India Solar Handbook 2016

India is set to become the fourth largest solar market in the world with expected capacity addition of 6 GW in 2016

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In our last weekly update, we discussed the state of domestic manufacturing and Indian government’s efforts to improve prospects of the sector after the domestic content requirement mechanism was challenged successfully by the USA at the World Trade Organization (WTO) (refer). Recent reports suggest that the government is planning to offer incentives directly to domestic manufacturers instead of compulsory domestic content requirement (refer). The Indian government seems totally committed to support local manufacturing with Mr Piyush Goyal, Minister for new and renewable energy, being emphatic that India needs a vibrant manufacturing sector to go hand-in-hand with boost in solar power generation.

  • Existing manufacturers may not gain any direct benefit from the new policy, which is likely to focus on creating new, large scale and vertically integrated investments
  • Financial incentives and/or assured market demand may be provided using a bidding based mechanism
  • Long-term outlook for the sector will remain uncertain unless there is a genuine competitive advantage arising from lower costs, better infrastructure and/or access to superior technologies

FULL STORY

With a target of 100 GW, India is hoping to get 8% of its power requirements from solar PV by 2022. In comparison, Germany got around 7.5%[1] of its power consumption from solar PV in 2015 and China is still at around 3%[2]. In Germany, where most of the solar capacity has been deployed in the form of distributed solar projects, billions of Euros are being spent on grid projects to help reduce curtailment in green power. Despite that, according to a government report[3], Germany curtailed about 1,581 gigawatt-hours of green energy in 2014, a threefold increase over the previous year. In China, grid curtailment issues continue to impact the export of power from solar projects and some provinces such as Gansu (31%) and Xinjiang (26%) have been hit particularly badly[4].

In Germany, on sunny weekdays, solar power can cover 35 percent of the momentary electricity demand. On weekends and holidays this ratio goes up to 50 percent and sometimes even higher. At such times, power pricing gets distorted, renewable and other sources of generation often need to be backed down. These problems are occurring despite Germany’s peak daily demand hours coinciding with peak solar generating hours. An integrated European grid, smarter grid management and abundant availability of dispatchable gas based power comes in handy at such times.

FULL STORY

Earlier this month, the Ministry of New and Renewable Energy (MNRE) published an update stating that India’s cell and module manufacturing capacity now stands at 1,212 MW and 5,620 MW respectively (refer). These numbers appear respectable in the context of India’s solar power generation capacity but the average size of a cell and module manufacturing line in India is just 86 MW and 69 MW respectively. In comparison, module production capacity of Trina Solar is expected to surpass 6 GW by the end of this year, higher than all 81 Indian module manufacturers put together.

  • The Indian government is committed to support domestic manufacturing and is working on a new policy on this front
  • Despite commitments from several leading industry players and an improved demand outlook, Trina Solar and Adani Group are the only parties still considering domestic manufacturing plans in earnest
  • It remains to be seen if the planned capacities can become genuinely globally competitive but Scale being a key determinant of competitiveness, outlook is not very promising for Indian manufacturers despite the solar power generation business going through a boom phase.

FULL STORY

Auction results for the NTPC (350 MW) tender in Telangana were announced last week. The capacity was fragmented into 35 projects of 10 MW each and a bidder could apply for a maximum of 10 projects. The tender was not attached to a solar park and hence, land acquisition and transmission would be in the developer’s scope. NTPC has now allocated 2,520 MW out of the total 3,000 MW target under state specific bundling scheme (NSM Phase II, Batch II)

  • Renew Power (100 MW), Karvy Consultants (50 MW), Azure Power (100 MW), Adani (50 MW) and Acme (50 MW) have won projects with tariffs ranging from 4.66/kWh to 4.67/kWh
  • The tender was oversubscribed by more than 2x, developers such as Mahindra, Acme, Solar Pack, Suzlon are a few among other companies that participated but did not win any projects
  • International developers refrained from participation in this tender largely due to unavailability of solar park infrastructure

FULL STORY

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