Mercom Capital Group, a global clean energy communications and research firm, today released its quarterly update on the Indian solar market.
Mercom’s forecast for solar installations in India for CY 2015 now stands at greater than 2,000 MW due to positive developments in Tamil Nadu. The Modi administration has continued to announce various solar programs, goals and policies during its one year in office, but has yet to call an auction. According to the Ministry of New and Renewable Energy (MNRE), they are very close to announcing the Phase II Batch 2 program.
Raj Prabhu, CEO and Co-Founder of Mercom Capital Group, commented, “While all of these announcements have raised market sentiments, the Indian solar industry is looking for a streamlined auction process at regular intervals to better plan investments and manufacturing capacity.”
Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has signed PPAs in the range of 400 MW – 1,000 MW. The commissioning of these projects is scheduled to be as early as September 2015 all the way up to March 2016.
The Solar Energy Corporation of India (SECI), which was originally formed to implement JNNSM projects, is evolving into a government-owned power generation unit. It announced a program to establish and own 2,000 MW of solar projects with sizes ranging from 250 MW to 500 MW to be auctioned as EPC contracts.
Projects installed under JNNSM have now overtaken solar installations under Gujarat’s solar policy for the first time.
The Reserve Bank of India (RBI) added renewable energy under priority lending but with a cap of Rs. 15 crore (~$2.5M) for renewable energy generators and Rs. 10 lakhs (~$16,393) per borrower for residential customers. The impact of this policy will likely be minimal in the short term as the Indian solar market currently is comprised mostly of large-scale projects.
“We commend the government for this decision which is a step in the right direction,” commented Prabhu. “We urge them now to consider increasing the cap in order to benefit large-scale projects which will greatly accelerate the implementation and execution of solar installations in the country.”
The MNRE also proposed a subsidy cut on rooftop solar power plants from 30 percent to 15 percent, reasoning that the lower price of components would offset the proposed subsidy reduction. Individual states have been asked to come out with their own favorable policy and regulatory framework to support rooftop solar. This proposal comes in the background of another goal set by the government to target 40 GW of grid-connected rooftop solar over the next five years.
The Ministry of Power has proposed several changes to the National Tariff Policy. Some of the proposed amendments include promoting renewable generation as a policy objective, and abolishing interstate transmission charges for renewable energy sources. The most notable change proposed by the Ministry is the increase in the solar Renewable Purchase Obligation (RPO) to eight percent by 2019 from the current goal of three percent.
“Without strict enforcement of RPO, it doesn’t matter what the percentage requirement is,” commented Prabhu. “It is more important to put mechanisms in place which will support strict enforcement of the policy.”
The Supreme Court dismissed an appeal challenging RPO regulations in Rajasthan, and endorsed that imposing RPO was desirable as the citizens have a right to live in a pollution-free environment. This ruling could have a wider impact considering there are several other similar cases pending in various state high courts.
Another welcome development was the passing of the Electricity Amendment Bill in the Parliament which is expected to end power distribution company monopolies by separating distribution from supply in the power sector.
For the complete report, visit: MercomIndiaMay2015Report
Image Credits: Wikimedia Commons (CC-BY-SA-3.0)
Raj is a recognized thought leader in clean energy markets where his work has influenced policies worldwide. He has a deep understanding of regulatory policy and clean energy markets and his market and opinion pieces are regularly published on both MercomIndia.com and other leading publications globally. Raj is also a regular speaker and presenter on clean energy policy and finance topics at conferences worldwide. Raj attended the KLE College of Science in Bangalore, India for physics and chemistry, and holds a Bachelor of Science Degree in Hotel and Institutional Management from Johnson and Wales University, Rhode Island. More articles from Raj Prabhu.