Record low module prices a boon to developers
  The solar project pipeline in India is now approximately 21 GW, with 14 GW under development and 7 GW scheduled to be auctioned. About 4.8 GW of solar to be installed in calendar year 2016, forecasts Mercom Capital Group in its quarterly update on the Indian solar market.
According to the report, India has reached 2.8 GW in solar installations year-to-date and cumulative installations have reached 8.1 GW as of August 2016.
“Solar installations and its share of energy generation has picked up speed but distribution companies continue to be a drag on the sector and are showing reluctance to purchase solar in light of low power demand and cheap power availability on the exchanges,” said Raj Prabhu, CEO and Co-founder of Mercom Capital Group. “This is an alarming development that the central government should address immediately to restore confidence among developers and investors,” he added.
Low bids are still a challenge and projects with bids below Rs.5 /kWh have yet to close financing. Although bids stabilised somewhat, they fell again with the lowest reaching Rs.4.35 /kWh in the latest JNNSM Phase II Batch 2 auction in Rajasthan.
Based on Mercom’s channel checks, Chinese modules in India are currently available for around Rs.26)/watt which is the cheapest average selling price currently anywhere in the world. “Module prices are forecasted to drop even further in the short-term due to the massive oversupply situation in China. With solar panels making up approximately 60 per cent of project costs in India, China’s oversupply issue is a big boost for Indian project developers but not so much for Indian manufacturers,” the report said.
The report also points out, “Current incentives have not been enough to move the solar rooftop market forward. Accelerated depreciation is set to come down to 40 per cent in FY 2017-18 from the existing 80 per cent. The government’s decision to increase solar parks from 20 GW to 40 GW to make up for slow rooftop adoption indicates that the goal for 40 GW of rooftop solar by 2022 is flexible.”
Consolidation activity has picked up in the sector, especially in the downstream segment. Welspun’s 1.1 GW project portfolio was acquired by Tata Power earlier this year for Rs 9,380 crore. There are a number of other M&A deals in the pipeline, Mercom reveals.
“Companies loaded with debt are finding it difficult to grow in this highly competitive environment and we expect to see a lot more M&A activity on the project side,” further commented Prabhu.

Record low module prices a boon to developers
  The solar project pipeline in India is now approximately 21 GW, with 14 GW under development and 7 GW scheduled to be auctioned. About 4.8 GW of solar to be installed in calendar year 2016, forecasts Mercom Capital Group in its quarterly update on the Indian solar market.
According to the report, India has reached 2.8 GW in solar installations year-to-date and cumulative installations have reached 8.1 GW as of August 2016.
“Solar installations and its share of energy generation has picked up speed but distribution companies continue to be a drag on the sector and are showing reluctance to purchase solar in light of low power demand and cheap power availability on the exchanges,” said Raj Prabhu, CEO and Co-founder of Mercom Capital Group. “This is an alarming development that the central government should address immediately to restore confidence among developers and investors,” he added.
Low bids are still a challenge and projects with bids below Rs.5 /kWh have yet to close financing. Although bids stabilised somewhat, they fell again with the lowest reaching Rs.4.35 /kWh in the latest JNNSM Phase II Batch 2 auction in Rajasthan.
Based on Mercom’s channel checks, Chinese modules in India are currently available for around Rs.26)/watt which is the cheapest average selling price currently anywhere in the world. “Module prices are forecasted to drop even further in the short-term due to the massive oversupply situation in China. With solar panels making up approximately 60 per cent of project costs in India, China’s oversupply issue is a big boost for Indian project developers but not so much for Indian manufacturers,” the report said.
The report also points out, “Current incentives have not been enough to move the solar rooftop market forward. Accelerated depreciation is set to come down to 40 per cent in FY 2017-18 from the existing 80 per cent. The government’s decision to increase solar parks from 20 GW to 40 GW to make up for slow rooftop adoption indicates that the goal for 40 GW of rooftop solar by 2022 is flexible.”
Consolidation activity has picked up in the sector, especially in the downstream segment. Welspun’s 1.1 GW project portfolio was acquired by Tata Power earlier this year for Rs 9,380 crore. There are a number of other M&A deals in the pipeline, Mercom reveals.
“Companies loaded with debt are finding it difficult to grow in this highly competitive environment and we expect to see a lot more M&A activity on the project side,” further commented Prabhu.