BRIDGE to INDIA_India Solar Handbook June 2013 - Print

7/24/2019 BRIDGE to INDIA_India Solar Handbook June 2013 - Print

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BRIDGE TO INDIA, 2013 1

The IndiaSolar

HandbookJune 2013 edition

A complete industry overview

for solar energy in India


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BRIDGE TO INDIA, 2013

Visit our website www.bridgetoindia.com

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 BRIDGETO INDIA and is protected byIndian copyright and internationalcopyright/intellectual property lawsunder applicable treaties and/orconventions. The user agrees not toexport any report into a country thatdoes not have copyright/intellectualproperty laws that will protect BRIDGETO INDIAs rights therein.

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The information contained in thisreport is of a general nature and is notintended to address the requirementsof any particular individual or entity.BRIDGE TO INDIA aims to provideaccurate and up-to-date information,but is not legally liable for theaccuracy of such information.

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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Jasmeet Khurana

[email protected]

For further enquiries, please contact:

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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,

2013

Source:BRID

GETOINDIA


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Status of projects

Until 2012, the main drivers forcapacity addition in India had beenthe Gujarat Solar Policy and phase

one of the National Solar Mission(NSM). Projects under these twopolicies still account for over 70% ofIndias installed capacity as of May2013. Capacity additions grew at animpressive pace in the first half of 2012but had more or less stalled in thelatter half. During the first half of 2013,we have seen the capacity additionspick up. The new capacity additionis largely backed by the projectsunder batch two of phase one of the

NSM, a single large 125 MW projectin Maharashtra and over 70 MW ofprojects under the Renewable EnergyCertificate (REC) mechanism. The totalinstalled capacity in India as on May2013 stands at 1.7 GW.

In the second half of 2012 and in thefirst quarter of 2013 several statescame out with their solar policies andallocation processes. This includesnew policies in states such as Kerala,

Uttar Pradesh, Andhra Pradeshand Tamil Nadu and new allocationprocesses in Rajasthan and Karnataka.The allocation process for the NSM hasalso begun with the release of the draftRequest for Selection (RfS) document.The key change in the NSM allocationprocess is the introduction of ViabilityGap Funding (VGF)1, and limiting of thedomestic content requirement (DCR) to

just 300 MW out of the 750 MW plannedallocation capacity.

Other than the NSM and statepolicies that typically allocate utilityscale projects, several states cameout with solar specific policies andallocations. Kerala has announced apolicy for 10,000 rooftop installationsof 1kW each. The suppliers for thispolicy have already been empaneled.Gujarat announced a 25 MW rooftoppolicy, under which projects havebeen allocated in five cities. Phase

two of the NSM (2013-2017) alsotargets a deployment of 1,000 MW ofrooftop solar PV projects. The newlyincorporated Solar Energy Corporationof India (SECI), that will be responsible

for the implementation of phase twoof the NSM, has already carried outrooftop allocations for 5.5 MW andannounced an additional allocation of11.1 MW since the beginning of 2013.These projects are to be installedacross nine cities in India.

Another major market developing inIndia is the parity based market. Thismarket is largely driven by the factthat solar is approaching parity with

the commercial tariff being paid byconsumers in Delhi, Maharasthra andKerala2. It is expected that more than45% of the Indian states will achievecommercial parity by 2016. Some initialprojects have already come up fordirect sale of power to commercial andindustrial consumers. Such projectsdepend on additional viability enablerssuch as the REC mechanism, taxbenefits and the subsidy mechanism.Going forward, these projects areexpected to be almost completelydriven by parity.

One of the fastestgrowing solarmarkets globally

The markets that led the solarrevolution in the world are nowapproaching maturity. These marketsare now cutting incentives and

focusing on parity driven demand.It is the emerging markets such asIndia, China and Middle Eastern andNorth African (MENA) countries thatare expected to see high growth andpresent expansion opportunities tosuppliers in the market. Finally, newersolar markets such as Chile and SouthAfrica have also recently announcedaggressive targets that will providenew opportunities for global players.

----------------------1

Read the October 2012 edition of the India Solar Compass to read BRIDGE TO INDIAs analysis onthe subject2Read an analysis of the parity based markets in India in the April 2013 edition of the India SolarCompass

The total installedcapacity in India as on

May 2013 stands at 1.7GW.

It is expected that morethan 45% of the Indian

states will achievecommercial parity by

2016.


