Solar capacity additions – A vapid year for JNNSM while the non-policy market perks up

Going from a nascent market with a mere 22 MW of total installed PV capacity in 2011 to over 2.5 GW in 2014, the Indian solar market has held up to its promise for being one of the most exhilarating markets. This has been achieved largely due to the flagship JNNSM scheme of the Indian government as well as state policy driven projects. India added 171 MW of PV capacity in the last quarter, taking the total installed capacity for utility scale, grid-connected PV to 2523 MW (as of 18th June, 2014). In-depth details, data and analysis is available in our latest edition of the India Solar Compass (July 2014 edition) here.

  • India added much lesser solar capacity in FY 2013-14 as compared to FY 2012-13
  • The difference can be attributed mainly to absence of capacity addition under JNNSM during the last year
  • However, the non-policy market gained momentum and a capacity of around 300 MW was added outside of policy-driven feed-in-tariffs in the last four quarters

The JNNSM Phase-II draft was released in December 2012, but final calls for bidding happened only a year later in December 2013 and the PPA’s were signed only in March 2014. Uncertainties over trade disputes regarding domestic content requirements and indecisiveness on how to take the JNNSM forward contributed to the delays. Additionally, a sluggish economy, talk of anti-dumping duties, a volatile currency and looming general elections ensured a lacklustre year with just 674 MW of capacity addition during the last year. In comparison, 822 MW capacity was added between July 2012 and June 2013. While state policy driven projects took a backseat, projects geared towards RPO fulfilment contributed a major share in last quarter’s capacity addition taking the net installed capacity in the last quarter to 171 MW (see Figure 1).

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Figure 1: Installations in the last four quarters (MW)

So far, the JNNSM and Gujarat state policy have been the major drivers for the Indian solar market, contributing around 1400 MW. India’s capacity addition until now has thus largely followed the trend of capacity additions under JNNSM and Gujarat state policy (figure 2).

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Figure 2: Quarter wise capacity additions in India and JNNSM+Gujarat solar policy

However, growth in parity market is visible. The non-policy market added 300 MW of solar PV capacity during the last four quarters (figure 1). This is a good sign and only to be expected as the market has reached commercial parity in most states. In quite some states including Maharashtra, Andhra Pradesh and Delhi, the cost of solar is already much lower than commercial tariff (figure 3).

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Figure 3: State wise parity chart

We expect the parity driven market to gain rapid momentum in the coming months and years, at least in the states which have already reached commercial parity.

With PPA’s for Phase-II Batch-I having been signed and draft guidelines for Phase-II Batch-II under JNNSM being announced recently, the future looks optimistic. The fundamentals of the Indian solar market remain strong. Phase-I of JNNSM had given a good start to the Indian solar industry and it is expected that Phase-II will provide a decisive push, allowing for rapid capacity additions in the months to come.

 

Shikhin Mehrotra is a Research Analyst at BRIDGE TO INDIA.

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