Bridge India

BRIDGE TO INDIA has released its latest edition of the India Solar Rooftop Map report. As per the report, India added 678 MW of rooftop solar capacity in FY 2016-17, growing at 81% Y-o-Y. Total installed rooftop solar capacity reached 1.4 GW as of March 2017. Strong market fundamentals including falling costs and improving debt financing mean that the market will continue strong growth trajectory for many years to come. Commercial and industrial customers (C&I) remains the biggest market segment as economic viability is most pronounced for such customers; OPEX model has been gaining market share, doubling from 12% in FY 2014-15 to 24% last year and large public sector procurement programs will drive further growth in this market in the next few years; Yearly capacity addition is expected to scale up to over 2 GW by 2019 and over 3 GW by 2020 presenting attractive growth opportunities for all market participants; With 65% of total installed capacity, C&I remains the biggest market segment. These consumers account for more than 50% of India’s total power demand and make savings of up to 50% through rooftop solar systems as their grid tariffs are typically between INR 7-10 (US₵ 11-16)/ kWh. Public… Read More »

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Two months ago, we wrote about how Uttar Pradesh (UP) could be the dark horse for solar power demand in the country. Since then, the state has announced a 750 MW tender with Solar Energy Corporation of India (SECI) in Bhadla and a new solar policy to build 10.7 GW of solar capacity by 2022. But UP can be a tough place to do business as proven yet again by the state renewable nodal agency, UP New & Renewable Energy Development Agency (UPNEDA), asking developers to reduce tariffs for a 215 MW state tender closed in 2015. UPNEDA claims to be acting on behest of the state electricity regulator (UPERC), which is apparently refusing to approve power procurement at tariffs ranging between INR 7.02 – 8.60/kWh even though the benchmark regulated tariff for the tender was INR 9.33/kWh. Many project developers are already wary of entering UP and the state’s move to renegotiate tariffs after signing PPA’s will further damage its credibility; It makes no sense for UP to renegotiate tariffs for a mere 165 MW of capacity when it wants to add more than 10 GW of solar capacity in the next 5 years; Such unilateral, post-facto moves to… Read More »

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Three days into implementation of the Goods and Services Tax (GST), Indian solar industry continues to face uncertainty regarding GST rates. We know that GST will be applied to solar modules at a concessional rate of 5%. Central government officials including the Minister for Power, Piyush Goyal, have confirmed on multiple occasions that the 5% concessional rate will extend to all equipment for solar power generating plants. But operational clarity for these other capital goods used in solar projects is lacking in practice. There is confusion in the market on how to avail of the concessional 5% GST rate when many of the same components are taxed at higher rates for use in other industries; MNRE is still working to evolve a mechanism in consultation with Ministry of Finance to try and resolve this issue; Net increase in project EPC costs is expected to be around 6% if the issue is not resolved; We spoke to four inverter suppliers today – two of them said that the GST rate for inverters is 18%, one said that it is 5% and another one said that that it is 5% for end-users and 18% for EPC companies. The reason for the rate… Read More »

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India imported 5.7 GW or about 89% of its total solar module requirement in FY 2016-17. Value of these imports is estimated at USD 3 billion, equivalent to 2.8% of the country’s total merchandise trade deficit. An increasing reliance on imports in a growing and strategically important sector is creating various stress points and raises the risk of a knee-jerk policy reaction by the government which has, until now, been unable to effectively support domestic manufacturing. China dominates global manufacturing and is trying to secure control on the technology upgradation roadmap for solar PV; Over reliance on a single country puts Indian solar sector at a risk of disruption in global supply chain and change in Chinese government policy; The Indian government needs to consider long-term implications for the sector and draw up a well thought out plan for domestic manufacturing instead of introducing short-term support measures; China has been pumping in billions of dollars in subsidies and other support measures to scale up solar PV manufacturing and dominate global market. The result is massive increase in manufacturing capacity from 23 GW in 2013 to over 70 GW today despite steep fall in prices. It has also been strategically providing… Read More »