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Stable markets

The United States of America (US)

The US had an installed capacity of7,221 MW until the end of 20123. Themarket has primarily been driven byutility scale projects where eight outof the ten large-scale solar projectsunder construction were completed

in the year 2012. The US solar marketwas propelled by state-wise solardevelopments with over 11 statesinstalling over 50MW each in 2012.There is no national level obligationto produce solar. However, over 30states in the country have RenewablePurchase Standards. Each state offersdifferent solar incentives and energyoff-take mechanisms.

Through 2013, there has been a surge

in the third-party ownership modelin the residential sector. Over 50% ofall new residential installations wereinstalled through this model, withArizona topping with 90%. This trend islikely to continue.

Germany

Germany had an installed capacity of32,411 MW until the end of 2012, whichis 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 bythe government since January 2012 tomaintain a steady growth of 2.5 GW to3.5 GW of installations per year. TheFiTs as of May 2013 range between `6.5 to `9.75 ( 0.10 to 0.15/$ 0.13

to $ 0.19)/kWh. Solar projects forcommercial buildings are one of themain drivers of the German solarmarket and account for around 50%of the cumulative installed solar PVcapacity as of 2012. Going ahead, themarket is expected to a see growthin storage with the launch of the newsubsidy program that subsidizes PVsystems with battery storage by 30%.

Spain

Spain had an installed capacity of 5,100MW by the end of 20125. It witnesseda boom in 2008 that was followed by abust due to the economic slow-downand the burden of the generous FiTs.Spain retracted the support for solarby way of FiTs in 2012 which curtailedthe demand for solar in the country.Early this year, retroactive cut backof FiTs and 7% electricity tax chargedon all electricity producers (includingrenewables) has created an unreliable

climate for investment in the country.

USAJAPAN

CHINA

Stable markets

Rising 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


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06 BRIDGE TO INDIA, 2013

Italy

Italy had 16,250 MW of solar, thesecond highest capacity of solarinstalled until the end of 20126.Financial support through FiTs isexpected to be phased out in 2013.However, schemes like scambio sulposto (similar to net metering) and taxrebates are expected to keep up themomentum in the market for a steadygrowth. Italy is one of the few marketsthat will witness an early transition topost-FiT phase.

Australia

Australia had an installed capacityof 2,400 MW by the end of 2012.

Residential consumers have largelydriven the Australian market.State level FiTs provide financialsupport to consumers however thevolatility of such state policies hasaffected investor confidence. With PVpenetration reaching as high as 90% insome areas of the country saturationlevels will be reached among theresidential consumers. This mayrestrict growth in this market; however,it will encourage installers to focus on

commercial consumers and segmentsof the residential market such asrented spaces and apartments.

Rising markets

IndiaIndia had an installed capacity of 1,250MW by the end of 2012 and the capacitystands at over 1,700 MW as of May20137. The nation-wide solar policy,National Solar Mission (NSM), targets

to install 22 GW of solar by 2020. Thegrowth in the Indian solar market isdriven by central and state incentivesand individual solar policies rolled outby states. The power deficient southernstates of the country such as TamilNadu and Kerala are gradually shiftingto solar to find long-term solutionsfor their power needs. Until now, theIndian solar market has been primarily

driven by utility scale projects howeverthe country is paying increasingattention to distributed generationas well. Moreover, solar is becomingfinancially viable for commercial and

industrial consumers in some stateswith rising costs of conventional power.With solar becoming increasinglycompetitive in many parts of thecountry, the Indian solar market isgeared for accelerated growth.

China

China had an installed capacity of 7,000MW by the end of 2012.8The Chinesegovernment 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-scalepilot projects under the Golden Sunprogram, China is expected to witnessaccelerated growth. China is planningto cut subsidies under the Golden Sunprogram given the declining costs ofsolar systems. However, the countryplans to shift focus from one-timeupfront subsidies to subsidies provided

over the life of the project in orderto encourage a more sustainabledevelopment of solar.

Japan

Japan had an installed capacity of7,000 MW by the end of 20129. Itintroduced a nation-wide FiT last yearto accelerate the growth of renewablesin the country, especially at the utilityscale. The FiT has been reduced by10% from `23.9 to `21.5 ( 0.37 to 0.33/$ 0.47 to $ 0.43) this year toaccommodate the reducing costs ofsolar equipment but it still remainsone of the highest tariffs offered inthe world. The Japanese solar markethas been primarily driven by theresidential sector until now. But, withthe 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 that

will witness an earlytransition to post-FiT

phase.

