The Indian solar market installed 8,263 MW in CY 2018, down 15.5 percent compared to 9,782 MW in CY 2017 as the safeguard duty, GST issues, and land and transmission issues took a toll on the large-scale installations, according to Mercom India Research’s newly released Q4 and Annual 2018 India Solar Market Update. Rooftop solar meanwhile had an impressive year growing by 66 percent year-over-year (YoY).
Total power capacity additions in India were 16.3 GW in 2018 from all generation sources. Of this, renewable energy sources accounted for nearly 70 percent of installations, with solar representing 50.7 percent of new capacity and wind with 14 percent. Coal accounted for 27.5 percent of new capacity added.
“To succeed in the Indian solar market, companies need to play the long game.For the first time in India’s history, solar made up over 50 percent of new power capacity in 2018. We will continue to see a steady shift toward solar as prices continue to drop. This is going to be the new normal as coal plants continue to shutter,” commented Raj Prabhu, CEO and co-founder of Mercom Capital Group.
In Q4 2018, solar installations came to 1,638 MW, up three percent quarter-over-quarter from the 1,589 MW installed during Q3 2018, but ~52 percent lower YoY compared to the 2,491 MW installed in Q4 2017.
According to the report, rooftop installations in 2018 totaled 1,655 MW, a 66 percent growth year-over-year. Cumulative rooftop solar installations have reached 3,260 MW. In terms of annual growth, rooftop solar continues to be a bright spot, as commercial and industrial entities see rooftop solar as a viable way to combat higher power tariffs. Following a significant increase of 50 percent quarter-over-quarter growth from Q4 2017 to Q1 2018, installation growth remained steady for the rest of the year.
Financing rooftop installations could be challenging in 2019 as Indian banks are facing a liquidity crunch with many banks hitting the exposure limits to the power sector.
The report found that solar parks continue to face issues in providing clearly demarcated-ready land for project development, causing undue delays and putting additional pressure on large-scale projects.
The market is adjusting to the safeguard duty regime, but much will depend on Chinese solar policy and installation goals going forward. Any increase in installation targets in China will tighten supplies and harden module prices while oversupply and module price declines could result if China decides to pull back on its solar installation targets.
“Tariff caps and retroactive cancellation of solar auctions have been the biggest concerns in the investment community,” added Prabhu.
As the general election nears, the rules of the election commission could affect land acquisition and government approvals for solar projects. However, elections generally mean fewer power cuts and increased power demand.
Key Highlights from Mercom India Research’s Q4 and Annual 2018 India Solar Market Update.
- India added 8,263 MW in new large-scale and rooftop solar capacity in CY 2018, in line with Mercom’s forecast.
- Of the total installed capacity in 2018, large-scale projects accounted for 6,608 MW (23 percent decline yoy) and rooftop installations came to 1,655 MW (66 percent growth yoy).
- Cumulative installed solar capacity in India reached almost 27.9 GW at the end of December 2018. Of this, cumulative rooftop solar installations amounted to 3,260 MW.
- Solar accounted for 50.7 percent of the new power capacity added in 2018.
- Renewable energy capacity additions continue to increase at a significant pace in India, accounting for approximately 22 percent of India’s power capacity mix cumulatively.
- In 2018, investments in the Indian solar sector totaled over $9.84 billion, 15 percent lower compared to the previous year.
- The year was highlighted by 11 mega tenders of 1 GW in size or more.
Mercom Communications India, a subsidiary of U.S.-based Mercom Capital Group, is a clean energy research and communications firm in India recognized worldwide for its expertise in Indian cleantech markets. Located in Bangalore, India, Mercom has been providing communications and research services across India for clean energy organizations since early 2009.