India has made tremendous strides in the development of its solar sector in last 18 months. As of today, the country has a solar project pipeline of 13 GW. These are projects, for which either PPAs have already been signed or tenders are issued. Most of these projects should be commissioned by the end of 2016 or early 2017.
- Southern states are most ambitious and drive solar under their own state solar policies. Telangana, Tamil Nadu, Andhra Pradesh and Karnataka jointly aim for more than 8.8 GW.
- Under central allocations (National Solar Mission, Phase II), 3,600 MW are in the pipeline.
- 2016 will be the market’s transition year: annual solar installations could triple and India could become a top global solar market.
Figure 1: State wise new capacity additions expected, MW, as on September 30, 2015
Seeing the current pace of development, almost 50% of the cumulative solar capacity expected to be installed by 2017 will be in four southern states including, Telangana, Andhra Pradesh, Tamil Nadu and Karnataka, leaving behind Rajasthan and Gujarat.
Southern states are more aggressive because they still have the highest power deficits (in 2014-15, 6-7 per cent of peak deficit and expected to be 19.8% for 2015-16). The crisis is primarily the result of the ongoing slump in fresh thermal capacity addition, a historic dip in hydro reservoir levels feeding southern stations and decline in gas supply. Therefore these states see solar as a viable and attractive option as solar can be built up very rapidly and is driven mostly by private investment.
Other key reason is that the southern grid is connected to the eastern and western regions through asynchronous links, severely limiting the power transfer capacity. The transfer capacity between the western and the southern regions stands at 1,520 MW against 4,220 MW between the western and northern regions and 4,390 MW between the western and eastern regions. Because of this solar has increasingly started playing an important role in these regions and is expected to remain so in next 2-3 years also.