India added 3.6 GW of solar open access capacity in the first half (1H) of 2024, a 153% increase from the 1.4 GW installed during the same period in 2023, according to the Q2 2024 Mercom India Solar Open Access Market Report.

The capacity added in the first half of this year exceeded the total annual installations of any previous year.

This growth was driven by the availability of low-cost solar modules imported in earlier quarters. In the second quarter of 2024, India added nearly 1.8 GW of solar open access capacity, a slight decrease of 2.5% compared to the more than 1.8 GW installed in Q1 2024.

Priya Sanjay, Managing Director of Mercom India, said, “Green energy targets and sustainable initiatives largely drove the increase in solar open-access installations in the first half of 2024. While the Green Energy Open Access Regulations introduced by central and state governments have significantly eased regulations, encouraging more states to participate, the primary motivation comes from companies’ commitment to going green.”

Many developers postponed capacity additions during the quarter while awaiting an exemption from the reinstated Approved List of Models and Manufacturers (ALMM) order, resulting in a decline in installations and delays in commissioning.

Sanjay explained how the ALMM, its suspension and subsequent reimposition, and the industry anticipation that open access and private rooftop projects would be excluded from the ALMM mandate caused uncertainty in the industry.

While behind-the-meter rooftop projects are exempt from the ALMM mandate, open access projects are included, causing many developers to delay the procurement of modules while awaiting clarity.

“There was also an expectation that some relaxation would be announced after the June elections, which did not occur. This situation has been a significant factor, and the growth could have been much higher if not for the ALMM,” Sanjay said.

The quarter’s installation increased by nearly 152% year-over-year compared to 712.8 MW. In Q2 2024, several projects with imported modules that arrived at the project site by March 31, 2024, were exempt from the ALMM order, reducing project costs and boosting installations.

In Q2 2024, Karnataka led the way in solar open access capacity additions, contributing over 40% of the installations for the quarter. Together, the top five states accounted for more than 85% of the installations during this period.

As of June 2024, the total installed solar open access capacity reached 16.3 GW.

Karnataka remained the leading state, contributing over 30% of the country’s solar open access capacity by the end of the first half of 2024. Maharashtra and Tamil Nadu followed, contributing nearly 14% and 11% of the cumulative installations, respectively.

Sanjay opined, “In Karnataka, the regulations are favorable, and the state has a large number of consumers, making it easier to meet demand locally without having to wheel power outside.” Karnataka is also well-suited for both wind and solar, leading to an increase in hybrid projects. DISCOMs in the state are accustomed to solar open access projects, and approvals are generally streamlined.

“It’s encouraging to see other states adopting the Green Energy Open Access regulations. However, there’s a distinction between issuing policies and their implementation. The real challenge often lies in implementation. Once states begin implementing, approvals start to improve, as seen in Andhra Pradesh recently, which has also become a significant market,” she said.

The pipeline for solar open access projects under development and pre-construction phases was nearly 23 GW as of June 2024, with over 81% of these projects located in Rajasthan, Karnataka, Andhra Pradesh, Maharashtra, and Tamil Nadu.

Sanjay said that the main risks developers face are procuring land and building evacuation infrastructure, along with ALMM affecting the supply side.

“Many projects bid by agencies like SECI, NTPC, and NHPC tend to secure larger plots of land near substations, making land and evacuation infrastructure key constraints for project development. However, once land is secured, the market is very promising, and finding consumers for projects won’t be an issue,” she noted.

Sanjay also cautioned that the market could slow down coming months if the transmission infrastructure isn’t ready, so the government needs to expedite infrastructure development.

Although efforts are being made, certain aspects like right-of-way issues, local protests, and legal challenges at the ground level remain beyond the control of transmission project developers. Until these are resolved, difficulties will persist.

The report analyzes the solar open access market, including retail electricity tariffs, PPA prices, and open access charges and costs across 15 states.

The Q2 2024 Mercom India Solar Open Access Market Report report is 58 pages long and covers vital information and data on the market. For the complete report, visit:
https://www.mercomindia.com/product/q1-2024-mercom-india-solar-open-access-market-report