India Solar Market – September 2019

An Overview

Gold Partners
Research provided by
Index

Executive Summary………………………………………………………………………………………………..………………………………...….……… 4

Current Solar Market – Installations, Pipeline…………………………..…………..…………………………………………………………..……………. 5

Policy Drivers…………………………………………………………………………………………………………….………...…………………….……… 8

Tenders & Auctions…………………………………………………………………………………………………..…………….…………….…….…..…… 13

Share of Solar…………………………………………………………………..…………….……………..…………..…………..…………..…………..…… 16

Project Development by State……………………………………………………………………………..…………………………………………………… 19

Solar Trade…………………………………………………………………..………………….………………………………………………………...……... 22

Rooftop Solar……………………………………………………………………………………………………………..……………….…………………….. 24

Market Leaders…………………………………………………………………………………………………………………………………...……………… 26

Solar Market Outlook……………………………………………………………………….……………………..…………………..………………………… 28

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 GOLD PARTNER
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 Executive Summary
• Indian solar market added ~3.2 GW of solar in 1H 2019, with cumulative solar installations crossing 31.5 GW as of Q2 2019. Mercom India Research
forecasts India to install over 8 GW of solar capacity in the calendar year 2019. The report estimates solar installations in India to reach approximately 70
GW by the end of 2022 based on current market dynamics. The solar project pipeline in India is now approximately 22.3 GW, according to Mercom’s India
Solar Project Tracker. Currently, about 37.4 GW of tendered projects are awaiting auction.

• By the end of Jun 2019, utility scale solar projects accounted for 88% of the total solar installed capacity with ~27.8 GW and solar rooftop accounted for
12% with ~3.8 GW installed capacity.

• In 1H 2019, ~30 GW of solar PV projects were tendered by state and government agencies, according to tender tracker. Over 7.3 GW of solar PV projects
were auctioned during 1H of 2019. Even though there were plenty of tenders issued in the country, tariff caps have added a new challenge for developers.
Developers are reluctant to bid at the levels prescribed by state agencies instead of a market-based auction in which the lowest bid wins. This has caused
several developers to refrain from participating in these auctions, and several auctions have been undersubscribed recently.

• Renewable energy (including large-hydro) now accounts for over 35% of the total power installed capacity in India, with solar comprising nearly 8.7% as of
Jun 2019. Within renewables, solar accounted for ~25% of the installed capacity.

• Karnataka is the top state for solar PV installations with over 6 GW of cumulative installed capacity as of Q2 2019. The state accounts for 22% of the total
installed solar capacity in the country.

• In Q2 2019, the Indian solar sector received investments to the tune of $1.85 billion (~₹132.66 billion).

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Current Solar Market – Installations, Pipeline
 India Solar Cumulative Installations By Policy (MW)
All India Cumulative Utility-scale Solar Installations By Policy Type (MW)
4,000

3,000
Cumulative Large-Scale Solar
Installations ~27.8 GW
2,000

1,000

Source: Mercom India Research (Jun 2019)

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 India Solar Project Pipeline By Policy (MW)
India Utility-scale Solar Project Pipeline (MW)
30,000

Projects Tendered, Pending Auctions (~34.4 GW)

25,000

Projects Under Development (~22.3 GW)

20,000

15,000

10,000

5,000

Source: Mercom India Research (Jun 2019)

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Policy Drivers
Policy Updates
❑ DISCOMs Mandated to Maintain Letter of Credit as a Payment Security Mechanism to Buy Power – The Minister for Power and New & Renewable
Energy (MNRE) announced the approval of a proposal to make it mandatory for distribution licensees to open and maintain an adequate Letter of Credit
(LoC) as a payment security mechanism under power purchase agreements. Power generators in India have battled the challenge of delayed or non-
payments by distribution companies (DISCOMS) for decades.

❑ Draft Guidelines for Grouping Solar PV Inverters for Testing in Labs - MNRE issued draft guidelines for series approval (grouping) of solar PV inverters
to conduct testing in labs for the implementation of “Quality Control Order on Solar PV Systems, Devices and Components Goods 2017.” These guidelines
are applicable for solar PV based off-grid, grid-tied, and hybrid inverters of capacities up to 150 kW. This draft guideline is specific to testing approval of
‘series’ of products instead of approving each product model individually. This was a sticking point as there was no clarity when the original order was
issued and manufacturers complained that getting approval for individual models was expensive, cumbersome and caused delays.