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 thehighest levels of irradiation in theworld and are hence geared to exploit

the vast untapped potential for solar.Morocco is in the process of building atotal of 2,000 MW of solar at five sitesby 2020 to meet 38% of its electricityrequirements10. The first project,a 160MW solar power plant in thesouthern Moroccan town of Ouarzazateis already under construction and isexpected 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 announcedsolar targets as a part of its shift torenewables. Saudi Arabia is the largestconsumer of oil among the MENAcountries. With an expected increasein electricity demand in the comingyears, the country wants to becomeenergy secure. It has thus launchedan ambitious plan to install 16 GW ofsolar 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 inRiyadh. Egypt plans to meet 20% of itselectricity needs from renewables by2020 where 8% comes from solar andhydro. Egypt's New and RenewableEnergy Authority (NREA) has a 100 MWsolar thermal plant and two 20 MWPV plants planned for development,however, political/social disturbancecould delay such projects.

Thailand

Thailand had an installed capacity of360 MW by the end of 2012 includinga 73 MW solar park.11The market inThailand has been driven by adderpremiums (similar to feed-in tariffs)offered at the national level that led toa surge in utility scale projects. Thecountry aims to install 2,000MW ofsolar by 2022 under the AlternativeEnergy Development Plan (AEDP).

Nascent markets

South Africa

With increasing electricity demand

and abundant solar resource, SouthAfrica is viewed as one of the emergingmarkets in the world. Under theRenewable 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 theprogram gearing up for the third roundof bidding this year, the country hasproven its commitment to renewablesand gained investor confidence. Thesolar market in South Africa has thustaken-off with the announcement ofthe utility scale projects under theREIPP.

Chile

Chile aims to meet 10% of itselectricity needs from renewables by2024. With plentiful solar resourceand demand for solar from the miningsector, utility scale projects areexpected to drive the Chilean solar

market. Currently the country hasaround 3.5 MW of solar installed andaround 68 MW under construction. AChilean mining and steel company,CAP and Sun Edison, are alsoplanning a 100 MW power plant on theAtacama Desert. The Chilean solarmarket, 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 thedevelopment of solar. Unlike many ofits counterparts, India is an energydeficient country, which requires animmediate solution that caters to itsenergy needs. The power deficit inIndia continues to increase with everypassing year. India has abundant solarresource 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 ambitious

plan to install 16 GW ofsolar PV and 25 GW of

CSP 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 amongall other alternatives. It providesthe optimum solution to Indiaspower problems. The country has anaggressive nation-wide policy in place

and states have been pro-active inpromoting solar by way of separatestate-level policies and incentives.Such strong support from thegovernment has created confidenceamong banks such that they can offerfinancing options for solar power

projects. Moreover, India is also oneof the few markets that are movingaway from a policy driven to a paritydriven scenario. With increasing costsof conventional power, solar is already

viable for certain consumers in manyparts of the country. Hence, with arobust framework of solar policiesand an environment conducive to thedevelopment of solar, the Indian solarmarket provides a huge untappedpotential for solar.

India has an aggressivenation-wide policy in

place and states havebeen pro-active in

promoting solar.


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09 BRIDGE TO INDIA, 2013

Average

solar

resource/

Irradiation

Solartarget

Installed

capacity

(ason

December

2012)

FiT/

Otherin-

centives

Tax

incentives

and

subsidies

Quota

obligation

orgreen

certifi-

cates

Netmetering

Marketcharacteristics

andkeyd

rivers

Futuretrends

Market

potential

projected

for2016

Mature

markets

U.S.A.

4.6

8

DifferentRPSfor

states

7.2

GW

Satelevel

FiT

Yes

Statelevel

RPSobli-

gation

Satelevel

Marketla

rgelydriven

byutilityscaleprojects.

Increased

demandfrom

commercialconsumers

alsoadde

dtothe

capacity.

Surgein3rdparty

ownedresidentialroo

f-

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

marketforstoragew

ill

bedeveloped.

52GW

Japan

3.6

3

33GW

by2020

source

7GW

National

levelFiT

Yes

No(re-

placed

byFiTin

2012)

No

Marketis

largelydriven

byresidentialconsum-

ers.

NationwideFiT

willencou

ragegreater

demandforutilityscale

projects.

Surgeinutilityscale

projectswiththeintro-

ductionofFiT

18GW

Spain

4.7

5

7.2

5GW

by2020

5GW

National

levelFiT

(Sus-

pended)

No

No

No

CutbackofFiT/support

fornewP

Vsystemshas

curtailed

demand

7.8

GW

Italy

3.8

1

23GW

by2017

16GW

National

levelFiT

No

No

Yesfor

system

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