Plans to go from two to five plants on largest solar plant top-10 list
BENGALURU — The Indian solar market had its best quarter in which it surpassed the U.S. during the first quarter (Q1) of calendar year 2018.
According to a recently released report by Mercom India Research, Q1 India Solar Market Update, this is the first time India has ever installed over 3 GW in one quarter.
The top three solar markets in the world – China, India, and US together installed a combined 15.4 GW of solar PV capacity in the first three months of 2018 (January to March).
According to data published by NEA, China installed 9.7 GW in Q1 of 2018, followed by India with 3.3 GW. According to a recent report released by GTM Research and Solar Energy Industries Association (SEIA), US installed 2.5 GW in Q1 2018.
However, this trend is unlikely to continue as the project development pipeline in India is relatively weak in 2018. The record first quarter was partly a result of commissioning of projects that were originally slated for Q4 2017 but could not be completed due to grid connection issues.
Mercom India Research is forecasting solar installations of approximately 8-9 GW in 2018 compared to 9.6 GW installed in 2017. The lower forecast is a result of a smaller pipeline of projects caused by uncertainty surrounding the safeguard duty and a slowdown in procurement by DISCOMs as higher module prices drove up auction bids.
According to the GTM Research and SEIA report, utility-scale installations in the US totalled 1.4 GW in Q1 2018. Comparatively, Indian utility-scale installations in Q1 were almost double with 2.9 GW installed. This is another compelling data point showing how dominant large-scale projects are in India compared to rooftop and the relatively large size of the Indian utility-scale market.
“While it is not fair to compare the U.S. solar market to India for only one quarter since market forces in the two countries are quite different, it is important to recognize how quickly the Indian market has grown over the last five quarters, ” pointed out Raj Prabhu, CEO and co-founder, Mercom Capital Group.
However, there are some similarities. The policy changes in China are going to dictate growth in both India and the US, mostly on the positive side assuming significant module price declines going forward (unless China reverses course). The expected module price decreases could nullify the 30 per cent import tariff imposed by the Trump administration.
India, meanwhile, is looking to impose a safeguard duty on Chinese modules, which could also be absorbed with the expected Chinese module price declines in the coming quarters.
India to have 5 of world’s 10 biggest solar plants
When it comes to operational solar plants, two of the world’s top ten are already in India. Five of the world’s largest under-construction solar parks are also located in India, according to a US-based Institute for Energy Economics and Financial Analysis (IEEFA) report.
The IEEFA report has listed 14 of the largest under-construction utility solar projects in the world, of which five are located in India.
When it comes to fully operational solar plants, two of the world’s top ten are in India, the report stated. These two are the 1 GW ultra mega project in and another 648 MW - both located in south India.
India has also started the construction of many industrial solar parks along with the world’s largest utility scale solar project (2,225 MW) at Bhadla solar industrial park in Rajasthan, which is nearly complete. The country has also commissioned the world’s largest rooftop solar unit in Punjab (19 MW), the report observes.
While India’s current installation numbers aren’t as dramatic as China’s, the report noted that India is clearly embarking on a massive transformation of its electricity sector. The 2018 National Electricity Plan aims at increasing India’s renewable energy capacity to 275 GW by 2027, with solar representing two-thirds of this total.
Dire need for investment in manufacturing & technology
According to an assessment compiled by IEEFA's Director of Energy Finance Studies, Australasia, Tim Buckley and Research Associate Kashish Shah, the faster India invests in renewables infrastructure the faster it can decarbonize its economy. “But without the proper alignment of investment and domestic employment, the government will face political resistance to the upfront $300 billion investment required over the coming decade,” the report indicated.
Tying new solar tenders to domestic manufacturing investment will help attract leading solar module manufacturers to set up operations in India enabling employment opportunities and, more important, enable access to world-leading solar technologies, the analysts said.
For instance, last month, Japanese public broadcaster NHK had reported that the SoftBank Group Corp has decided to invest $60-100 billion in solar power generation in India.
In 2015 SoftBank announced its investment of $20 billion in Indian solar projects with a goal of generating 20 gigawatts (GW) of energy as the majority partner in a joint venture with India’s Bharti Enterprises and Taiwan’s Foxconn. Recently, SoftBank and China's GCL System Integration Technology Co. announced a $930m 60-40 joint venture to build a major solar module manufacturing plant, with two phases each of 2 GW of annual production capacity.
Apart from SoftBank, several foreign companies such as Malaysia’s Mudajaya; Spain’s Gamesa Eolica SL; Greenko, Azure, Ostro Renewal Power and Airro from Mauritius; Japan’s Orix Corporation; ENEL Green Power from Netherlands, DEG_Deutsche from Germany; US-based Areva Solar are a few that have formed joint ventures with Indian entities.
Although coal continues to account for the majority of the power generation in India, it was the year 2017 that has become a milestone in the solar industry. It was the first time that more solar capacity was installed than coal in India.
Although solar is being installed at a rapid pace, due to a lower capacity factor, the actual electricity generated by solar tends to be much lower when compared to a coal power plant.
There are several challenges in this sector especially in areas of system balancing technology and improved grid connectivity. Other changes such as better demand response management, grid stability, storage, system pricing, etc., also need to be addressed for an unhindered growth in the renewable energy market, the IEEFA report noted.
As renewables rise in India, thermal power capacity is forecast to decline to just 43 percent of the nation’s total in 2027, down from 66 percent today.
But unless all the above factors come into play seamlessly and simultaneously address all the issues, the country’s ambitious plans could easily get derailed.
— Sufia Tippu is a freelance tech journalist based in India contributing to EE Times India