New Delhi: India is expected to add 9.4 gigawatts (GW) of solar power capacity in 2017 but rising competition is squeezing investor returns, said a report released by Bridge to India (BTI) on Monday.
It added that “it is still an unnerving time for project developers and investors as rising competition forces tariffs down and the sector faces headwinds from module price rises, tender cancellations, GST (goods and services tax) and anti-dumping duty-related uncertainty”.
Despite this, the forecast for total addition of solar power as per BTI’s India Solar Compass is more than its forecast earlier this year. In May, BTI released its India Solar Handbook 2017, which said that with 8.8GW of capacity addition projected in the year ahead India is set to become the third biggest solar market globally in 2017, overtaking Japan.
The India Solar Compass report, a quarterly update on the Indian solar market, noted that second quarter (Q2) of 2017 was a landmark period in the Indian solar sector with tariffs falling below the critical threshold of Rs3 per unit, making solar power the cheapest new source of power in the country.
“After a bumper Q1 (first quarter) 2017 when India added 3,120 megawatts (MW) of utility scale solar capacity, pace in Q2 2017 was relatively slow at 1,437MW against a scheduled capacity addition of 3,300MW. Highest capacity addition as well as slippage was from the 2,000MW allocation in Telangana,” said the BTI report.
“Around 1,680MW was due to be commissioned in Q2 but only 640MW came online because of delays arising from land and transmission-related issues,” it emphasized.
The report further said that the expected new utility scale capacity addition in Q3 and Q4 2017 will be 1,565MW and 2,265MW respectively. Of the 9.4GW in 2017, the expectation for total rooftop solar capacity is 1,056MW.
“Indian solar sector continues to grow rapidly with capacity addition in 2017 expected to go up y-o-y (year-on-year) 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,” said BTI’s managing director Vinay Rustagi.
He, however, said that the “challenge is to sustain this growth as discoms (distribution companies) 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,” he added.
Meanwhile, the report highlighted that more than 3,000MW of new tenders were announced, greater than the aggregate of all new tenders announced in three previous quarters but at the same time, eight tenders with an aggregate capacity of 2,130MW were scrapped due to discoms reconsidering their power procurement options.
As on 30 June, the total installed renewable power capacity across India is 58,303.35MW. Of that 13,114.85MW is solar power. India has an ambitious target of 100GW of solar power by 2022.