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BRIDGE TO INDIA has released the March 2017 edition of India Solar Map. As per our project database, India installed 5.5 GW of utility scale solar capacity in the last fiscal year reaching total cumulative solar capacity of 12.5 GW by March 2017. Another 12 GW capacity has been allocated to developers and is in various stages of development. – We expect southern states to continue to dominate the sector in the short-term as 53% of total pipeline is concentrated in Andhra Pradesh, Karnataka and Telangana; – Adani remains the largest developer with a total portfolio exceeding 2 GW (780 MW commissioned and 1,250 MW pipeline); – Market volumes are likely to expand by 45% in the upcoming year but we don’t anticipate any new entrant to gain a meaningful foothold as India remains an intensely competitive market; Southern domination continues in the sector with Andhra Pradesh replacing Tamil Nadu at the top with a commissioned capacity of 1,962 MW. We expect the southern states to continue to dominate the sector for the next 12-18 months as 53% of total solar pipeline is concentrated in the Andhra Pradesh, Karnataka and Telangana. Greenko, NTPC and ReNew Power are the top three… Read More »

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“In order to fulfill my solemn duty to protect America and its citizens, the United States will withdraw from the Paris climate accord,” US President Donald Trump said last week. The move has already been criticized extensively within and outside the US. No other country seems willing to support the US, and in fact, the action has prompted several countries to reiterate their commitment to the climate accord. The reason simply is that renewable energy has crossed the point of no return. It is financially and operationally viable and the old ‘carrot and stick’ approach is fast becoming irrelevant. We see a limited short-term impact of this announcement within US and almost no impact on India. Most states and end-consumers, even within the US, will continue to accelerate adoption of renewable energy and other green energy programs because of their improving techno-commercial merits; As the US can only exit the accord after three years, many analysts point out that the decision could be overturned by a new US President before it is implemented; The US decision to withdraw from the Paris accord is unfortunate but largely, a non-event for India’s renewable energy sector; Soon after President Trump said he would… Read More »

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Last week, we wrote that the proposed 18% Goods and Service Tax (GST) on solar modules could cause major disruption in the industry and affect over 10 GW of projects. Following uproar in the industry, India’s revenue secretary, Hasmukh Adhia, has clarified that the rate of tax on solar modules should be 5% and not 18%. He said that an official clarification in this regard may be issued on June 3 when the GST council meets next. Earlier last week, secretary for Ministry of New and Renewable Energy (MNRE) had also issued a statement that the 18% rate on solar modules seems to be an anomaly and that it should be corrected. Total project capital cost is likely to rise by about 4% as against 10-12% envisaged earlier; Revised rate structure will not have any material negative impact on the industry and will allow project developers to proceed with construction; MNRE needs to still play a hands-on advisory role for all affected entities to ensure smooth transition for the industry; 5% GST rate for solar modules sounds reasonable and consistent with government guidance leading up to the rates announcement. The new tax regime will result in effective rate of indirect… Read More »

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India’s southern region comprising Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Kerala accounts for 25% of national power consumption but 45% of total wind and solar power capacity in the country. Penetration of variable wind and solar energy, defined as generation from both these sources as a percentage of electricity consumption, in the southern region was 9% in 2016-17 as against the national average of 5%. Such high rate of penetration raises concerns regarding management of the grid and can result in high grid curtailment rate. South India represents a test case for the country for integration of variable renewable energy into the grid. Increased RE deployment is changing the energy landscape in southern region and raises concerns regarding grid stability and power curtailment; While strides have been made in enhancing transmission connectivity, a lot still needs to be done to enhance grid flexibility and develop ancillary services market; Lessons should also be learnt from successful international experiences in allowing high renewable energy grid penetration; Enhanced transmission connectivity as well as rapid RE deployment has helped south India in considerably reducing its power deficit from 7.3% in 2013-14 to only 0.2% in 2016-17. But another 9 GW of wind and… Read More »

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