702 MW of new utility scale solar power generation capacity was commissioned in Q2 2018 taking total installed capacity to 24,941 MW on June 30, 2018. Capacity addition was 11% below our estimate and 60% below the scheduled commissioning target. It was also 82% lower than actual capacity addition in the previous quarter. Accordingly, we estimate total utility scale solar capacity addition in 2018 at 7,082 MW, 17% lower than in 2017. Including rooftop solar, total 2018 solar capacity addition is expected at 8,352 MW, 48% lower than MNRE’s original target for the year.

• Slow progress can be attributed to slowdown in tender issuance and auctions about two years ago (Jul-2016 – Jun-2017) and on-the-ground operational delays;
• The delays are seen across different types of tenders, states, sponsor groups and irrespective of solar park availability;
• If the government is serious about achieving the 100 GW target, it needs to take immediate and decisive action on multiple fronts.

Figure: Utility scale solar capacity addition, MW

Source: BRIDGE TO INDIA research

The fall in capacity addition can be attributed to two main reasons – there was a significant slowdown in tender issuance and auction completions about two years ago (Jul-2016 – Jun-2017). That slowdown is showing up in projection completion progress now. Second, projects are being significantly delayed for both genuine and not-so-genuine reasons. Delays of 6-12 months seem common across the board. Curiously, the delays are seen across different types of tenders, states and sponsor groups and irrespective of solar park availability. Completion of land acquisition and transmission in 12-13 month timeframe – as allowed until recently under the PPAs – is extremely challenging particularly in states such as Karnataka, Maharashtra and Uttar Pradesh. But we believe that in many cases, delays are deliberate and specific to developers – they have either failed to raise financing in time or chosen to delay operational progress possibly because of increase in module prices in H2-2017 and/or safeguard duty risk.

Our estimates for 2019 and 2020 capacity addition are also about 30% lower than MNRE’s annual targets. Slow progress and wide-spread delays should ring alarm bells for the government. It has listened to the developers and allowed them an extended completion timeline of 18-24 months for new tenders further stretching schedules. But if it is serious about the 100 GW target, it needs to take immediate and decisive action particularly in addressing the land and transmission challenges.

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