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INDIASOLARCOMPASSJanuar 2012 Edition
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BRIDGE TO INDIA, 2011Photograph courtesy Istock photo
Market DashoardA snapshot o the markets
undamentals
Latest Market InsightsAn analysis o the policies, projects,
industry and fnance
A Ke Question AnsweredIs the solar Renewable Energy
Certifcates market viable?
OutlookQuarterly projections or the Indian
solar market
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1. Overview
2. Market Dashoard
2.1. India Market Compass2.2. Indian Solar Market Prices
2.3. Installed Capacit in India
3. Ke Findings
4. Policies4.1. National Solar Mission
4.2. Gujarat Solar Polic
4.3. Karnataka Solar Polic
4.4. Rajasthan Solar Polic4.5. Tamil Nadu
5. Projects5.1. New Installations Grid Connected
5.2. Status o Ongoing Projects
5.3. Execution Risks and Challenges
6. Financing
7. Upstream Industr Analsis7.1. PV Manuacturing Capacit in India
7.2. Expected Capacit Additions
7.3. Suppl Analsis
8. Ke Question:Is the Solar Renewale EnergCertifcates Market Viale?
9. Outlook9.1. Current Quarter
9.2. Longterm Outlook
10. Annexure10.1. Criteria or Project Allotment Under
Indian Solar Policies
10.2. Procedural Overview o
Indian Solar Policies
10.3. Glossar o Terms
CONTENTS
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Figure 41: List o solar PV project winners oratch two o phase one o the NSM
Figure 51: Grid connected solar projects installedin the previous quarter Octoer to Decemer 2011
Figure 52: Spectrum o challenges in projectexecution in India
Figure 61: Loans sanctioned the USEXIM ankor solar PV projects in India
Figure 71: Current module manuacturing capacitin India (MW)
Figure 72: Current PV cell manuacturing capacitin India (MW)
Figure 73: Thin flm manuacturers in India
Figure 74: Expected crstalline module capacitadditions new plaers April 2012
Figure 75: Expected crstalline module capacit
additions existing plaers April 2012
Figure 76: Module supplies to India as o Decemer25th 2011 (nonexhaustive)
Figure 81: Status o Renewale Energ PurchaseOligation (RPO) in selected states (20102011)
Figure 82: Solar REC Floor and Forearance Price(per MWh)
Figure 83: Solar PV project viailit push with RECs
Figure 84: Histor o nonsolar REC market prices
Figure 85: Demand and suppl o nonsolar RECs
Figure 91: Projected quarterl PV installationsin India
LIST OFFIGURES
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1. OVERVIEWThe previous quarter has seen PV
projects worth 350MW allottedunder batch two o phase one o the
Jawaharlal Nehru National SolarMission (hereon reerred to as the
NSM). A process o competitive biddingor the allocation o projects has seen
the eective price o solar in India allby 27.5% rom January 2011. The lower
taris have increased the pressureon developers that already aced low
margins in the highly price sensitivemarket. On the other hand, the allingprices have made solar increasingly
competitive in the Indian market. Itis now beginning to reach parity with
commercial electricity in dierentparts o the country, increasing its
viability independent o governmentpolicies.
Solar Renewable Energy Certicates
(RECs) continue to ace the challengeso a lack o long-term clarity on prices
and poor enorcement o statesRenewable Purchase Obligations
(RPOs). As a result, the solar RECmarket has seen limited demand
and almost non-existent supply.Depending on the business model,
selling RECs in addition to the incomerom a Power Purchase Agreement
(PPA),private or government backed,could provide an eective tari ar
higher than that under the NSM or anyother government policy. The lower
taris have brought into ocus the RECmechanism as a viable o-take or
projects.