❑ MNRE Orders Setting Up of Dispute Resolution Committee for Solar and Wind Sectors - MNRE issued an order to establish a system to resolve
disputes between solar and wind energy developers and the Solar Energy Corporation of India (SECI) and National Thermal Power Corporation (NTPC).
The Dispute Resolution Committee (DRC) will be handling cases pertaining mostly to time request extensions along with various other common issues.
These would be cases wherein time extension decisions by SECI are challenged based on contract terms.

❑ CERC Finalized the Fifth Amendment to its Deviation Settlement Mechanism Regulations – The Central Electricity Regulatory Commission (CERC)
issued its fifth amendment to the deviation settlement regulations which include two new clauses: a daily base deviation settlement mechanism (DSM) and
a time block DSM. The commission has provided relief to generators through exemption from additional charges.

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 Policy Updates
❑ CERC Issued Draft Regulations for Power System Development Fund - CERC issued draft regulations for the Power System Development Fund (PSDF).
The National Load Despatch Center will be the nodal agency for the implementation of the projects or schemes under these regulations. The fund is to be
utilized to fund projects or programs for the creation of necessary infrastructure, necessary transmission systems of strategic importance based on operational
feedback by load despatch centers for relieving congestion in the interstate transmission system and intrastate systems which are incidental to the ISTS. The
PSDF will be maintained and operated through the public account of India.

❑ PGCIL Proposes Blueprint for Solar and Wind Power Evacuation from Western Region – The Power Grid Corporation of India Limited (PGCIL), came up
with a proposal to establish a transmission system for the evacuation of power from potential solar and wind energy zones in the country’s western region. The
proposal is to develop the transmission infrastructure in two phases. A total of 20 GW of solar and 9 GW of wind projects have been planned in Phase-I (up to
December 2020), and 30 GW of solar and 7.5 GW of wind are planned for Phase-II (December 2021).

❑ MNRE Asks Developers to Use Robotics for Efficient Use of Water in Solar Projects - The MNRE issued a letter recommending the efficient utilization of
water for cleaning utility-scale solar projects. The ministry noted that the project developers are currently using too much water for cleaning solar modules, and
they should try and minimize wastage and recommends the use of robotic cleaning technology, which uses less water for cleaning solar projects.

❑ Clarification on Import Conditions for Lead-Acid Batteries Used in Solar Projects - MNRE issued guidelines for the import of secondary cells and
batteries of lead-acid and nickel-based chemistries that are utilized in solar project development. It clarifies that secondary cells and batteries of lead-acid or
nickel-based chemistry type, are covered under the Indian Standard (IS) 16270 for storage batteries that are used in solar projects. The ministry has also
issued draft guidelines for performance testing of batteries (lead-acid and nickel-based chemistry type) series approval for mandatory registration with the
Bureau of Indian Standards (BIS).

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 Challenges Faced By Industry

Availability Land PPA Renegotiations

of and and Tariff Caps Payment Delays
Financing Transmission Curtailment

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 Case for Solar in India

Strong Transition to Solar Cheaper Top 3

Large Domestic
Government Renewables is
Market
than Coal in the Solar Market
Support for Solar Happening Now Country Globally

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Tenders and Auctions
 Solar Tender & Auction Activity in 1H 2019
• In 1H 2019, approximately 30 GW of solar projects India Solar Tenders and Auctions in 1H 2019 (Jan-Jun)
were tendered by state and government agencies. 14,000

• Over 7.3 GW of solar PV projects were auctioned Tenders (MW)

12,000
during the period Jan-Jun of 2019. Auctions (MW)

• Even though there were plenty of tenders issued in

10,000
the country, tariff caps have added a new
challenge for developers. Developers are reluctant
8,000
to bid at the levels prescribed by state agencies
instead of a market-based auction in which the
6,000
lowest bid wins. This has caused several
developers to refrain from participating in these
4,000
auctions, and several auctions have been
undersubscribed recently.
2,000
• In the interim, we may continue to see auctions
getting postponed and tariff caps adjusted multiple
0
times until they are viable enough for developers to Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19

bid. Source: Mercom India Solar Tender Tracker

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 Low Tariff/Bids (₹/kWh)

