The July 2012 India Solar Compass: Key findings from the market this quarter

Mr. Mohit Anand heads the Market Intelligence team as senior consultant at BRIDGE TO INDIA.

The INDIA SOLAR COMPASS July 2012 brings you updates and analyses from Indian solar policies, projects, industry and financing. Read below the key findings from our research on the market in the last three months.

The biggest ‘Policies’ development is expected at the end of the year with the guidelines for the NSM Phase 2 coming out towards that time
In terms of ‘Projects’, the REC mechanism is gaining foothold in the market. This can be accounted to India’s first project to have been issued RECs in the last quarter. We also present an analysis on the performance of projects in Gujarat
The financial landscape in the market has seen some cause for worry on account of the recent rupee depreciation. Projects who have procured international financing may face a cash crunch

1. The last quarter has seen anáaddition of 360.42MW of solar PVácapacity.

2. Guidelines for phase two of theáNSM are being formulated andáexpected to be announced towardsáthe end of this year.áPhase two will aim to buildá9,000MW of solar power of whichá3,000MW shall be through feedin-átariffs and 6,000MW througháRenewable Energy Certificatesá(RECs) and Renewable PurchaseáObligations (RPOs).

3. There are limited projectádevelopment opportunities thisáyear in the Indian market. Severalácompanies have started lookingáat business models for projectádevelopment around the RECámechanism.

4. The government of India has setáup the Solar Energy Corporation ofáIndia (SECI). The SECI is startingáwith an initial fund of INR20 billion (Ç307m). It will take over the role ofáimplementing the NSM from NVVN.

5. Indian module suppliers are askingáfor anti-dumping and additionaláimport duties on internationallyámanufactured modules. Also,áthey are asking for the DCR toábe extended to cover thin filmámodules.

6. The Rajasthan Renewable EnergyáCorporation Ltd. (RRECL) hasáindefinitely postponed projectáallocation under the RajasthanáSolar Policy. No official reason hasábeen given for the postponement.áThis is most likely due to theáunavailability of funds.

7. Madhya Pradesh has allocatedá125MW capacity to two developersáthrough a competitive biddingáprocess. This bidding was notáguided by any policy.

8. Indiaĺs first solar REC was issuedáto M&B Switchgears Ltd. More RECámechanism projects are expectedáto become operational soon.

9. The payments of three projectsáin Gujarat have been put on holdáby the Gujarat Urja Vikas NigamáLtd. (GUVNL). GUVNL claims thatáthese projects have violated theáclause which states that the poweráproducers have to continue to holdáat least 51% of equity from the dateáof signing of the agreement up toáthe period of two years after projectácommissioning.

10. The Indian rupee has depreciatedá24% since January 2011. This willácause revenue losses for projectsáthat have opted for un-hedgedáor partly hedged internationaláfinancing.

11. In the last quarter (April-Juneá2012) Indian manufacturersáhave not announced any furtheráinvestments to expand theiráproduction facilities.

12. Indian manufacturers now run theiráplants on extremely low utilizationárates of 10-15%.

13. After the imposition of antidumpingáduties on Chineseámanufacturers in the US, Chineseámanufacturers will increase theiráeffort to sell to India.

14. Several companies have startedálooking at business models foráproject development around theáREC mechanism. Companiesálike Kiran Energy, SunEdison,áSolairedirect, IBC Solar andáBRIDGE TO INDIAĺs ownáproject development arm areálooking at project developmentábusiness models around captiveáconsumption and the RECámechanism.

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