The Indian solar market installed 1,589 MW (mega watt) in the third quarter of 2018. Installations declined by four per cent compared to 1,659 MW in the second quarter of 2018, while a year ago (Q3 2017) it was 2,278 MW.
Large-scale installations during the third quarter of 2018 totalled 1,154 MW compared to 1,244 MW in second quarter 2018 and 2,013 MW in Q3 2017, according to Mercom India Research report.
“Lower installation levels were not a surprise due to a slowdown in tender and auction activity last year. The safeguard duty, lack of clarity around GST rates and land and transmission issues have all sapped the momentum from the solar market,” said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.
He added, the Indian solar industry is trying to recover from the safeguard duty announcement. "An acceptable tariff for both project developers and government agencies has been an ongoing challenge since the inception of India’s solar program,” continued Prabhu
The report also found that rooftop installations grew 5 per cent quarter-over-quarter in the third quarter, totalling 435 MW compared to 415 MW installed in Q2 2018. Rooftop installations increased by 64 per cent YoY compared to 265 MW installed in Q3 2017.
India’s cumulative installed solar capacity reached 26 GW at the end of Q3 2018. The report forecasts solar installations of around 8 GW for the calendar year (CY) 2018.
Rajasthan emerged as the top state for large-scale installations with a newly added solar capacity of over 600 MW, followed by Odisha and Telangana in Q3 2018. Together these three states made up around 70 per cent of large-scale installations in the quarter.
Mercom reports claim nearly 4 GW of solar auctions have been cancelled by multiple agencies this year. The Solar Energy Corporation of India (SECI) also introduced a tariff ceiling, which has capped tariff levels that developers could bid for, making auctions somewhat controlled where bids can only move in one direction regardless of market conditions.
“After a year and a half, the solar industry is still not clear as to what the actual GST rates are. Land and transmission availability challenges have contributed to slower growth in large-scale projects. Rupee depreciation and higher interest rates have added to the headwinds faced by the industry.”
In the long-term, prospects for solar remain bright in the country. The energy transformation in the country continues and 2018 may be the first year where solar makes up over 50 per cent of new capacity additions in India. Companies need to be able to play the long game if they want to be successful in the Indian solar market, said Prabhu.
Amit Gupta, Director of Legal & Corporate Affairs, Vikram Solar added the other factors are cut throat competition, currency fluctuations, such as ambiguity in applicability of GST on EPC for solar power projects and no seamless process being set up to ensure pass through of recently imposed Safeguard Duty for the projects that were bid out before the imposition of safeguard duty without factoring the same in bid price, allotted in various Indian States.
Although, Ministry of Power directed CERC to determine the per unit cost impact of new levies and duties in a time bound manner. Such directions are applicable only to the project that come within the jurisdiction of CERC. But no such directions have been issued by State Governments to State Regulators till now. As a result thereof, solar developers and EPC contractors having projects in various Indian States are made to face complex, time consuming and painful legal remedies to recover the same. Further, Solar developers are uncertain, if they will be able to get the reimbursement on account of Safeguard Duty and/or how much time will be spent in getting the same recovered through legal process.
— Solar installations in India in Q3 2018 totalled 1,589 MW, a 4 per cent decline compared to 1,659 MW installed in Q2 2018.
— Of the 1,589 MW installed in Q3 2018, large-scale installations added up to 1,154 MW (73 per cent), while rooftop installations accounted for 435 MW (27 per cent).
— Cumulative solar installed capacity in India was approximately 26 GW, with the cumulative rooftop solar installed capacity reaching 2.8 GW at the end of Q3 2018.
— Solar represented 53 per cent of the newly added power capacity with 6.6 GW installed in the first nine months of 2018.
— Mercom forecasts India to install approximately 8 GW in CY 2018.
— Renewables comprise approximately 21 per cent of India's total installed capacity, with solar accounting for about 7.5 per cent. Among renewables, solar accounts for approximately 35 per cent of the installed capacity.