2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
NSM PII B2 (Kar)-Apr 16

NSM PII B2 (Telangana)-May 16

Jharkhand-May 16

2016-17
Karnataka P-V (Gen)-May 16

NSM PII B2 (Raj)-Jul 16

Rewa Solar Project (MP) - Feb 17

NSM PII B2, Kadapa (AP) - Apr 17

NSM PII B4, Bhadla P4 (Raj) - May 17

NSM PII B4, Bhadla P3 (Raj) - May 17

GUVNL (Guj) - Sep 17

2017-18
NSM PII B4, Bhadla P3, T XI (Raj) - Dec 17

NSM PII B4, Bhadla P4, T XII (Raj) - Dec 17

KREDL P-VI Talukwise (Kar) - Feb 18

KREDL, Pavagada Park (Kar) - Mar 18

Solar Bidding Trends

NTPC, Ananthapuram Solar Park (AP) - May 18

MSEDCL (Mah)- May 18

SECI, Pavagada Solar Park (Kar) - May 18

Mahagenco AG Feeder (Mah) - May 18

APDCL (Assam) - May 18

KREDL, Pavagada Solar Park (Kar) - Jun 18

SECI, ISTS (Across India) - Jul 18

SECI, Kadapa Solar Park (AP) - Jul 18

SECI, ISTS - II (Across India) - Jul 18

GRIDCO (Odisha) - Jul 18

NTPC, ISTS (Across India) - Aug 18

Imposition

2018-19
Safeguard Duty

GUVNL PII (Guj) - Sep 18

UPNEDA (UP) - Oct 18

Lowest Solar Bids in Reverse Auctions in India (₹/kWh)

KREDL Talukwise (Kar) - Oct 18

KREDL Pavagada Solar Park (Kar) - Oct 18

SECI Floating Solar (UP) - Nov 18

UPNEDA (UP) - Dec 18

MSEDCL, P2 (Mah) - Feb 19

GUVNL PIV (Guj) - Feb 19

SECI, ISTS - III (Across India) - Feb 19

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SECI, (Rajasthan) - Mar 19

GUVNL, Raghanesda Park, PIII-R (Guj) - May 19

GUVNL, Dholera Solar Park, P-V (Guj) - May 19

SECI, Dondaicha Solar Park (Mah) - May 19 2.87

2019-20

SECI, ISTS - IV (Across India) - Jun 19 2.54

SECI, T-II (Rajasthan) - Jun 19 2.50

Low Tariff (₹/kWh)

- 15 -

UPNEDA (UP) - Jun 19 3.02

Source: Mercom India Research (Jun 2019)
Share of Solar
 Solar Accounts for 51% of New Power Capacity Additions in 2018
Share of New Power Capacity Additions in India (2010-2018)
Solar and Wind account for ~65% of New Power Capacity Additions in 2018
100%
Other Renewables
90%
Small Hydro
Share of New Capcity Additions %

80%

70% 50.7% Solar Power

60%
Wind Power
50%
Hydro
40%
14.0%

30% Nuclear

20%
Gas
27.5%
10%
Coal
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018

Data from CEA, MNRE, Mercom India Solar Project Tracker Source: Mercom India Research (Jun 2019)

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 Solar Makes Up ~8.7% of India’s Total Installed Energy Capacity
India - Cumulative Installed Power Capacity Mix (%)
• Renewable energy sources (including
Renewables (including Large Hydro) comprise over 35% of India's total installed capacity, with solar
large hydro) accounted for ~35.4% of the accounting for ~8.7%. Among renewables, solar accounts for ~25% of the installed capacity
India’s power capacity mix at the end of Nuclear Lignite
Diesel
1.9% 1.7%
Jun 2019. 0.2%
Gas
6.9%
• Cumulative solar installations at the end of
June 2019 reached 31.5 GW, representing Large Hydro 12.6%

8.73% of the total power capacity in India.

• Among the renewables, solar accounted

for approximately 25% of the installed Renewable Energy Wind Power 10.1%
35.4%
capacity. Coal
53.9%
• India added a total power capacity of
Solar Power 8.7%
around 8 GW in the first half of 2019.
Solar and wind accounted for 56% of the
Bio-Power 2.7%
new power capacity added during the Small Hydro 1.3%
Waste to Power 0.04%
period.

