. The state
has set a goal to achieve 1,ooomw of solar installations by march 2017. The
draft was to be submitted for cabinet approval on September 11, 2012 and may
take another month or more for the policy to come into effect.
Solar market too has become highly fragmented both
product-wise as well as number of companies jumping into the Solar bandwagon.
Most of the UPS Manufacturers have jumped into the Solar bandwagon. Many larger
companies have started acquiring smaller solar companies having strong Solar
experience. Swelect Energy Systems Ltd, formerly Numeric Power Systems Ltd, a
BSE listed company sold of its UPS Business Unit for over 850 crores to
concentrate on Renewable Energy. In just a few months the company has set up and
commissioned two solar Power Plants and a Wind Power Plant and has over 1200
rooftop installations to its credit. Consul is in the process of acquiring
Megatech which Integrates as well as manufactures SPU which has IEC
Waaree Energies Pvt. Ltd., a Mumbai based PV Manufacturer has
taken huge projects in Gujarat and even plans to invest 800 crores in MP. Many a
Big UPS companies with strong rural presence have taken the roof top root to
Solar Supremacy while bigger players including Semi Govt. enterprise & major
PV manufacturers, once and those backed by big corporate houses prefer to go for
big order like Solar farms and usually sublet Integration Jobs. This creates
opportunity for small level Integrators, allowing the majors to monitor. Very
few companies have entire setup from PV manufacturing to Integration and
A 12.8 GW opportunity till 2016 - the Indian solar market is
a key future growth market for PV.
India’s installed capacity as of quarter ending September
2012 was 1.03 GW, which is still negligible as compared to more mature markets
such as Germany. However, the first two quarters of 2012 alone have seen
additions of 657.22 MW to Indian PV installed capacity, growth showing the
deepening of the market. The market is currently mostly driven by FiTs. By
introducing the solar Renewable Purchase Obligations (RPOs) and the solar
Renewable Energy Certificate (REC) mechanism, the government has created a
further market instrument to advance solar power in India.
The year will see some movement and interest by market
players to explore new business models/segments within the solar industry in
India. Further, the falling cost of solar will lead to new projects in the
captive commercial space as solar tariffs become competitive with commercial and
industrial grid prices in various parts of the country.
There are also external factors in India challenging its
solar industry, namely high inflation and consequently high interest rates,
slowdown in GDP growth, a several depreciated rupee and relentless corruption
scandals. Low bids with high interest rates in the range of 13 to 15 per cent
make it challenging to borrow in India (most Indian Banks look at these projects
as risky.) and successfully execute a quality project that can last 25 years.
The rating does not include major players such as BHEL, BEL,
CEL, TATA BP Solar India Limited, Solar Semi-conductor & Moser Baer India
Limited, LANCO, L&T, INDO SOLAR, Reliance Power, Mahindra Power, Wipro-ECO