Slowdown bites hard

20 September 2019 |

India’s total installed solar capacity touched 34,154 MW on 30 June 2019. This capacity is split between utility scale, rooftop solar and off-grid solar as 27,934 MW, 4,960 MW and 1,260 MW respectively. Total project pipeline – projects allocated to project developers and at various stages of development – stood at 19,698 MW as on 30 June 2019.

Figure: Total installed and pipeline capacity at the end of June 2019, MW

Source: BRIDGE TO INDIA research, MNRE

Note: ‘Others’ include projects executed under open access, REC and other miscellaneous categories.

Utility scale solar capacity addition had been slowing down in India for the last year and Q2 remained slow with only 1,104 MW of capacity addition against our estimate of 1,536 MW. The slowdown is attributable to many reasons – land and transmission bottlenecks, tight liquidity in the financial system, and increase in many input costs affecting profitability of many projects. Distribution Company (DISCOM) payment delays have also hurt the sector very badly. Rooftop solar remains a bright spot with capacity addition of 515 MW in Q2 2019. Capacity addition share jumped to 28% in 2018-19 from 6% just five years ago.

Figure: Utility scale solar capacity addition, MW  

Source: BRIDGE TO INDIA research

Going forward, installation activity should pick up significantly. A total of 13,519 MW is due for completion in the next 12 months but we expect significant slippages due to reasons discussed earlier. Fall in safeguard duty to 15% in Jan-2020 and removal by Jul-2020 should ease concerns for the sector. But there is rising speculation in the market that the government is mulling further duties to protect domestic manufacturers.

Tender issuance has stayed robust with a total utility scale capacity of 10,296 MW issued in Q2 2019, although it was down 35% over the previous quarter. However, many recent tenders have been cancelled and/ or undersubscribed. Gujarat’s 700 MW Raghanesda tender was subscribed by 100 MW in May 2019. Solar Energy Corporation of India (SECI’s) 1,200 MW tender issued in June 2019, 2,000 MW tender issued in March 2019 and 1,200 MW hybrid tenders saw 50%, 53% and 25% undersubscription respectively. Recently, NTPC Ltd.’s 1,200 MW tender found no bidders forcing a deadline extension.

Ministry of New and Renewable Energy’s (MNRE) policy move to adopt an Approved List of Module Manufacturers (ALMM) to address quality issues in solar components is also likely to create further uncertainty in the sector. All installations starting April 2020 need to comply with this policy. There are concerns both about MNRE’s capacity to complete the necessary certification process in time and willingness of international as well as domestic manufacturers to hand over confidential data.

Capacity addition has been muted for over a year now but the project pipeline looks robust for Q3 and Q4, 2019. It is up to the government to take decisive action to address land acquisition, transmission connectivity and DISCOM bankability issues.

Rising incidents of tender cancellations and undersubscriptions have marred investor confidence, which has been further shaken up by Andhra Pradesh’s move to rescind the PPAs. Overall sentiment in the sector is highly stressed and all eyes are on the government if they can announce measures to revive confidence.


Recent reports

India Renewable Power CEO Survey | 2020

The survey provides a sector-wide glimpse into the minds of renewable power leaders on industry outlook, capacity addition over the next 5 years, oper...


COVID-19: Impact on Global Solar Market

This report, produced with financial support from International Solar Alliance (ISA), examines operational and financial impact of the COVID-19 pandem...


COVID-19: Impact on Indian Renewables

This report examines operational and financial impact of the COVID-19 pandemic on the Indian renewable power sector. It assesses delays in constructio...


India Solar Compass Q1 2020   

Utility scale solar capacity addition in Q1 2020 was just 689 MW against our estimate of 1,864 MW...

Buy Report Download Executive Summary

India Solar Rooftop Map | December 2019

India’s operational rooftop solar capacity reached 5,440 MW as on 31 December 2019. Only 1,534 MW, 7% lower than last year, capacity is estimated to...


India Solar Map | December 2019

India’s operational utility scale solar capacity reached 30,982 MW on 31 December 2019. Only 7,150 MW of new capacity was added during 2019, up a mo...

Award winnig research
We use cookies to offer you an optimal user experience and collect information on website usage.