Projects under both, the NSM and
the Gujarat solar policy, are acingdelays with regards to their completion
deadlines. The majority o the currentinstalled capacity has been achieved
by projects that have been delayedunder the Migration Policy o the NSM,
the Rootop & Small Solar PowerGeneration Programme (RPSSGP)
oered by the Indian RenewableEnergy Development Agency (IREDA)
and the Gujarat solar policy. Thedelays refect the challenges acedby the developers with regards to the
availability o nancing, high interestrates and tough execution challenges.
None the less, with the last quarterseeing the largest capacity addition
so ar, India is now emerging as aunctioning solar market.
The falling prices
have made solar
increasingly
competitive in the
Indian market.
Projects under both,
the NSM and the
Gujarat solar policy,are facing delays
with regards to
their completion
deadlines.
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2. MARKETDASHbOARD
2.1 INDIA MARKET COMPASS
PV CSP
FiT M8.5 M10
Int Rate 13% 13%
Capex M77/W M120/W
Modules M46/W NA
BOS M31/W NA
Project Size 20MW 120MW
2.2 INDIAN SOLAR MARKET PRICES
B
RIDGETOINDIA,2011
BRIDGE TO INDIA, 2011
Source: BRIDGE TO INDIA
Source: BRIDGE TO INDIA
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BRIDGETOIND
IA,2011
2.3 CURRENT TOTAL GRIDCONNECTED INSTALLEDCAPACITy - ALL INDIA
Source: BRIDGE TO INDIA
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1. Competitive bidding o 350MWworth o PV projects took place in
December 2011 as part o batch
two o phase one o the NSM. Thissaw the average tari all by 27.5%to M8.7 (0.14)/kWh.
2. The lowest tari bid wasM7.49 (0.12)/kWh oered by
Solairedirect o France or a5MW project in Rajasthan. The
highest successul bid was M9.39(0.15)/kWh by Green Inra Solar
rom India or a 20MW project inRajasthan.
3. We estimate that project costsstand at M90m (1.5m) per
megawatt, making the lowertaris viable.
4. The Tamil Nadu government isexpected to oer solar projects
worth 50MW in the upcomingquarter. Meanwhile, bidding under
the Karnataka solar policy willtake place in January 2012 and the
Rajasthan solar policy inFebruary 2012.
5. The last quarter has seen acapacity addition o 101.5MW o PV
and 5.5MW o CSP in India.6. Not more than 40MW out o the
150MW o PV under the NSM willmeet the project commissioning
deadline o January 10th 2012.7. Not more than 51MW out o the
450MW o PV under phase oneand phase two o the Gujarat
solar policy had met the project
commissioning deadline at the timeo publication o this report.8. Land acquisition, local
inrastructure, data or siteassessment and supply o BoS
components are the key challengesin project execution in India at
the moment.9. Project nancing remains a key
challenge in the industry with themajority o banks requiring heavy
collaterals to provide debt.
3. KEyFINDINGS
10. A prohibitively high cost o debt inIndia has seen many projects avail
export credit nancing, available
at a signicantly lower rate ointerest. So ar, such nancing hasbeen available largely through the
US-EXIM bank.11. The current production capacity o
modules in India is about 1,200MWo which 1,130MW is crystalline
silicon and 70MW are thin lmmodules.
12. A majority o the PV projectsunder execution in India are using
modules rom oreign suppliers.More than 140MW worth o projects
have been commissioned in Indiain the year 2011; more than 80%
o these installations have usedimported modules.
13. Suntech and First Solar have thelargest share in the Indian market
exceeding 150MW each. Industrysources suggest that they oer
some o the lowest prices in India.14. The high foor price under the REC
mechanism makes it lucrativeas an o-take, compared to
government policies like the NSM.15. The REC mechanism can give a
viability push to projects looking too-set commercial and industrial
grid prices.16. The solar REC market is expected
to ollow the non-solar REC markettrend o rising demand and supply
over the short-term.
17. Based on our projections, weestimate that a total capacity o100MW under the NSM and 175MW
under the Gujarat solar policy willbe added by end-March 2012.
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