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8/12/2019 BRIDGE to INDIA_India Solar Handbook June 2013
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The IndiaSolar
HandbookJune 2013 edition
A complete industry overview
for solar energy in India
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BRIDGE TO INDIA
THE INDIA SOLARHANDBOOKJune 2013 edition
2012 BRIDGE TO INDIA Energy Pvt.
Ltd. All rights reserved
June 2013, New Delhi
This report is owned by BRIDGE
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DISCLAIMER
Authors
Dr. Tobias F. Engelmeier
Mohit Anand
Jasmeet Khurana
Tanya Loond
Prateek Goel
Cover Illustration
Dwarka Nath Sinha
Design & Layout
Ragini Ahluwalia
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Is India the right market for solar? 01High solar irradiation in India 01
One of the fastest growing solar markets globally 04
What is the expected demand? 11
Overview of the market segments 13Feed in Tariff (FiT) 13
RPO (REC) 13
RPO (SP) 13
RPO (thermal captive) 13
Commercial captive 13
Telecom towers 13
Diesel captive and diesel backup 14
What currently drives solar in India? 15Policy based demand 15
Parity Based Demand 26
Project trends 29
Financing trends 30
What is the future of the Indian solar market? 33
Glossary 34
CONTENTS
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IS INDIA THERIGHT MARKET
FOR SOLAR?High solar irradiation in India
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Over 1.7 GW of installed PV capacity
B
RIDGETOINDIA,2
013
Source:BRIDGETO
INDIA
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Status of projects
Until 2012, the main drivers forcapacity addition in India had been
the Gujarat Solar Policy and phaseone of the National Solar Mission
(NSM). Projects under these twopolicies still account for over 70% of
Indias installed capacity as of May2013. Capacity additions grew at animpressive pace in the first half of 2012
but had more or less stalled in thelatter half. During the first half of 2013,
we have seen the capacity additionspick up. The new capacity addition
is largely backed by the projectsunder batch two of phase one of the
NSM, a single large 125 MW projectin Maharashtra and over 70 MW of
projects under the Renewable EnergyCertificate (REC) mechanism. The total
installed capacity in India as on May2013 stands at 1.7 GW.
In the second half of 2012 and in thefirst quarter of 2013 several states
came out with their solar policies andallocation processes. This includes
new policies in states such as Kerala,Uttar Pradesh, Andhra Pradesh
and Tamil Nadu and new allocationprocesses in Rajasthan and Karnataka.
The allocation process for the NSM hasalso begun with the release of the draft
Request for Selection (RfS) document.The key change in the NSM allocation
process is the introduction of ViabilityGap Funding (VGF)1, and limiting of the
domestic content requirement (DCR) tojust 300 MW out of the 750 MW planned
allocation capacity.
Other than the NSM and state
policies that typically allocate utilityscale projects, several states came
out with solar specific policies andallocations. Kerala has announced a
policy for 10,000 rooftop installationsof 1kW each. The suppliers for this
policy have already been empaneled.Gujarat announced a 25 MW rooftop
policy, under which projects havebeen allocated in five cities. Phase
two of the NSM (2013-2017) also
targets a deployment of 1,000 MW ofrooftop solar PV projects. The newly
incorporated Solar Energy Corporationof India (SECI), that will be responsible
for the implementation of phase two
of the NSM, has already carried outrooftop allocations for 5.5 MW andannounced an additional allocation of
11.1 MW since the beginning of 2013.These projects are to be installed
across nine cities in India.
Another major market developing in
India is the parity based market. Thismarket is largely driven by the fact
that solar is approaching parity with
the commercial tariff being paid byconsumers in Delhi, Maharasthra and
Kerala2. It is expected that more than45% of the Indian states will achieve
commercial parity by 2016. Some initialprojects have already come up for
direct sale of power to commercial andindustrial consumers. Such projects
depend on additional viability enablerssuch as the REC mechanism, tax
benefits and the subsidy mechanism.Going forward, these projects are
expected to be almost completelydriven by parity.
One of the fastestgrowing solarmarkets globally
The markets that led the solar
revolution in the world are nowapproaching maturity. These markets
are now cutting incentives andfocusing on parity driven demand.
