India added 2.5 GW of solar open access in the calendar year (CY) 2022, a year-over-year (YoY) increase of 92% from the 1.3 GW installed in CY 2021, according to the newly released 2022 Q4 & Annual Mercom India Solar Open Access Market Report.

The year marked the highest-ever annual installations of solar open access, driven by developers’ need to avoid a 40% Basic Customs Duty on solar modules. The higher tax rates became effective from April 1 last year.

Further, the commissioning of open access projects accelerated owing to a lack of clarity about the applicability of the Approved List of Models and Manufacturers regulations. However, the government clarified in October that projects which had applied for approval before October 1 last year would be exempt from ALMM.

Additionally, the commissioning of projects delayed in 2021 due to the COVID-19 pandemic also contributed to the doubling of installed capacity in 2022 YoY.

However, the breakneck project commissioning speed slowed down drastically in the fourth quarter (Q4) of CY 2022 as India added just 293 MW of solar open access capacity, a decline of 52% quarter-over-quarter and 10% YoY.

Karnataka added the most solar open access capacity in CY 2022, followed by Maharashtra, Tamil Nadu, Chhatisgarh, and Uttar Pradesh. The top five states accounted for 77% of the total installations during the year.

The cumulative installed solar open access capacity stood at 7.7 GW as of December 2022.

Karnataka remained the leading state, accounting for over 32% of the capacity addition in the quarter. The top five states contributed over 96% of all open access installations during the quarter.

The development pipeline of solar open access projects in the country totaled 6.6 GW as of Q4 2022. Nearly 70% of this pipeline is in Andhra Pradesh, Rajasthan, Karnataka, Maharashtra, and Gujarat.

Cumulatively, Karnataka was the leading state in solar open access installations, accounting for nearly 36% of the total capacity, followed by Maharashtra, with over 12% of the total installations.

The captive and group captive models have seen a rise in demand in the country, given the surcharge exemptions and lower net landed costs.

The third-party installations, however, saw a considerable impact due to the substantial cross-subsidy and additional surcharges in states like Karnataka, Telangana, and Maharashtra.

In Telangana, Haryana, Gujarat, and Uttarakhand, the additional surcharges were altered during the last quarter leading to revised net landed costs.

Chhattisgarh continued to have the lowest net landed cost among all states, followed by Andhra Pradesh and Odisha.

“The solar installations in the open access segment overcame the regulatory challenges and recorded the best year to date despite the odds. The overwhelming growth reflects the demand by industrial and commercial units keen on sourcing clean power and conscious of the economic benefits. Though the government has announced that consumers with sanctioned load of 100 kW and above are eligible to source green power through open access, consumers below 1 MW demand remain largely underserved and are a dormant market,” commented Priya Sanjay, Managing Director at Mercom India.

Short-term Market

Andhra Pradesh was the largest electricity supplier in the Green Day-Ahead Market (G-DAM), accounting for over 40% of the market share in Q3 CY 2022.

Gujarat emerged as the leading procurer of energy from the G-DAM, followed by Maharashtra, which accounted for 14.6% and 12.5% of the total power purchased during Q3 CY 2022.

The Delhi High Court’s suspension of trading in renewable energy certificates issued before October 31, 2022, for six weeks adversely impacted energy trading in the fourth quarter.

Mercom expects 2023 to be a stronger year for solar open access installations, given the significant pipeline, removal of the ALMM mandate, and lower power purchase agreement tariffs.

The increased awareness of the cost-saving benefits offered by open access, particularly under captive and group captive business models, among C&I consumers, is expected to encourage the rapid adoption of open access in 2023.

The report further provides an in-depth analysis of the solar open access segment in seventeen states, including a comprehensive coverage of open access charges, retail supply tariffs, and the market size of each state.

The report includes insights on the average power purchase agreement prices, net landed costs, banking regulations, short-term transactions, and open access policies and regulations that were introduced in Q4 2022.

The report sheds light on the perspectives and opinions of leading open access installers nationwide during the quarter.

The “2022 Q4 & Annual Mercom India Solar Open Access Market Report” report is 79 pages and covers vital information and data on the market. For the complete report, visit: https://mercomindia.com/product/india-solar-open-access-market-report-q4-2022/