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www.bridgetoindia.com
InterSolar Munich 2015
Where is the Indian solar market headed?
Tobias Engelmeier
New Delhi, May 15th 2015
© BRIDGE TO INDIA, 2015 2
Based on strong fundamentals, the government has proposed a target of 100 GW by 2022
Utility scale solar
40 GW
Entrepreneur scheme
20 GW
Rooftop solar
40 GW
Total investment of USD 60 bn
CAGR of 82% to reach 100 GW by 2022
Solar policy
© BRIDGE TO INDIA, 2015 3
The government is making concerted attempts to tackle the challenge on the policy front
Amendment to Electricity Act 2003
Renewable Energy Act 2015
Amendment to National Tariff Policy
2005
Center-State coordination
• RPO target to be increased to 10.5% by 2022• Introduction of Renewable Generation Obligation (RGO)• Penalties for not implementation of RPOs and RGOs
• Passing through of RPO and RGO costs in tariffs• Waiver of inter-state transmission costs for renewables• Easy implementation of RGO on a cost plus basis to bring in larger
players
• Emphasis on distributed generation and relevant regulations• Support to open access and private sale of solar power• Support to rural electrification using solar power
• Successful communication of new and proposed state level targets• Successful coordination to ensure net-metering guidelines across 25
states and union territories • Moving quickly on solar parks policy and state procurement of solar
power
Solar policy
© BRIDGE TO INDIA, 2015 4
Utility scale solar
© BRIDGE TO INDIA, 2015 5
Installed capacity India has added over 4 GW of utility scale solar PV as of date and 3 GW is under development
• NSM only accounts for 30% of the installed capacity today
• Rajasthan has overtaken Gujarat as the state with the highest installed capacity
• Madhya Pradesh is also likely to overtake Gujarat in the next couple of months
• South Indian states are expected to account for the largest capacity addition for the remaining part of the year
• By the end of 2015, India is expected to have 5.5 GW of installed capacity
Highlights
© BRIDGE TO INDIA, 2015 6
Solar tariffs in India have fallen drastically and in line with global reduction in module costs
Solar tariffs
© BRIDGE TO INDIA, 2015 7
25 solar parks with 20 GW of aggregate capacity have been planned
• Solar parks policy will act as a vehicle policy to host central and state government backed solar projects and will streamline the land acquisition and grid interconnection process for the developers
• The first phase of the solar park in Andhra Pradesh with a capacity of 500 MW will host the upcoming National Solar Mission projects
• Gujarat and Rajasthan have existing solar parks
Highlights
Solar policy
Source: BRIDGE TO INDIA analysis
© BRIDGE TO INDIA, 2015 8
State governments have indicated targets to achieve 48 GWs of utility scale solar
• Almost all Indian states have an active solar policy now
• Rajasthan’s 25 GW target is of course the most ambitious and far surpasses even the 10.5% RPO requirement.
