Softdisk Solar
Softdisk Solar Market Analysis 2012
Indian Solar Market Growing Slow

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 players.

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 bandwagon.

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 weeks.

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 :
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 certifications.

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 commissioning.

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 etc.

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