It is the emerging markets such asIndia, China and Middle Eastern and
North African (MENA) countries thatare expected to see high growth and
present expansion opportunities tosuppliers in the market. Finally, newer
solar markets such as Chile and SouthAfrica have also recently announced
aggressive targets that will provide
new opportunities for global players.
----------------------1 Read the October 2012 edition of the India Solar Compass to read BRIDGE TO INDIAs analysis onthe subject
2Read an analysis of the parity based markets in India in the April 2013 edition of the India SolarCompass
The total installedcapacity in India as onMay 2013 stands at 1.7
GW.
It is expected that morethan 45% of the Indian
states will achievecommercial parity by
2016.
http://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compasshttp://bridgetoindia.com/our-reports/india-solar-compass8/12/2019 BRIDGE to INDIA_India Solar Handbook June 2013
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Stable markets
The United States of America (US)
The US had an installed capacity of
7,221 MW until the end of 20123. Themarket has primarily been driven by
utility scale projects where eight outof the ten large-scale solar projects
under construction were completedin the year 2012. The US solar market
was propelled by state-wise solardevelopments with over 11 states
installing over 50MW each in 2012.There is no national level obligation
to produce solar. However, over 30states in the country have Renewable
Purchase Standards. Each state offersdifferent solar incentives and energy
off-take mechanisms.
Through 2013, there has been a surge
in the third-party ownership modelin the residential sector. Over 50% of
all new residential installations wereinstalled through this model, with
Arizona topping with 90%. This trend islikely to continue.
Germany
Germany had an installed capacity of32,411 MW until the end of 2012, which
is the highest in the world4.With thisinstalled capacity, solar PV fulfilled
around 4.7% of the countrys electricity
needs. The German market has beendriven by generous national level Feed-
in-Tariff (FiT) offered over the years.However, the FiT has been reduced by
the government since January 2012 tomaintain a steady growth of 2.5 GW to
3.5 GW of installations per year. TheFiTs as of May 2013 range between `
6.5 to `9.75 ( 0.10 to 0.15/$ 0.13to $ 0.19)/kWh. Solar projects for
commercial buildings are one of themain drivers of the German solar
market and account for around 50%of the cumulative installed solar PV
capacity as of 2012. Going ahead, themarket is expected to a see growth
in storage with the launch of the newsubsidy program that subsidizes PV
systems with battery storage by 30%.
Spain
Spain had an installed capacity of 5,100
MW by the end of 20125. It witnesseda boom in 2008 that was followed by a
bust due to the economic slow-downand the burden of the generous FiTs.
Spain retracted the support for solarby way of FiTs in 2012 which curtailed
the demand for solar in the country.Early this year, retroactive cut back
of FiTs and 7% electricity tax charged
on all electricity producers (includingrenewables) has created an unreliableclimate for investment in the country.
USA
EGYPT CHINA
Stable markets
JAPAN
Rising markets
Nascent markets
BRIDGE TO INDIA, 2013Source: BRIDGE TO INDIA
----------------------3IEA; PVPS report - A Snapshot of Global PV 1992-20124Ibid.5Ibid.
Over 50% of allnew residential
installations in the USwere installed through
this model.
CHILE
SOUTH
AFRICA
THAILAND
MOROCCO
SAUDIARABIA
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Italy
Italy had 16,250 MW of solar, the
second highest capacity of solarinstalled until the end of 20126.
Financial support through FiTs is
expected to be phased out in 2013.However, schemes like scambio sulposto (similar to net metering) and tax
rebates are expected to keep up themomentum in the market for a steady
growth. Italy is one of the few marketsthat will witness an early transition to
post-FiT phase.
Australia
Australia had an installed capacity
of 2,400 MW by the end of 2012.
Residential consumers have largelydriven the Australian market.State level FiTs provide financial
support to consumers however thevolatility of such state policies has
affected investor confidence. With PVpenetration reaching as high as 90% in
some areas of the country saturationlevels will be reached among the
residential consumers. This mayrestrict growth in this market; however,
it will encourage installers to focus oncommercial consumers and segmentsof the residential market such as
rented spaces and apartments.