• Amongst new targets, Andhra Pradesh and Telangana have announced target of 5,000 MW each and Maharashtra is expected to announce a target of 7,500 MW
Highlights
Solar policy
Source: BRIDGE TO INDIA analysis
© BRIDGE TO INDIA, 2015 9
Central government has set a target to achieve 15 GW of utility scale solar under phase II of NSM by 2019
Name of allocation under Phase II
Implementing authority
Primary off-taker
Investment Tentative capacity
Mechanism for allocation
Timeline for allocation (expected)
Batch II Tranche 1
NTPC NTPC Private sector 500 MW Tariff based bidding 2015 (underway)
Batch II Tranche 2 & 3
NTPC NTPC Private sector 2,500 MW Tariff based bidding
2015 to 2016
Batch III Tranche 1 to 5
SECI SECI Private sector 7,000 MW
VGF based bidding
2015 to 2018
Batch IV Not known Not known
Not known Not known Not known Not known
Batch V SECI CPSUs Public sector 2,000 MW
Fixed VGF 2016
SECI State Discoms
Public Private Partnership (PPP)
750 MW VGF and low cost debt
2015
NTPC State Discoms
NTPC 2,000 MW Sale of bundled power on cost+
2016-2017
SECI/Defense Defense Defense 300 MW Fixed VGF 2014-2019
Solar policy
Source: BRIDGE TO INDIA analysis
© BRIDGE TO INDIA, 2015 10
New state and central policies plan to allocate over 10 GW of capacity in this financial year (2015-16)
• Central government expects to announce 10 GW of new capacity allocation. BRIDGE TO INDIA realistically expects 6,250 MW to be available for private development
• Telangana expects to allocate 2,000 MW. BRIDGE TO INDIA expects this capacity to be undersubscribed
• Tamil Nadu is known to be signing PPAs at a fixed tariff
• Maharashtra is expected to come up with a policy and allocation process
Highlights
Solar policy
Source: BRIDGE TO INDIA analysis
NSM (bundling scheme)
NSM (VGF scheme)
Telangana Tamil Nadu Maharashtra Karnataka
3,000
3,250
2,000
1,000
500 500
Ongoing and and expected upcoming solar capacity allocation announcements for private developer
© BRIDGE TO INDIA, 2015 11
BRIDGE TO INDIA projects the utility scale market to add 24 GW between 2015 and 2019; reaching 28 GW
2015 2016 2017 2018 20190
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
RPO/RGO/CPSU/REC/Pri-vate initiatives/Others
State government schemes
Central government schemes
Year
Ne
w ie
xpe
cte
d n
sta
llatio
ns
(MW
)
Market projections
• The policy space in India is very fluidic as of now and making accurate predictions is difficult.
• BRIDGE TO INDIA has used a model to come up with these numbers with the primary variable being the increased RPO
• A key message here is that despite the big announcements made by the central government, states are still likely to take a lead in capacity addition
Highlights
Source: BRIDGE TO INDIA analysis
© BRIDGE TO INDIA, 2015 12
Rooftop solar
© BRIDGE TO INDIA, 2015 13
India has already installed 350 MW of rooftop solar PV
Rooftop policy
• India has installed 350 MW of rooftop solar as of date
• Around 40 MW of this has been installed under the OPEX model
• Less than 15% of this capacity has availed the central government’s capital subsidy scheme
• Gujarat, Maharashtra, Tamil Nadu, Uttar Pradesh and Andhra Pradesh account for the largest capacity of rooftop solar installed in the country
Highlights
Source: BRIDGE TO INDIA analysis
© BRIDGE TO INDIA, 2015 14
Propped by the center, 25 states and UTs have announced net-metering guidelines for rooftop solar
Rooftop policy
Source: BRIDGE TO INDIA analysis
• India has opted for net-metering as the primary tool to promote rooftop solar
• This effectively ends all discussions around FiT and GBI for rooftop solar
• Along with net-metering, the accelerated depreciation benefits are likely to continue and interest rate subvention is expected to be introduced
• Subsidy mechanism is likely to be withdrawn
Highlights
© BRIDGE TO INDIA, 2015 15
Commercial consumers in most states would achieve parity with AD and interest rate subvention
Economic viability – rooftop solar
• Commercial consumers in Maharashtra, Tamil Nadu, Karnataka and Delhi are most likely to start adopting rooftop now
Highlights
© BRIDGE TO INDIA, 2015 16
Industrial consumers pay a little less but a similar statement is true for this segment as well
Economic viability – rooftop solar
• Industrial consumers in Maharashtra, Odisha, Tamil Nadu and West Bengal are most likely to start adopting rooftop solar now
Highlights
© BRIDGE TO INDIA, 2015 17
BRIDGE TO INDIA projects the rooftop solar market to grow by 4 GW between 2015 and 2019
Market projections
2015 2016 2017 2018 2019 -
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Residential
Industrial
Commercial
Year
Ne
w in
sta
llatio
ns
(MW
)
• The government plans to install 10 GW of rooftop solar by 2019, we expect the number to be around 4 GW
• Even though the commercial tariffs are higher, industrial segment is expected to take the lead due to the sheer volume of industrial consumption in India vis-à-vis the commercial consumer
Highlights
Source: BRIDGE TO INDIA
© BRIDGE TO INDIA, 2015
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