Softdisk Solar
INDIAN SOLAR MARKET SLOWS DOWN IN THE LAST FISCAL

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 countryís geographical location, large population and government support are assisting it to become one of the most rapidly emerging solar energy markets in the world.

However with all this positives, the industry didnít grow as expected last year.

Due the election year there was a complete policy paralysis in the Government & the priorities were changed.

The report provides an insight on various small & Mid level companies forming the major chunk of 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 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 : To achieve commercial viability and expeditiously operationalize the Renewable Energy Projects. to enhance the contribution of Renewable Energy in the total installed capacity of the state from 2400 MW to about 6600 MW by 2014. To conserve 7901 MU (900 MW) by 2014 through the Energy Efficiency & Energy Conservation measures in all sectors.

The KREDL MD Mr. Balram (IAS) seems to be in no hurry to commence the projects It seems all the money which KREDL collected thru earnest money is being used to fund KREDL. (Just a doubt), 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. KREDL willing.

RAJASTHAN : The state of Rajasthan has sanctioned and installations is either completed or underway for 730 MW of solar projects currently.

ORISSA : The Orissa Renewable Energy Agency (OREDA) called for tenders auctioned off a 54MWp. The project includes Installation of Grid Connected Rooftop Solar Photovoltaic Power Plants with aggregate 54 MWp capacity in various States across the Country on Pilot Basis. The project aims to reduce the fossil fuel based electricity load on main grid and make the buildings self-sustainable to the extent possible.

Projects can be set up on the concept of Net Metering/ Feed-in-Tariff on Pilot Basis. The individual project will normally range from 10 kW to 500 kW size. The projects below 10 kW may also be considered for residential sector. 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. Those going in for MNRE subsidy ware in for a rude shock as subsidy schemes were discontinued and crore& cores of money of various company stuck. There is an utter confusion as customerstillsites MNRE guidlelines where vendor wondor how to convince. Madhya Pradesh also recently announced a solar policy to fulfill its RPO obligations with 150 Mwcommisioned thru Welspun.

MAHARASHTRA : Maharashtra State Power Generation Company Limited(MahaGenco) has 150MW of solar power projects under development by three companies. State 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. Off this 200 MW has already been auctioned.

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 13, 2014 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. Vikram Solar 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.

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 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 1645 rooftop installations to its credit. Consul is in the process of acquiring Megatech & now Neowatt which Integrates as well as manufactures SPCU which has IEC certifications

A 12.8 GW opportunity till 2016 - the Indian solar market is a key future growth market for PV :

Indiaís installed capacity as of quarter ending 31 March 2014 was 2.63 GW, which is still negligible as compared to more mature markets such as Germany. However, the first two quarters of 2014 alone have seen additions of 657.22 MW to Indian PV installed capacity, showing the lacklustreness 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.

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 of the previous Govt. 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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