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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.
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 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.
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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.
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 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.
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 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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