Data from CEA, MNRE, Mercom India Solar Project Tracker (Installed Capacity as on 30 Jun 2019) Source: Mercom India Research

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Project Development by State
India Solar Cumulative Installations By State (MW)
India Utility-scale Cumulative Solar Installations by States (MW)
Karnataka
Rajasthan
Telangana
Andhra Pradesh
Tamil Nadu
Gujarat
Madhya Pradesh
Maharashtra
Uttar Pradesh
Punjab
Odisha
Uttarakhand
Chhattisgarh
Bihar
Kerala
Cumulative installed large-
West Bengal scale solar capacity now
Haryana stands at ~27.8 GW
Jharkhand
New Delhi
Daman and Diu
Himachal Pradesh
Chandigarh <20 MW
Dadra and Nagar Haveli
Andaman & Nicobar 20-100 MW
Tripura
Goa 100-1,000 MW
Arunachal Pradesh
Jammu & Kashmir 1,000-2,500 MW
Lakshadweep
Assam 2,500-5,000 MW
Puducherry

0 2,000 4,000 6,000 8,000

Source: Mercom India Research (Jun 2019)

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Solar Project Development Pipeline By State (MW)
Large-scale Solar Project Development Pipeline by State (MW)
Across India
Maharashtra
Rajasthan
Karnataka
Gujarat
Andhra Pradesh
Uttar Pradesh
Tamil Nadu
Madhya Pradesh
Solar projects under development
Telangana pipeline total about 22.3 GW
Assam
Odisha
West Bengal
Punjab
Kerala
Andaman & Nicobar
Haryana

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

Source: Mercom India Research (Jun 2019)

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Solar Trade
 Import-Export Trends in the Indian Solar Market
• Solar modules and cells worth $399 million (~₹27.75 billion) were imported by India in Q2 2019, a steep decline of 39% when compared with ~$650 million of solar cells
and modules that were imported by India in Q1 2019. YoY, the solar imports also decreased by 9% in comparison to Q2 2018.

• In Q2 2019, India exported solar cells and modules worth $34.8 million (~₹24.24 billion), a 4% rise when compared to the previous quarter. In Q1 2019, India had
exported solar cells and modules worth $33.3 million (~₹23.4 billion).
Country-wise Breakdown of Indian Solar Imports (%) Country-wise Breakdown of Indian Solar Exports (%)
Q2 2019 (Apr-Jun 2019) Q2 2019 (Apr-Jun 2019)

Others
Oman
Others China
Spain
Hong Kong
Korea
Taiwan
UAE USA
Singapore
Somalia

South Africa
Thailand

Belgium
Vietnam

Data from Department of Commerce Source: Mercom India Research

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Rooftop Solar
 Rooftop Solar Installation Growth
• Rooftop solar installations increased slightly in Q2 Rooftop Solar Installations by Quarter (MW)
500
2019 with 292 MW, when compared to 263 MW of
rooftop solar projects added in Q1 2019.

• India needs to accelerate the growth of its rooftop 400

solar segment compared to large-scale solar.

• Cumulative solar rooftop installations in India

300
totaled ~3.8 GW as of June 2019. Rooftop
installations still only make up 12% of total solar
installations in the country.
200

• Most of the growth in the rooftop segment is

currently coming from C&I market.
100
• Mercom forecasts around 1 GW of rooftop solar
capacity to be added by the end of 2019, primarily
due to the disruption and slowdown caused by 0
general elections, financing challenges, and net- Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19
Source: Mercom India Research (Jun 2019)
metering issues.

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Market Leaders
 Indian Solar Market Leaders

Indian Solar Market Leaders 2018

Source: Mercom India Solar Market Share Tracker © 2019 by Mercom Capital Group, LLC. All Rights Reserved.

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Solar Market Outlook
India’s Solar Installation Outlook
India Solar Demand Forecast (MW)
12,000 50,000
Annual Rooftop Solar Installations (MW)

Annual Utility-scale Solar Installations (MW) 45,000

10,000 9,782
Cumulative Solar Installations (MW) 40,000

Cumulative Installations (MW)

8,338
Annual Installations (MW)

35,000
8,000
30,000

6,000 25,000

4,313 20,000
4,000
15,000
2,313
10,000
2,000
998 1,044 985 5,000
12 177
6
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F
Source: Mercom India Research (Jun 2019) Note: 'F' represents forecast

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-29-
 About Mercom India

Mercom Communications India (Mercom India) is the go-to source for information and insight into
India’s cleantech industry. A subsidiary of U.S.-based Mercom Capital Group – a global clean energy
communications and consulting firm – Mercom India is widely recognized for its leadership and
influence in helping to shape India’s rapidly growing clean energy sector.

For clean energy organizations looking to expand market influence or eyeing initial entry into India’s
renewable energy industry, Mercom India provides invaluable research, news, consultation, and
communications services.

www.MercomIndia.com
info@MercomIndia.com
@MercomIndia

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