Rising markets
IndiaIndia had an installed capacity of 1,250
MW by the end of 2012 and the capacitystands at over 1,700 MW as of May
20137. The nation-wide solar policy,National Solar Mission (NSM), targets
to install 22 GW of solar by 2020. Thegrowth in the Indian solar market is
driven by central and state incentivesand individual solar policies rolled out
by states. The power deficient southernstates of the country such as Tamil
Nadu and Kerala are gradually shiftingto solar to find long-term solutions
for their power needs. Until now, theIndian solar market has been primarily
driven by utility scale projects however
the country is paying increasingattention to distributed generation
as well. Moreover, solar is becomingfinancially viable for commercial and
industrial consumers in some states
with rising costs of conventional power.With solar becoming increasinglycompetitive in many parts of the
country, the Indian solar market isgeared for accelerated growth.
China
China had an installed capacity of 7,000MW by the end of 2012.8The Chinese
government announced its ambitiousplan of adding 10 GW in the year 2013
and increased the overall renewabletarget to 50 GW by 2020. With a nation-
wide FiT, subsidies at the provinciallevel and completion of large-scale
pilot projects under the Golden Sunprogram, China is expected to witness
accelerated growth. China is planningto cut subsidies under the Golden Sun
program given the declining costs ofsolar systems. However, the country
plans to shift focus from one-timeupfront subsidies to subsidies provided
over the life of the project in orderto encourage a more sustainable
development of solar.
Japan
Japan had an installed capacity of
7,000 MW by the end of 20129. Itintroduced a nation-wide FiT last year
to accelerate the growth of renewablesin the country, especially at the utility
scale. The FiT has been reduced by
10% from `23.9 to `21.5 ( 0.37 to 0.33/$ 0.47 to $ 0.43) this year toaccommodate the reducing costs of
solar equipment but it still remainsone of the highest tariffs offered inthe world. The Japanese solar market
has been primarily driven by theresidential sector until now. But, with
the introduction of the FiT, utility scaleprojects will witness a surge.
----------------------6IEA; PVPS report - A Snapshot of Global PV 1992-20127BRIDGE TO INDIA market model8IEA; PVPS report - A Snapshot of Global PV 1992-20129Ibid.
Italy is one of thefew markets thatwill witness an early
transition to post-FiTphase.
The power deficientsouthern states of Indiasuch as Tamil Nadu and
Kerala are graduallyshifting to solar to findlong-term solutions for
their power needs.
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Middle Eastern and North Africancountries (MENA)
MENA countries receive some of the
highest levels of irradiation in theworld and are hence geared to exploit
the vast untapped potential for solar.Morocco is in the process of building a
total of 2,000 MW of solar at five sitesby 2020 to meet 38% of its electricity
requirements10. The first project,a 160MW solar power plant in the
southern Moroccan town of Ouarzazateis already under construction and is
expected to be completed by 2015.Moroccan Agency For Solar Energy
(MASEN) will be dedicated to overlookthe entire implementation process.
Saudi Arabia, the worlds leadingexporter of oil, has announced
solar targets as a part of its shift torenewables. Saudi Arabia is the largest
consumer of oil among the MENAcountries. With an expected increase
in electricity demand in the comingyears, the country wants to become
energy secure. It has thus launchedan ambitious plan to install 16 GW of
solar PV and 25 GW of CSP by 2032.The country has recently completed
the construction of its first largescale project, a 3.5 MW solar plant in
Riyadh. Egypt plans to meet 20% of itselectricity needs from renewables by
2020 where 8% comes from solar andhydro. Egypt's New and Renewable
Energy Authority (NREA) has a 100 MWsolar thermal plant and two 20 MW
PV plants planned for development,however, political/social disturbancecould delay such projects.
Thailand
Thailand had an installed capacity of360 MW by the end of 2012 including
a 73 MW solar park.11The market inThailand has been driven by adder
premiums (similar to feed-in tariffs)offered at the national level that led to
a surge in utility scale projects. Thecountry aims to install 2,000MW of
solar by 2022 under the AlternativeEnergy Development Plan (AEDP).
Nascent markets
South Africa
With increasing electricity demandand abundant solar resource, South
Africa is viewed as one of the emergingmarkets in the world. Under the
Renewable Energy IndependentPower Producer Program (REIPP),
South Africa plans to install 1,450MW of solar PV by the end of 2016.
