Bridge India

Weekly Update: National Solar Mission to miss capacity targets for the year by a significant margin

The year 2013 was a comparatively good year for the global solar market. While 39 GW of solar was installed globally in 2013, India, which got off to a good start two years back, is now facing a tough time achieving its 1.1 GW target set for the current fiscal year (2013- 14). China alone installed 12 GW in 2013 with Japan and the US tied at around 4 GW each. In terms of future targets, China has set an ambitious target of 35 GW by 2015 (20 GW utility scale and 15 GW distributed). In comparison, the National Solar Mission (NSM) target of 20 GW by 2022, does not look as ambitious anymore.

  • Delays associated with state solar policies and roll-out of phase II of NSM has resultd in sluggish capacity additions in the current fiscal year
  • Moving forward, prospects of solar capacity additions do not look gloomy
  • To keep the momentum going states and center need to work cohesively towards a more sustainable capacity addition roadmap

India has installed only ca. 550 MW of grid connected solar in the current fiscal year (until January 2014). More importantly, around 200 MW of the 550 MW projects have been from non-policy projects. Thanks to Gujarat, in the previous two years India has comfortably achieved its targets.

The key reasons for the sluggish capacity addition in the current fiscal year have been the delays associated with the state solar policies and the delay in roll-out of the phase II of the National Solar Mission. Draft guidelines for Phase II of the NSM were released in December 2012 but the final call for bids came only in the last quarter of 2013 after facing a delay of almost a year. The PPA signing process has also been delayed in states including Andhra Pradesh, Tamil Nadu and Karnataka.  In addition, setting a bad precedent, the commissioning of projects has been delayed without any penalties in Rajasthan, Karnataka and Madhya Pradesh.

Moving forward, prospects for solar capacity addition in the country do not look as gloomy. The allocation process for NSM phase II batch I is currently underway and the PPAs are expected to be signed in April 2014. New projects are also being executed in Karnataka, Andhra Pradesh, Uttar Pradesh and Punjab and are expected to be commissioned in the next one year. As a result, the next fiscal year (2014- 15) is expected to be better. To keep the momentum going and ensuring demand through the year, the states and the center need to cohesively work towards a more sustainable capacity addition roadmap.

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