Solar installations up by 34% in India: Report

Solar installations in India saw a sequential increase of 34% to 3,269 megawatt (MW) in the first quarter of 2018 from 2,448 MW in the last quarter of 2017, according to a report by Mercom India. The surge in installations was primarily due to completion of projects scheduled for commissioning in the previous quarter, but delayed due to grid connection issues.

Out of the total installations, rooftop installations accounted for 390 MW as compared to 245 MW the previous quarter. According to Mercom India, a clean energy research and communications firm, rooftop installation accounted for 12% of the total capacity.

“Rooftop solar has been growing at a healthy pace but it is very dependent on government tenders and projects. Open access projects were really sought after, but slowly states are making them less attractive by levying wheeling and banking charges. Residential solar is still untapped as financing and upfront costs continue to be big challenges. Government subsidies are not getting paid on time, affecting small installers,” the report said.

The cumulative solar installed capacity totaled 22.8 gigawatt (GW) at the end of the first quarter, the report said. Solar modules’ average selling prices also began to decline for the first time this quarter after two consecutive quarters of soaring prices. This comes at a time when the government and industry stakeholders are deliberating on the roadmap to achieve the target of generating 100 GW of solar power by 2022 under the National Solar Mission.

“A majority of the capacity addition in India for renewable energy has taken place over the past four to five years, with a vast pipeline of projects being announced in the past few years. India has immense potential to tap renewable energy sources and capitalise on emerging opportunities existing in the solar industry. To meet the country’s renewable energy requirements, the government has also introduced competitive bidding mechanisms, which have in turn driven the prices of tools and technologies significantly,” Rajasree Ray, economic advisor, department of economic affairs, ministry of finance, said at a press meet earlier this month.

This was the first quarter where over 3 GW was installed in the Indian solar market and the fifth quarter in a row where at least 2 GW was installed, the report added.

“Even though Q1 was a record quarter, solar procurement activity has been muted over the last few quarters. But with an anticipated decline in module prices, we expect to see tariffs decline and distribution companies ramp up procurement activity,” commented Raj Prabhu, CEO and co-founder of Mercom Capital Group.

“Coming off a record quarter, there are still several issues that need to be resolved by the government before strong growth resumes in the Indian solar sector at a healthy pace.”

Mercom is expecting approximately 8-9 GW of solar to be installed this year. “Recently, the Chinese government made a new policy announcement imposing installation caps and reducing feed-in tariffs to slowdown solar installations in China. This could mean a massive oversupply situation and creates an optimistic scenario for Indian solar developers who could begin to bid lower, which in turn could open the auction floodgates as states jump in to lock in low tariffs,” the report suggests.