With the second round of projectsobtaining financial closure and the
program gearing up for the third roundof bidding this year, the country has
proven its commitment to renewablesand gained investor confidence. The
solar market in South Africa has thustaken-off with the announcement of
the utility scale projects under theREIPP.
Chile
Chile aims to meet 10% of its
electricity needs from renewables by2024. With plentiful solar resource
and demand for solar from the miningsector, utility scale projects are
expected to drive the Chilean solarmarket. Currently the country has
around 3.5 MW of solar installed andaround 68 MW under construction. A
Chilean mining and steel company,CAP and Sun Edison, are also
planning a 100 MW power plant on theAtacama Desert. The Chilean solar
market, though at a nascent stage, iswitnessing a lot of new activity.
Why India?Among all the prominent solar
markets, India is one of themost attractive markets for the
development of solar. Unlike many ofits counterparts, India is an energy
deficient country, which requires animmediate solution that caters to its
energy needs. The power deficit inIndia continues to increase with every
passing year. India has abundant solar
resource and capacity addition using
----------------------10EPIA; Global Market outlook for Photovoltaics 2013-201711IEA; PVPS report - A Snapshot of Global PV 1992-2012
Saudi Arabia has thuslaunched an ambitiousplan to install 16 GW of
solar PV and 25 GW ofCSP by 2032.
South Africa plans toinstall 1,450 MW of
solar PV by the end of2016.
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solar power can be the fastest among
all other alternatives. It providesthe optimum solution to Indias
power problems. The country has anaggressive nation-wide policy in place
and states have been pro-active in
promoting solar by way of separatestate-level policies and incentives.Such strong support from the
government has created confidenceamong banks such that they can offer
financing options for solar power
projects. Moreover, India is also one
of the few markets that are movingaway from a policy driven to a parity
driven scenario. With increasing costsof conventional power, solar is already
viable for certain consumers in many
parts of the country. Hence, with arobust framework of solar policiesand an environment conducive to the
development of solar, the Indian solarmarket provides a huge untapped
potential for solar.
India has an aggressivenation-wide policy in
place and states havebeen pro-active in
promoting solar.
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A
verage
solar
resource/
Ir
radiation
Solartarget
Insta
lled
capa
city
(aso
n
Dece
mber
2012
)
FiT/
Otherin-
centives
Tax
incentives
and
subsidies
Qu
ota
ob
ligation
or
green
ce
rtifi-
ca
tes
Netmetering
Marketch
aracteristics
andkeyd
rivers
Futuretrends
Market
potential
projected
for2016
Maturemarkets
U.S.A.
4
.68
DifferentRPSfor
states
7.2G
W
Satelevel
FiT
Yes
Statelevel
RP
Sobli-
ga
tion
Satelevel
Marketla
rgelydriven
byutilityscaleprojects.
Increased
demandfrom
commerc
ialconsumers
alsoadde
dtothe
capacity.
Surgein3rdparty
ownedresidentialroof-
topinstallations
37GW
Germany
2
.9
52GW
by2020
(35%
and80%
of
electricityfrom
renewablesby
2020and2050,
respectively)
32GW
National
levelFiT
Yes
No
No
Marketis
drivenbythe
FiTsCommercialand
residentia
lconsumers
aretheke
ydriversofthe
market.
Withthelaunchof
a30%
subsidyfor
PVwithbatteries,
A
marketforstorage
will
bedeveloped.
52GW
Japan
3
.63
33GW
by2020
source
7GW
National
levelFiT
Yes
No
(re-
placed
by
FiTin
20
12)
No
Marketis
largelydriven
byresidentialconsum-
ers.
NationwideFiT
willencou
ragegreater
demandforutilityscale
projects.
Surgeinutilitysca
le
projectswiththein
tro-
ductionofFiT
18GW
Spain
4
.75
7.2
5GW
by2020
5GW
National
levelFiT
(Sus-
pended)
No
No
No
CutbackofFiT/support
fornewP
Vsystemshas
curtailed
demand
7.8
GW
Italy
3
.81
23GW
by2017
16GW
National
levelFiT
No
No
Yesfor
system
