India Solar Market Update...uncertainty around the GST and how it will affect the solar sector is a cause for concern. Some of these issues have affected solar auction announcements

India Solar Quarterly Market Update

©2017 Mercom Capital Group, llc. ALL RIGHTS RESERVED. I www.mercomcapital.com I [email protected] I Page 1

India Solar

Market Update

December 2016

http://www.mercomcapital.com/

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Mercom Capital Group

India Solar Market Update

India Solar Quarterly Market Update

Crucial Year Coming Up for the Indian Solar Sector with More Than 9 GW of

Installations Forecasted for 2017

2016 installations to come in at approximately 4 GW

December 2016

Key Findings

▪ Mercom forecasts approximately 4 GW of solar installations in India for calendar year (CY) 2016 and

more than 9 GW for 2017

▪ As of December 2016, cumulative solar installations have reached 9.6 GW

▪ Solar projects under development now total approximately 14.2 GW with 6.3 GW of tenders waiting to

be auctioned

▪ Top solar states currently include Tamil Nadu, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Madhya

Pradesh, Punjab, Karnataka, Maharashtra, and Uttar Pradesh

▪ Five Indian states now have more than 1 GW each of installed solar capacity

▪ Auctions have generally slowed over the past three months

▪ Solar parks infrastructure development is lagging

▪ Transmission and evacuation issues are cropping up in several states

▪ Demonetization has been positive on the banking side as financial institutions are flush with cash to

lend, but a negative for small developers

▪ Module prices have declined swiftly over the last 3-4 months. Chinese module prices in India have

dropped by approximately 30 percent over the last 12 months

▪ Low module prices came in just in time, making projects economically viable, that seemed previously

unviable due to aggressive low bidding

▪ Uncertainty regarding the GST impact on solar projects has made some developers cautious in bidding

for new projects






List of Charts/Tables

India Solar Demand Forecast (MW)……………………………………………………………..………... 3

All India Cumulative Utility-Scale Solar Installations by Policy Type (MW)……….…………………… 5

India Utility-Scale Solar Project Pipeline (MW)……………………………………………………….…… 5

India Utility-Scale Solar Projects by Status (MW)……………………………………………………….… 6

SECI: Details of Solar Rooftop Tender for 1,000 MW…………………………………….……………… 9

Chinese Module ASPs in India are the Lowest in the World………………………..……..................... 10

Historical Average Module Spot Price Trends in China/Taiwan………………………..……................ 11

Domestic Interest Rates for Solar Project Financing (%)………………….……………….................... 12

Top Developers with Operating Utility-Scale Solar Projects in India………….................................... 13

Top 20 Developers Account for 75% of Utility-Scale Solar Project Pipeline…………......................... 14

Top Solar Inverter Suppliers in India by Shipments…………………………………………………….… 15

Market Share of Leading Solar Rooftop Installers in India…………………………………………….… 16

Project Development in Solar Parks in India…………………………………………………………….… 18

India - New Solar Tenders Announced (Sep 2016 to Dec 2016) …………………………………….… 19

India - Solar Auctions Announced in (Sep 2016 to Dec 2016) ………………………………………….. 20

India : UDAY Timeline 2016……………………………………………………………….……………….… 22

India Imports and Exports of Solar Cells and Modules………………………………………………….… 23

Country-wise Breakdown of Indian Solar Imports (%) April to September 2016…….……………….… 23

Country-wise Breakdown of Indian Solar Exports (%) April to September 2016…………….……….… 23

Share of New Power Generating Capacity Additions in India (2010-Nov 2016) …………………….… 25

India - Installed Power Capacity Mix (%)………………………………………………………………….… 26

Solar Power's Share of Total Electricity Generation in India (Billion Units) ………………………….… 27

Electricity Generation from Renewable Energy Source (Million Units) ……………………………….… 27

Perspective Transmission Plan for RE Capacity by 2030……………………………………………….… 30

Overall Project Implementation Plan……………………………………………………………………….… 32

Transmission Infrastructure Growth as of Nov. 30, 2016…………………………………….………….… 33

India Utility-Scale Cumulative Solar Installations by States (MW) ……………………….…………….… 38

Solar Project Development Pipeline by State (MW) ……………………………….…………………….… 43

Top 10 Solar States in India……………………………………………………..………………………….… 45






Solar installations in India are expected to reach over 4 GW in 2016, we have reduced our installation forecast

from the previous quarter as several project completion dates have been moved to 2017. We are forecasting

installations to reach over 9 GW in 2017 which would put the Indian solar sector in the big leagues along with

China, the United States, and Japan. However, there are significant headwinds in terms of transmission and

evacuation issues that could threaten the pace of growth. The country’s solar development pipeline is now

approximately 14.2 GW, about 6.3 GW of projects have been tendered and are pending auction.

