Mercom Capital forecasts solar capacity addition of more than 9GW in India in 2017

Marcom

Solar installation of over 9 GW in 2017 would put the Indian solar sector in the big leagues along with China, the United States, and Japan

Global clean energy communications and consulting firm, Mercom Capital forecasts solar capacity addition in India of over 9 GW during the current calendar year 2017.  2016 saw solar installations at about 4 GW as compared to 2.3 GW installed in 2015.

“We are forecasting installations to reach over 9 GW in 2017 which would put the Indian solar sector in the big leagues along with China, the United States, and Japan. However, there are significant headwinds in terms of transmission and evacuation issues that could threaten the pace of growth,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group.

The share of solar generation continues to grow with 16.7 percent of new power generating capacity added in 2016 (as of November 2016). Solar accounted for almost one percent of electricity generated from April-October (FY2016-2017), 50 percent more than all of FY2015-2016.

The top 10 states account for approximately 90 percent of all solar installations and pipeline; they are: Tamil Nadu, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Madhya Pradesh, Punjab, Karnataka, Maharashtra, and Uttar Pradesh.

Indian government agencies have announced solar tenders of ~3,781 MW during Sep-Dec 2016 and auctioned about 1,311 MW. Auction activity has slowed over the last three months notes the research firm.

Mercom Capital in its report stated that the project development landscape has changed significantly over the last quarter largely due to Chinese module price declines. The average selling prices (ASPs) of Chinese modules in India have declined approximately 10 percent since August and by about 30 percent over the last 12 months. This decline in prices has provided a much-needed boost to developers that won projects at low bids and were struggling to make project economics work.

The major concerns for the industry are currently around transmission, evacuation, curtailment, timely payments and the outcome of the goods and services tax (GST).

Solar park development is experiencing some setbacks due to incomplete infrastructure,” said Prabhu. He added “In some cases, developers are incurring expenses to clean the land, build roads, and are waiting for power to be evacuated after commissioning. All of this is having a negative effect on project costs and profitability.”

Key Findings of the report             

  1. Mercom forecasts approximately 4 GW of solar installations in India for calendar year (CY) 2016 and more than 9 GW for 2017
  2. As of December 2016, cumulative solar installations have reached 9.6 GW
  3. Solar projects under development now total approximately 14.2 GW with 6.3 GW of tenders waiting to be auctioned
  4. Top solar states currently include Tamil Nadu, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Madhya Pradesh, Punjab, Karnataka, Maharashtra, and Uttar Pradesh
  5. Five Indian states now have more than 1 GW each of installed solar capacity
  6. Auctions have generally slowed over the past three months
  7. Solar parks infrastructure development is lagging
  8. Transmission and evacuation issues are cropping up in several states
  9. Demonetization has been positive on the banking side as financial institutions are flush with cash to lend, but a negative for small developers
  10. Module prices have declined swiftly over the last 3-4 months. Chinese module prices in India have dropped by approximately 30 percent over the last 12 months
  11. Low module prices came in just in time, making projects economically viable, that seemed previously unviable due to aggressive low bidding
  12. Uncertainty regarding the GST impact on solar projects has made some developers cautious in bidding for new projects

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