India is expected to add 9.4GW of solar PV this year, according to Bridge to India’s latest quarterly report.
The consultancy’s India Solar Compass Q2 2017, now extended in line with the huge growth of activity in the Indian sector, projected 8.4GW of utility-scale installs and 1.1GW of rooftop overall this year.
India has now reached 15,611MW of cumulative installed capacity as of 30 June , with 13,951MW utility-scale and 1,660MW in rooftop.
The firm noted that with tariffs going below the three rupee per unit mark earlier this year, solar had become attractive to distribution companies (Discoms) and the pull of solar had gone beyond regulatory or environmental factors. However, the low tariffs also resulted in scrapped tenders as states and Discoms looked to redesign their tenders to achieve similar lows or recondsider their power procurement options. Indeed, while 3GW of tenders were announced in Q2, another 2.1GW were scrapped. The lower amount of capacity to play for has also made the already fierce competition between players even more so.
Additions in Q2 of 1,437MW dropped significantly from Q1’s huge 3,120MW, and were less than half the government’s scheduled 3.3GW for that quarter.
More worryingly, according to Bridge to India, some states including Uttar Pradesh, Andhra Pradesh and Tamil Nadu are planning to renegotiate or cancel previously allocated projects, which have higher tariffs.
Looking ahead, Bridge to India expects utility-scale capacity additions in Q3 and Q4 2017 of 1,565MW and 2,265MW respectively.
Module prices spiked up to US$0.32-0.33/W against expectations of about US$0.28/W, but this is expected to remain firm through the next 2-3 months driven by strong demand from China and the US (ahead of potential safeguard duties). Less availability of modules might also cause delays in project completions due for Q3 and Q4.
An almost complete transition to 1,500V systems is expected within two years.
Vinay Rustagi, managing director, Bridge to India, said: “Indian solar sector continues to grow rapidly with capacity addition in 2017 expected to go up y-o-y by 90%. Rooftop solar is also showing robust growth as solar power becomes increasingly more attractive with falling costs. All this is acting as a huge pull for international investors and equipment suppliers. The challenge is to sustain this growth as Discoms seem to be frozen in the headlights with falling tariffs and weak power demand. The over-riding need of the moment is for central government and regulators to ensure that the tender allocation and project contractual structures are robust and not prone to short-term fluctuations.”
Accounting for remaining confusion around the Goods and Services Tax (GST), Bridge to India expects a net increase in project costs of 3-8% depending on GST rate for equipment other than modules (which are set at 5%).
In stark contrast to Bridge to India's figures, Mercom Capital Group recently significantly revised its forecasts upwards, projecting that India would add nearly 10.5GW in 2017.