Major concerns in the sector right now are related to transmission, evacuation, curtailment, timely payments and

the outcome of the goods and services tax (GST).

The project development landscape has changed significantly over the last quarter largely due to oversupply and

the price decline of solar modules coming out of China. The average selling prices (ASPs) of Chinese modules in

India have declined approximately 10 percent since August and the lowest module price quoted has declined by

about 14 percent in the same period. This drop in panel prices has provided a much-needed boost to developers

that won projects at low bids and were struggling to make the project economics work.

Our recent in-depth look at solar parks has revealed that the infrastructure in many of these parks is incomplete

and not ready for primetime. Developers have raised concerns about how expensive the park fees are compared

to the quality of infrastructure being provided and in some cases developers are incurring expenses to clean the

land, build roads, and are still waiting for power to be evacuated after commissioning. All of this can have a

negative effect on project costs and profitability.

6 12 172

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2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F

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Annual Rooftop Solar Installations (MW)

Annual Utility-scale Solar Installations (MW)

Cumulative Solar Installations (MW)

2011 to 2015 cumulative installation figures reflect large-scale+rooftop installs Source: Mercom Capital Group (Dec 2016)

India Solar Demand Forecast (MW)

4,006

9,020 9,130 9,2009,500

2,313

9851,044998






The government of India announced demonetization on November 8, 2016, which has affected almost every

citizen and industry across the country. Essentially, the government ceased the use of ₹500 and ₹1,000 notes as

legal tender. While the effect of demonetization has been varied and implementation chaotic, our analysis

indicates a possible overall positive outcome for the power sector. Distribution companies (DISCOMs) are

recovering unpaid power bills as consumers have been allowed to pay power bills using old ₹500 and ₹1,000

notes. Unpaid power bills are a huge problem for DISCOMs in India and a key reason behind their financial

problems. There is also an expectation that banks, now flush with funds, could ease lending to the power sector

and potentially reduce interest rates. Demonetization has however negatively affected some small developers.

Delayed payments to developers are still an issue in states like Tamil Nadu and Rajasthan. Maharashtra and

Madhya Pradesh are now behind on their payments, which raises concern that other states may follow.

Payments to wind developers are delayed by 6-7 months in some states and banks are worried that solar may be

next.

Transmission and evacuation issues are a big concern, particularly for solar parks. Developers are losing

revenue due to delays. The industry is betting on the completion of the Green Energy Corridor to solve some of

these issues, but this project is moving very slowly.

While there is speculation that implementation of the GST will be delayed, many developers mentioned that

uncertainty around the GST and how it will affect the solar sector is a cause for concern.

Some of these issues have affected solar auction announcements which have slowed down over the past three

months.

Some important topics currently talked about in the Indian solar sector:






Methodology and Sources

Information and data for Mercom’s India Solar Quarterly Market Update comes from multiple sources.

Mercom collects installation data through state and central government agencies, project developers and

installers. We strive to reach every project under development to get timely updates which can lead to our figures

being slightly ahead of the government numbers. Mercom maintains a master project database of all large-scale

projects in India.

For module average selling process and interest rates we call manufacturers and developers. Interest rate

information comes from banks.

Our Market share information comes from extensive interviews with manufacturers, installers, EPCs, project

developers and inverter companies.

The facts and figures included in our reports are based on public information and our own primary research.

Mercom Capital Group has been tracking project development and other trends in the Indian solar sector since

2010.

All our forecasts are based on calendar year.

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India Solar Market Update...uncertainty around the GST and how it will affect the solar sector is a cause for concern. Some of these issues have affected solar auction announcements