11 January 2016 | BRIDGE TO INDIA
BRIDGE TO INDIA research shows that utility scale solar projects totaling up to 4.8 GW of capacity will be commissioned in the calendar year 2016, a growth of 140% over capacity commissioned in 2015. Contrary to popular perception, new capacity addition in 2016 will be driven largely by state level allocations. Delays in new allocations by NTPC and SECI mean that most of the recently allocated or under allocation capacity under National Solar Mission (NSM) will get commissioned only by about H1 2017. This may still allow the government to reach closer to the official target of 7,800 MW for utility scale projects for the upcoming financial year (April 2016 to March 2017) (refer).
- The market is expected to grow significantly in 2016; capacity addition in the first quarter of 2016 is expected to be equivalent to the entire capacity added in 2015
- Southern states of Tamil Nadu, Andhra Pradesh, Telangana and Karnataka are expected to add 80% of all new capacity in 2016
- There is little doubt that capacity additions in 2017 will surpass capacity additions in 2016, catapulting India to become one of the key global markets for at least the next two years
In 2015, India’s utility scale solar capacity grew by 2 GW, double the rate of capacity addition in years between 2012 and 2014 but substantially below our estimate of 2.45 GW (India Solar Handbook 2015, refer) because of delays in projects in Andhra Pradesh, Telangana, Tamil Nadu, Karnataka and Punjab. Out of the 2 GW commissioned in 2015, 700 MW of capacity was completed under central government allocations, 850 MW under state allocations and the remaining 450 MW under other heads, including private initiatives. The Indian government’s utility scale solar target of 1,800 MW for the current financial year (ending 31 March 2016) will be easily met.
In calendar year 2016, southern states of Tamil Nadu, Andhra Pradesh, Telangana and Karnataka would contribute to almost 80% of all new capacity addition. With a strong pipeline of state level projects to be commissioned through 2016 and a significant capacity addition expected through central government allocations in the first quarter of 2017, the utility scale solar market also seems to be on track to meet the targets for the next financial year.
The government’s ambitious plan to ramp up capacity addition for utility scale projects from 1 GW per year until last year to 7.2 GW planned in the next financial year, now seems plausible. This is further expected to be ramped up to 10,000 MW in 2017-18. However, it is not going to be easy to sustain this momentum as states are expected to assume the responsibility for further growth once the central government led allocations begin to dry up. We foresee evacuation of power and grid stability becoming big bottlenecks for future growth as several gigawatts of capacity comes up in the southern states itself. The speed of implementation of the inter-state evacuation corridors will be key to the success of these initiatives and sustainable growth of the market.