Bridge India

5 charts to capture 2017

2017 was an extraordinary year in many ways for the Indian RE sector. The year will be known for record capacity addition, drastic fall in tariffs and start of the new trade investigations by Indian government into imports of cells and modules. We look at 5 charts summarizing key trends for the sector in 2017.

Sector added record new capacity

2017 RE capacity addition is estimated to touch a record 13.3 GW (+61% over 2016) – utility scale solar added 8.2 GW (+110%), rooftop solar 0.8 GW (+60%) and wind 4.0 GW (+11%). This was also the year when solar outpaced all other sources of power for the first time. We believe that 2017 will be a record year for RE capacity addition in India for some years to come.

Chart: Annual capacity addition, MW

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Source: BRIDGE TO INDIA research

Note: Thermal capacity addition numbers are ‘net’ of decommissioned plants. Also, these numbers are for financial years from Apr-Mar. 2017 thermal power capacity addition number is for Apr-Dec.

Tariffs continued to go down despite rising costs

SECI’s 750 MW of utility scale auction in Bhadla solar park saw tariffs fall to a new low of INR 2.44 falling below the previous lows seen in Rewa and Kadapa tenders. Intense competition meant that tariffs went up only marginally in subsequent auctions despite significant increases in module costs, GST and import duty. Wind tariffs fell even lower to INR 2.43, beating all market expectations, in December 2017.

Chart: Tariffs hit record low even as cost rise

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Source: BRIDGE TO INDIA research

Note: Wind tariff for Q4-2016 is taken as the average of feed-in-tariff for select states.

Tender pipeline remained sluggish because of weak power demand

Weak power demand growth meant that DISCOMs were relatively reluctant to buy new power despite falling tariffs.

Chart: Tender issuance and auction completion, MW

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Source: BRIDGE TO INDIA research

Commissioning delays badly affected state tender projects

Commissioning delays affected the sector badly as developers grappled with various issues related to land acquisition, connectivity, completion permits and GST etc. Worst affected tenders include Karnataka’s 1,200 MW tender and Telangana’s 2,000 MW tender. The following chart shows cumulative scheduled and actual commissioning status of Karnataka’s 1,200 MW, 920 MW SECI and 500 MW NTPC tenders, Uttar Pradesh 215 MW tender, Telangana 2,000 MW tender and Madhya Pradesh 300 MW tender.

Chart: Commissioning performance of selected tenders

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Source: BRIDGE TO INDIA research

India continued to be heavily reliant on imported modules

Despite DCR and other incentives offered to domestic manufacturers, India remained heavily dependent on imported cells and modules with Chinese suppliers dominating the market because of low prices and huge capacity. That has put pressure on the Indian government to consider trade protection measures to support Indian manufacturing.

Chart: Source of modules procured for the projects commissioned in 2017

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Source: BRIDGE TO INDIA research

Note: This data is for 8.2 GW of modules used in utility-scale projects commissioned in 2017.

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