An outlook on the solar PV market in India
Solar energy is creating positive ripples in the power sector. Due to its enormous potential it has become preferable choice in the industry. According to a research report, India is estimated to become world’s largest solar market in 2017. Looking at the progress in the solar sector it seems that the country will achieve the set target as there are lot of developments taking place in the solar sector. Some of the major reasons for the development in the sector are concession in the prices which has made the solar power cheaper, developing Photovoltaic (PV) plants etc. In addition, a total of 852 projects (based on Solar PV) have been operational under Decentralised Distributed Generation (DDG) of Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) implemented by Ministry of Power as on 31st January 2017. Also to achieve the installation of 40 GW, Solar Energy Corporation of India (SECI) launched a tender of 1,000 MW capacity for development of grid-connected rooftop solar capacity for central government ministries and departments. This would be the largest rooftop tender to be launched by SECI, and is expected to give a big boost to the hugely potent rooftop solar power generation segment.
Outlook on the solar PV market in India
Since the last 100 years all the world’s energy needs have been largely fuelled by fossil fuels like coal, natural gas, petrol and diesel. The demand for energy has become so high that all natural resources based on fossil fuels are due to run out in the next 50-75 years.
In such a scenario, the world is looking at rapidly replacing fossil fuels with alternate sources of energy and most significant and abundant among those is solar energy. In the short to near term around 10 per cent of the energy needs of the entire global economy will be fulfilled by solar power. “India alone has the theoretical capacity of generating over 5000 trillion kWh of solar energy in a year, and we have not even scratched the surface. The Indian government alone plans to spend USD 19 billion for the development of solar PV projects till 2022 not to mention investments by private and PPP players in the sector. That is a humungous opportunity for businesses and entrepreneurs. So, I would say the outlook on the solar PV market is very bright,” says Sunilbhai Chovatiya, CFO, Addin Power Ltd.
Government’s target set to achieve 175 GW by 2022 has changed the dimension of the Indian solar industry believes Krishnendu Mukherjee, COO Sova Solar Ltd. He says, “The outlook on the solar PV market has changed. At one point of time when we ventured into this industry in the year 2010-11 we found that if it has to survive, then ours only target should be the European solar market. The nation’s solar drive was not so effective, though the JNNSM scheme had been launched but the implementation was not adequate. The complete vision and mission of the company has radically changed with enterprising efforts of Prime Minister, Narendra Modi and Power Minister Piyush Goel. The target set by them has changed the dimension of the Indian solar industry.”
The target of 175 GW renewable energy capacity by 2022 set by the India government is a great booster. It has energised the entire solar PV landscape in India. “If the Indian solar manufacturing industry gets some basic support and a primary stage protection, India can grow into a major manufacturing hub,” he adds.
To join the mission of the Prime Minister Narendra Modi, Sova Solar has set a target to reach 1GW solar module manufacturing capacity by 2018-19.
While sharing his outlook on the solar PV market in India Uday Doshi, Founder, Excelsior Engineering Solutions says, “It is a very exciting time to be a part of solar PV in India. Renewable projects have been creating ripples in the power industry. It has put several coal based projects on hold. Grid parity is no longer a concern.”
Project implementation has increased by leaps and bound. Customers now have several options to choose from, a solar integrator for their projects. The annual total of rooftop installation for captive consumption is higher than any previous years. Also, GW’s of solar installation is being achieved by the ground mount projects. We are yet short of our target for this year to reach 100 GW by 2022.
Doshi adds, “This year there will be further reduction in solar module pricing; greater than 25 per cent from the current pricing. Tier 1 manufacturer’s are further expanding their capacities and will have scale of economies working in their favour. This price war will surely hurt the small and mid category manufacturer’s. Indian module manufacturers will only be able to sell their modules in MW projects where DCR is mandatory. Chinese players will continue to dominate the market. With such aggressive bidding and severe competition, it is hope that the solar sector is not plagued by poor quality in terms of supply and service.”
The overall outlook is positive and there is growth in the sales believes Kunwer Sachdev, Managing Director, Su-Kam. He says, “The overall outlook is positive as we are seeing yearly 30 to 50 per cent growth in sales in all solar products. We are also seeing a rising opportunity of on grid projects that will be a major contributor in expanding the solar market in India as well as abroad.” Keeping this in mind Su-Kam is also developing new technologies in its solar inverters like the Brainy Eco and BrainyS static solar inverters that will be significant pillars in the growth and expansion of this industry.
India will be among the top 3 global markets in 2017, believes Harish Kapoor, Group President-Corporate Affairs, ACME. He adds, “The leapfrog growth India has made in recent years is set be longer this year. We expect that additional 9 GW solar PV plants will be operational by the end of this year. The declining project cost accompanied with downward interest rate in domestic market will be a strong enabler for demand overcoming any anticipated hurdles like weak power demand, etc.”
What lies ahead for the Indian solar PV market in 2017?
Indian solar industry welcomed 2017 with a project book worth 14 GW of utility scale projects, with the assurance to commission more than 7.7 GW capacities out of that 14 GW within the year. These positive and progressive developments are expected to bring about almost 90 percent growth in the Indian solar sector (compared to 2016). With careful implementation of UDAY and a supportive GST policy framework in place, India should manage to add another 8 GW of installed solar capacity in 2017. The solar rooftop industry is also growing phenomenally, and with the increasing demand, we may expect more than 75 per cent growth for the same over 2016.
