Softdisk Solar
Softdisk Solar Market Analysis 2013
Indian Solar Market Grows by Nearly 60% Between Oct 2012 to Mar 2013

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 32% between 2011 and 2014.

Finally INDIA now well 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 peryear,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 930mw have been installed year-to-date(2012) of which 635mw were installed in Gujarat.

Here is a brief of what various states have achieved :

GUJARAT : 824mw of solar projects have been installed under the Gujarat state solar Policy, with 379mw delayed. These 379mw projects will receive newly announced Oct 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 for 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 rates 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 1.000GW 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)/ KWh8.05(~$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 125MW in Yavatmal district are in very early stages of planning.

JHARKHAND : Based on RPO Policy, the state is targeting 300 MW 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 1,000 MW 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.

The Indian PV manufacturing has rapidly grown over the last few years with the entry of new and high-quality players. Today, there is already 2GW of solar PV module manufacturing capacity in the country. Talking about foreign players, while the European (German, Italian) and American PV manufacturers have been around for more than two decades, the last decade belonged to the Chinese players who have dominated the global manufacturing with their large scale capacities. Solar’s share of the global electricity power generation increased from almost zero to 0.15% from 2000 to 2010. By 2020 the International Energy Agency predicts this will increase to 1.18% of the global total – a ten-fold rise. Large projects have their own trajectory and there are the same implementation issues faced in solar projects as in other infrastructure projects. For example, land acquisition will become a big issue in the coming future due to the enactment of the new Land Acquisition Act. Megawatt scale Solar power plants require large tracts of land and any difficulty or delay in acquisition of land for the power plant will have a negative effect on the project schedule. Secondly the sector suffers from lack of project financing by banks. Thirdly, there are policy implementation issues around forward looking policies like the REC - RPO mechanism but the lax attitude of the state governments towards strictly enforcing the RPO mechanism has led to a situation where the REC market has not been successful so far. Once the state governments start strictly enforcing the RPOs, there will be a demand for the RECs which will create the demand for solar power as envisaged.

Vikram Solar has just completed 5MW in Tamilnadu in a record time. Waaree Energies Ltd., a Mumbai based PV Manufacturer has taken huge projects in Gujarat and even plans to invest 800 crores in MP.

Most of the UPS Manufacturers have jumped into the Solar bandwagon. Many larger companies.

Vikram Solar has just completed 5MW in Tamilnadu in a record time.Waaree Energies Ltd., a Mumbai based PV Manufacturer has taken huge projects in Gujarat and evven plans to invest 800 crores in MP.

Elaborating on the state of Indian PV Manufacturer vis-à-vis the foreign players (Especially Chinese) : Indian Manufacturers engaged in PV modules, PCUs and Balance of Systems (BoS) like Mounting Structures, Array combiners etc., and the System integrators all have good prospects given the Energy situation and widening supply & demand gap in India. As a global phenomenon Chinese companies are all out to take major market share of the world’s Solar Modules business. Chinese manufactures are also aiming to bring in their PCUs and the BoS components. But as far as India is concerned, due to the geographical reasons, frequency of Power outages and a strong dependence of Solar power in future by every enterprise, Indian companies will be successful in the areas of implementation and maintenance which Chinese companies cannot take any big share of the market.

The level of satisfaction with both state nodal agencies and MNRE is yet to improve from what it is now and we all hope Govt. will bring-in more industry friendly policies that suit every developer or a manufacturer uniformly across the country. The present state of MNRE subsidy for roof top and on ground program is a real pity as most of the projects completed in the previous financial year are still awaiting (subsidy) payment clearance and MNRE seems to totally helpless due to funds shortage as we understand. 

All genuine developers and PV system integrators are suffering because of this unclear status of the subsidy program that Govt. announced through several notifications and suddenly reversing those. We strongly request MNRE to maintain stable and uniform policy in the interest of our Nation and to promote Renewable energy a real success in India.

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, space.

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.

Waree Energies 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)/KWh8.05(~$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. The process was won by Consul which has aquired Megatech which Integrates as well as manufactures SPU which has IEC certifications.

Indian PV module & cell manufacturers have an obvious disadvantage against Chinese players in terms of scale and govt. assistance. Due to these factors, the imports from China are somewhat cheaper than domestically manufactured goods. While Indian PV modules manufacturers, such as Kotak Urja, are thriving in spite of this price gap due to better quality and better service support, the Indian cell manufacturers are not doing so well and the domestic PV cell manufacturing is pretty much at a standstill. On hurdle faced while implementing major projects : For MW scale projects, the initial hurdle is land acquisition and registration. Some states (e.g. Rajasthan) have created a single window clearance which simplifies the process. However, in majority states, you still have to deal with the bureaucratic hurdles. The next challenge, for both MW & kW scale projects is power evacuation. In several instances, the developer had to wait several months after project completion as the DISCOMs weren’t ready with their side of infrastructure to evacuate power.

He further laments, Currently the subsidy disbursal is taking much longer than normal due to funding crunch. This situation is not helpful to the end customers as well as channel partners as it adding severe constrains to already stifled cash flows. If MNRE can secure the planned funding and disburse the subsidies on time as promised, it will help the industry a great deal.

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 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. Limited has recently signed Piven 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 EPC 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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