The Indian solar market added 1,869 megawatts (MW) in the second quarter of 2017, bringing installations in the first half of the year to 4,765 MW (surpassing the 4,313 MW installed in all of 2016) according to the latest India Solar Market Update released by Mercom India Research.
Large-scale solar installations totaled 1,639 MW in Q2 2017 while rooftop installations accounted for 230 MW. In the first half of 2017, large-scale solar installations made up 4,290 MW (90 percent) and rooftop installations totaled 475 MW (10 percent) of total installations. Cumulative solar rooftop installations crossed a significant milestone of 1 GW at the end of Q2 2017.
"The Indian solar market had its best first half and is on pace to have its best year," said Raj Prabhu, CEO and Co-founder of Mercom Capital Group. "However, uncertainty around GST rates, utilities renegotiating to get better rates, and the recently initiated anti-dumping case has stalled momentum in the sector and could have a significant negative effect on installations in 2018."
Andhra Pradesh became the first state in India to install over 2 GW of solar. Currently, seven states have exceeded 1 GW of solar installations.
The pipeline of Indian utility-scale projects under construction is currently 12.2 GW with about 6.3 GW of tenders pending to be auctioned.
Approximately 3.4 GW of solar was tendered in Q2 2017 compared to 1.85 GW in Q1 this year. There were 2.5 GW of solar projects auctioned in Q2 2017 compared to 1.3 GW in Q1 2017.
The lowest bid in solar reverse auctions declined significantly by about 26 percent from Q1 to Q2 2017 and average large-scale solar project costs in Q2 2017 were approximately ₹4 crore (~$0.62 million)/MW.
The newly released Q2 2017 India Quarterly Market Update forecasts 2017 installations to reach 10.5 GW, which would be a 144 percent increase year-over-year compared to the 4.3 GW installed last year.
The Goods and Services Tax (GST) rates were announced as promised in July, but there is still a lot of confusion and ambiguity surrounding the GST rates. Initially, a rate of five percent was announced for all solar components, which was then clarified to five percent only for solar modules and 18 percent or more for other components. The most recent update is that the Ministry of New and Renewable Energy (MNRE) is pushing for a five percent rate, though nothing is official yet.
The second quarter also saw the lowest ever tariff of ₹2.44 (~$0.037)/kWh in the recently conducted 500 MW Bhadla Phase-III Solar Park auction. Most utilities now want a similarly low tariff, which has led to delays in PPA signings, tenders, and auctions.
"Most projects under construction will not be affected, but new tender and auction activity has stalled and most developers are taking a pessimistic view of the recent developments," said Priya Sanjay, Managing Director of Mercom Communications India.
While DISCOMs are looking for the lowest tariff, the anti-dumping petition filed by domestic manufacturers against solar imports from China, Taiwan, and Malaysia with the Directorate General of Anti-Dumping (DGAD) has been accepted. DGAD has officially initiated the investigation with the possibility of preliminary findings in as soon as two months.
Chinese module prices in India fell by about five percent in the second quarter of 2017. As expected, module prices firmed up in June due to high demand in China before its feed-in tariff cuts at the end of June. However, Chinese module prices are falling less dramatically than in Q3 2016 because the 5.5 GW top runner program and poverty alleviation program are keeping demand steady. Meanwhile, developers in the U.S. are looking to procure Chinese panels in anticipation of anti-dumping tariffs in the Suniva case. This presents a challenging scenario for Indian developers who are bidding lower and lower while anticipating that Chinese module prices will continue to decline indefinitely.
If the anti-dumping tariff is imposed, Mercom's forecast will be significantly revised downwards depending on the final tariff levels.
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