- Global demand growth will be driven by Asia. As China’s is slowing down, India’s will rise fastest among the BRICs. There is no real strategy for meeting it.
- Energy import will shift from North America to Asia. India will become highly import dependent.
- Emissions will far exceed safe limits. There is no political will to price carbon. Coal-to-gas shifts are best suited to mitigate according to BP.
THE BRIDGE TO INDIA BLOG
National Solar Mission allocations showcase positive trends for solar in India
On 20th January 2014, Solar Energy Corporation of India (SECI) opened bids for the allocation under batch one of phase two of the National Solar Mission (NSM). A total of 68 bids were received from 58 developers, covering 122 projects and having a cumulative capacity of 2,170 MW. Of this, 36 projects with a capacity of 700 MW opted to bid under the Domestic Content Requirement (DCR) part of the bidding process and the remaining 86 projects with a capacity of 1,470 MW opted for the open bids.
- Domestic content requirement (DCR) part of the bids has been oversubscribed
- State power companies have also shown interest to invest in solar assets
- Pure-play solar IPPs get a level playing field
Weekly Update: As international solar manufacturing companies boom, India gets left behind
The year 2013 has been good for investors in solar companies listed on the US stock market. Manufacturers like SunPower, Yingli, Jinko, First Solar, ReneSola and Trina have all had a spectacular bull run with share values of companies like Trina more than tripling over the year. SolarCity, the rising star of distributed installations in the US, has seen a five-fold jump in stock price. All this is good news for the market as a whole as well. The global solar market seems to have now stabilized from its over-capacity in 2012 and 2013. New installations in 2014 are expected to grow beyond 40 GW, largely driven by the US, China and Japan.
- Jinko recently announced that it would completely separate its projects business from the manufacturing business
- Stock prices of Indian solar companies had been in a free fall during the greater part of 2013 until the announcement of Domestic Content Requirement (DCR)
- Improving global demand for solar is likely to help with export that has been the lifeline of manufacturers in India
Weekly Update: Kerala’s rooftop programs – Lessons for other states
Media reports claim that Kerala’s ambitious rooftop plan to set up 10,000 off-grid solar power plants would be missing the deadline. However, based on our interaction with the officials, it seems that the program is likely to be completed well ahead of schedule as per the December 2014 deadline set by MNRE. As of now, around 6,000 plants have been commissioned and the rest are already in pipeline. However, another program announced last year that aims at installing 25,000 grid connected rooftop power plants, faces delays and no power plant has been commissioned under the policy as yet.
- The 10,000 rooftop program proposes attractive incentives to consumers by allowing state subsidies apart from the central ones
- The 25,000 grid connected power plant program will probably be delayed due to issues with net metering, energy accounting and handling grid connectivity
- The key learning from delays in subsidy disbursement in Kerala is to make a policy not dependent on central government grants
The market for solar irrigation pumps in India
Solar irrigation pumps in India could be a very attractive market. They could replace diesel powered pumps in many parts of India’s agricultural heartlands, especially in the under-electrified Gangetic plains. They could even increase agricultural output by making more irrigation water available to farmers. However, at the moment, neither the products nor the distribution chains are anywhere near maturity. I recently served as a jury member on a Greenpeace Innovation Challenge to develop a new solar pump. The challenge was initiated by the Greenpeace Innovation Lab and conducted online, across the world and in a collaborative manner. This blog is part one of a three part series, in which I look at the market. The other two parts look at the new pump design and at how online innovation processes can help identify and spread solutions.
- Around 300 million Indians still have no grid power. Another 300 million have only very unreliable grid power. Most of them live in rural areas
- Only 12,000 solar pumps were sold in 2012, indicating that the current product designs find it hard to compete
- The market for diesel pumps in India is ca. 2 million pumps at ca. INR 80bn (USD 1.3bn) per annum
Weekly Update: How will financing of NSM projects work?
Developers are in the process of finalizing their bids for National Solar Mission (NSM) projects. The use of Viability Gap Funding (VGF) mechanism for the first time, resulting in significantly different cash flow profiles, poses many interesting questions for developers. Financial structuring will play a very important role in determining bid outcomes.
- SECI has the right to claw back VGF in case of project underperformance. Hence, lenders will not allow VGF to be used for capital repayment to a developer
- Top-tier sponsors that can provide corporate guarantees or recourse to lenders will likely benefit from most competitive financing
- If adequate sponsor support is not available, the lender is directly concerned with the risk associated with the treatment of VGF disbursement
Tamil Nadu’s 10,000 solar rooftop policy: A winning proposition for residential consumers
The Government of Tamil Nadu released a new scheme called the 10,000 solar rooftop scheme for domestic consumers on 2nd December 2013 (click here to access the scheme, and here to access the corrigendum document). The highlights of this scheme are:
- The scheme is restricted to battery-less grid-tied systems. This is unlike Kerala’s 10,000 rooftop scheme which is restricted to off-grid (battery based) systems.
- Tamil Nadu Government will provide a capital subsidy of INR 20,000 per kWp in addition to the MNRE subsidy (30% of the benchmark capital cost of INR 100,000 per kWp). This amounts to nearly 50% of the system cost. Unfortunately, the Tamil Nadu Govt. does not assume any responsibility for claiming the MNRE subsidy. This is left entirely unto the developers.
- There is a Domestic Content Requirement (DCR) for PV modules for the entire allocation.
The transition of the Indian solar market from an incentive driven market to a parity driven market
The January 2014 edition of BRIDGE TO INDIA’s quarterly publication, the India Solar Compass, has been released. The new edition focuses on the current state of the Indian solar market which is in transition from being an incentive driven market to a parity driven market. A gist of this edition of the Compass is given below.
- A positive implication of the transition is a possible shift from utility scale market to a more distributed generation market
- A drawback of the state rooftop policies is that most of them rely largely on funding support from the MNRE which is suffering a funding crunch
- NSM will not result in any capacity addition in 2014 but will provide a renewed vigour for investments and rapprochements in the second half of 2014