Indian solar sector will shake off the initial road bumps presented by demonetisation and flourish under the huge demand within the country. Support towards domestic manufacturing can also be enhanced through the ‘Make in India’ campaign by creating better industrial infrastructure and bringing investments into the country. But at the same time, some issues need to be addressed to help achieve the ambitious 100 GW solar energy target.
“A focused approach is critically required from the government for awarding of solar projects. It may be noted that out of 12 GW of bids conducted in the FY 2016-17 so far, only 4 GW capacities of projects have been awarded. Such delays in awarding projects are decreasing demand and stretching project timelines. Therefore, it is imperative that time bound bids are released and LOIs is issued within strictly set timelines. Standard Bidding documents also need to be published from MNRE to regulate and streamline the process. With timely auctions of projects and their consequent execution, the goal of 100 GW could be realised,” suggest Neha Agrawal, Head- Corporate Strategy, Vikram Solar.
Further, dumping of low quality cheap modules from other countries will also affect the life of the project over time. The government will need to address this matter to ensure sustained development of solar power in the country, while boosting domestic manufacturing at the same time.
There are other issues concerning power evacuation, lack of land banks, scarcity of land, non-enforcement of policies, lack of skilled labour, etc, that require constant focus for achieving the 100 GW by 2022 target. “With prompt focus on these issues, the Indian PV industry is slated for strong growth potential in 2017, aiming for a leadership position amongst countries like China, U.S.A. and Japan,” Neha adds.
2017 will be a very interesting year for the Indian solar PV market. In 2016, Indian government showcased its drive to support the solar PV industry through numerous policy level initiatives which has made India the 4th largest solar power generator in the world behind China, USA and Japan.
“The solar parks policy and UDAY scheme have been hugely successful with India adding a historic 1GW of solar power generation 3 years in a row. But the most buzzing topic for the sector is the sharp decline in power tariffs which have come down to under Rs 3/unit. This is bound to trigger a huge demand for solar power even at an individual home level,” says Chovatiya.
While explaining on what lies ahead for the Indian solar PV market in 2017 he informs, “Many state governments are wooing investors in this sector with attractive SOPs. Apart from the Rajasthan government announcing large tracts of the Thar desert dedicated for solar parks, south Indian states like Andhra Pradesh, Karnataka and Telengana, Madhya Pradesh and Maharashtra have numerous open access projects on offer.”
Chovatiya adds, “Certain issues pertaining to funding of projects and robustness of the distribution grid do exist, but in 2017 I see a very fruitful year overall for the Indian solar PV market.”
In 2017, new and small players will continue to enter the solar PV market in India. Their focus would mainly be implementing the rooftop projects, believes Doshi. Competition will be severe in this space. Net-metering will be a key driver for the rooftop projects. One segment that has not picked up in the rooftop market, is the residential sector. It yet needs a big push from all the government officials to promote rooftop solar for the residential sector.
Several ground based projects will be implemented with trackers. Tracker installation will be on further rise. Few projects with storage will be implemented on trial and learning basis.
“We will witness 100’s of MW of projects being won by individual customers at single location in the upcoming State & National tenders. Existing IPP’s will continue their dominance in these bids,” say Doshi.
“Not many new players or international fund houses will participate in these bids, as the returns are no longer as attractive as it used to be in the last FY,” says Doshi.
On the equipment front, poly crystalline module manufacturers will now bring in higher wattage capacity modules, like 330 W and greater. Inverter manufacturers will promote 1.5 MW to 2 MW central inverters. Inverter and several B.O.S equipment manufacturers will integrate and sell equipment with 1,500 VDC options, so as to save overall cost of project.
Entire industry is eagerly waiting to see how the GST implementation pans out. There would be some hindrance to the overall solar sector due to GST, but the industry will ride over this wave swiftly.
Mukherjee says, “It is a very timely and good question, I must say. Basically 2017 is the year when India will get many megawatt or ultra megawatt power plants implemented in one hand and on the other hand it has got some attractive tariff rates, which are below the conventional power tariff. Indian solar industry is more matured now. In 2017, a good number of big tenders are waiting to be finalised, which will open up the market for solar equipment and module manufacturers. Definitely there is cut throat competition from Chinese manufacturers, which in my opinion is 80-85 per cent of the total market. The rest 15 per cent is open to Indian manufacturers.”
He adds, “Moreover, we expect a further reduction in price in months to come. You will be surprised to know, that after rigorous exercise, we have been able to cut down our costs to such a level that we are competitive in the open category as well. So in my opinion, 2017 would be a land mark year for Indian solar industry.”
India is gearing up for a massive solar industry expansion in the coming years. The Indian government has to complete the target of 40 GW rooftop installation in the coming 5 years which opens up the market of 12 lakh crore. “The government is also coming up with new policies that will greatly help the solar developers and users to make solar the primary source of power generation in the coming years,” says Sachdev.
Sharing his views on what lies ahead for the Indian PV market in 2017 Kapoor says, “With the prices going down and solar energy become more affordable, we expect that Rooftop and off-grid solar may become one of the key markets in 2017. Overall, it will be a good year for both megawatt scale and kilowatt scale solar solutions.”