Solar Power in India: A 100 GW Market

The ratification of Paris treaty by India on 2nd October 2016 highlights India’s commitment towards low carbon growth and reducing its current share of 4.1 % of global carbon emissions. At CoP 21 India has not only committed to reduce emission intensity by 30 – 33 % by year 2030, but also achieve an energy mix by 2030 having 40 % of its generated electricity through renewable sources.

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Maps of India

Solar energy would play a pivotal role in helping India meet the above objectives and targets. With an average solar intensity of 2200 kWh / square meter, solar potential in India is expected between 650 – 700 GW contributing to almost 80 % of total renewable potential in India.  Solar Potential Map of India can be found here

National Solar Mission

In order to tap this potential, Indian government in 2010 launched National solar mission in with a target to build 22 GW of installed solar generation. However this target was enhanced to 100 GW by 2022 with 60 GW from utility based projects and 40 GW expected from rooftop solar projects. Read more about National Solar Mission here

In order to build this targeted capacity, create demand and attract investment, the government developed a policy and regulatory framework which is conducive to accelerating demand and investment in solar sector. Few policy and regulatory initiatives of federal government include:

  • Solar purchase obligation on utilities and private developers: 8 % solar RPO by 2022
  • Renewable Energy Certificates / Certificates of origin scheme trade able in power exchange
  • Waiver of inter-state transmission charges for solar / wind power
  • Net metering policy for rooftop solar projects
  • A transparent competitive bidding regime adopted at both federal and state (county) level for allocation of projects
  • Setting up solar farms and ultra mega projects to avoid challenges related to land acquisition and transmission constraints (Land for solar farms to be procured by government)
  • Development of dedicated transmission green corridors in areas of high solar potential
  • Wheeling, banking and third party sales, buyback facility by states.
  • A federal government backed nodal agency to cover the risk of default by state utilities/ discoms.

In addition, several fiscal incentives are being offered by Indian Government in solar sector namely:

  • Exemption from excise duties and concession on import duties on components and equipment required to set up a solar plant.
  • A 10-year tax holiday for solar power projects.
  • GBI schemes for small solar projects connected to a grid below 33 KV.
  • Special incentives for exports from India in renewable energy technology under renewable sector-specific SEZ.
  • A subsidy of 30 % of the project cost for off-grid PV and solar thermal projects.
  • Loans at concessional rates for off-grid applications.

The demand for solar power is being driven from three major sinks

  1. Federal Government scheme “National Solar Mission” for setting up central sector projects
  2. Each State (county) government have their independent solar targets and invite project developers through a tariff based auction.
  3. Private Sector – commercial, industrial and residential sector opting for solar projects primarily rooftop for meeting CSR norms, tax advantages and commercial benefits

The above policy, regulatory and fiscal incentives have led to surge in installed capacity though the yearly installations still lag the yearly target capacity addition, thereby creating opportunities in this space. A detailed Solar map sharing latest overview of county wise projects Installed and in pipeline are detailed here …

Further, India is expected to add another 6 GW  in current year and is the total installed capacity is expected to touch 15 GW by March 2017.

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Yearly growth of solar capacity in India

 

Project allocation mechanism in order to enhance the scale and accelerate development, projects were initially allocated through reverse auction (based on discount over reference tariffs decided by regulator) and  under Viability Gap funding mechanism. Projects are now allocated under single price tariff based competitive bidding and has witnessed a consistent jaw dropping decline in prices which can primarily be attributed to declining price of solar panels and invertors, access of low cost funding and economies of scale.
The recent trend of prices discovered in auctions suggest that grid parity has been achieved earlier than expected at least with respect to imported coal based projects or gas based projects.

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Opportunities for Norwegian Companies

There exist multiple opportunities for Norwegian companies operating in solar domain as solar panel manufacturers, project developers, project financing, equipment suppliers, transaction advisors etc.

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Make in India

As per the National Solar Mission targets, India intends to achieve indigenous manufacturing capacity to the tune of 7 – 8 GW by the year 2020 in India. As per recent estimates, the installed capacity of solar cells and modules in the country is 1212 MW & 5620 MW respectively. Hence there exist opportunity to set manufacturing units in India and have access to huge unmet demand.

Solar in Niche areas

India is also looking at solar solutions in areas of canal solar power projects, floating solar, hybrid solutions, solar storage technologies, solar based lighting etc. India is recently floated tenders set up utility solar projects with storage facilities.

While companies such as Stat Kraft have already ventured into solar domain in India, Innovation Norway would be glad to work with other Norwegian companies to create value for them in Indian solar space.

Contact

For more specific information and a successful integration in Indian market, contact:

Avanish Verma
Market Advisor, Innovation Norway in New Delhi
avanish.verma@innovationnorway.no
+919717778224

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