Solar open access installations grew by 24% in the second quarter (Q2) of the calendar year (CY) 2023 compared to the previous quarter, adding 712 MW of capacity, according to the recently published Q2 2023 Mercom India Solar Open Access Market Report.

Throughout the quarter, module prices continued to decline, which reduced project costs and enhanced the attractiveness of power purchase agreements (PPAs), thereby boosting the growth of solar open access capacity.

Compared to Q2 2022, when developers hurried to complete projects due to concerns about module supply after the Approved List of Models and Manufacturers (ALMM) order became mandatory for solar open access installations from October 1, 2022, installations decreased by 3.6% in the quarter.

“Cost is not the only factor now for the commercial and industrial (C&I) segment. They are focused on achieving their decarbonization goals on time. The growing demand from the C&I segment has led to an increase in installations. The decrease in module prices was another major reason for installations going up,” commented Priya Sanjay, Managing Director at Mercom India.

The main drivers behind the increase in solar open access capacity additions across states were the captive and group captive models. These projects benefit from exemptions on cross-subsidy and additional surcharges, resulting in greater cost savings for consumers than other forms of open access transactions relative to the state’s retail electricity tariffs.

“Renewable energy has become an integral part of the C&I segment. They can only achieve this through rooftop solar adoption, green tariffs by DISCOMs, or procuring through open access. In 2021, open access projects accounted for about 14% of the total utility-scale projects installed; in 2022, it was 21%, and right now (1H), it is 36%. Foreign direct investment is readily available, and banks are also lending to green open access projects. So, things are improving on all fronts,” Priya Sanjay explained.

In Q2 2023, the highest solar open access installations were in Gujarat, with more than 46% of the total capacity additions. This was followed by Karnataka with more than 21% and Tamil Nadu with 10%.

The top five states accounted for over 96% of all installations during that quarter.

“In Gujarat, the Gujarat Electricity Regulatory Commission amended the wind-solar hybrid policy. The state has large power consumers, and Gujarat is a well-established industrial state. The health of distribution companies is also very good. In Q2 2023, wind-solar hybrid projects accounted for 86.6% of the total installations in the state,” Priya Sanjay noted.

Diverse sectors such as automotive, mining, and electronic manufacturing in Karnataka took to solar open access during the quarter. In April 2023, the state introduced amendments to its banking policy, enhancing transparency in open access charges and improving the accuracy of open access power scheduling for load despatch centers.

The primary driver behind the surge in open access adoption in Tamil Nadu during the quarter was the state’s decision to increase the retail tariffs.

1H 2023

In the first half of 2023, India recorded an addition of 1.3 GW in solar open access capacity, a decrease of nearly 18% compared to the 1.6 GW installed in the same period in 2022.

By June 2023, India’s cumulative solar open access capacity had reached 9.8 GW.

Karnataka maintained its position as the leading state, representing more than 34% of the cumulative solar open access capacity at the end of 1H 2023. Maharashtra accounted for over 13%, and Tamil Nadu 10% of the total installed solar open access capacity.

The top five states contributed almost 73% of the cumulative open access solar installations.

At the end of Q2 2023, India had 9.2 GW of solar open access project pipeline in various stages of development.

Commenting on the impact of green open access on installations, Priya Sanjay said, “Most of the states have started implementing green open access regulations. However, each state has a different banking policy. Many states have increased the banking charges, which will impact the solar open access growth in the coming quarters to an extent.”

Karnataka emerged as the primary seller in the Green Day Ahead Market (G-DAM) within the short-term markets, commanding more than 57% of the market.

Maharashtra held the leading position in energy procurement from G-DAM, followed by the Damodar Valley Corporation, constituting 32% and 11% of the total power purchased.

The trading of Renewable Energy Certificates on the Indian Energy Exchange (IEX) saw a significant decline of nearly 47% from the previous quarter.

The report also noted that the volume traded in the Green Term Ahead Market (G-TAM) on the IEX fell by approximately 20% QoQ.

The report offers an in-depth analysis of the solar open access business landscape, retail electricity tariffs, and open access charges and costs for 17 states.

Additionally, the report includes information on the average PPA prices, net landed costs, and open access policies and regulations released in Q2 2023.

Furthermore, the report features insights and perspectives from leading open access installers across the country during the quarter.

The “Q2 2023 Mercom India Solar Open Access Market Report” report is 151 pages long and covers vital information and data on the market. For the complete report, visit: https://www.mercomindia.com/product/q2-2023-mercom-india-solar-open-access-market-report