The total installed capacity in the open access (OA) market as of December 2020 stood at almost 4 GW, with a project development pipeline of over 1 GW, according to Mercom India Research’s newly updated report, Open Access Solar Market in India – Key States.
The report covers OA markets in key states like Karnataka, Andhra Pradesh, Telangana, Maharashtra, Uttar Pradesh, Haryana, Tamil Nadu, and Gujarat. The report discusses the state of the markets, OA charges, and challenges while providing an overview for each state. Open access installations in India saw a 56% increase in 2020 from the year before, owing to the increasing interest of corporates buying OA projects under group captive.
Mercom’s data showed that Karnataka was still the largest market for open access transactions cumulatively as of December 2020. The state has potential, but the growth is being deterred as distribution companies (DISCOMs) have been delaying approvals. This has resulted in a drop in interest for both third-party sale (TPS) and group captive projects in the state.
Tamil Nadu and Gujarat were the latest inclusions in the report. Like Karnataka, Tamil Nadu has also been facing similar challenges, with developers facing hurdles in getting approvals for TPS projects from DISCOMS. The state saw a 57% decline in OA installations as of December 2020, from the end of 2019. Gujarat was the only state that allowed installations under the TPS model exclusively for solar-wind hybrid projects.
Industry executives told Mercom that TPS projects have come to a standstill due to high OA charges and issues in getting approvals from DISCOMs. The TPS model is similar to the OPEX (operational expenditure) model, where the developer owns the solar project, and the consumer only has to pay for the energy generated.
Captive generation models remained the next best option for consumers where power can be sourced by a single entity or a group of companies.
The most significant advantage of group captive projects is that some OA charges are not levied on the procured power.
The report showed that the market is gradually shifting towards this model, thanks to the lower risks involved and ease of acquiring approvals compared to the TPS model.
Industry officials believed that long-term open access agreements were the most favorable because of their longer 15-20-year tenures and higher security on returns. However, consumers preferred short-term open access agreements since they tend to steer away from long-term contracts.
Short-term open access agreements were common in the textiles, metals, chemicals, and auto component industries, the report showed. Textile industries held the largest share of short-term open access transactions with a 29% share, followed by the metals industry with a 24% share.
The report asserted that while the OA market remains an attractive avenue for investment even as ground-level issues like DISCOM approval hassles, policy inconsistencies, and a non-conducive regulatory environment continue to weigh it down.
According to Mercom’s India Solar Market Leaderboard 1H 2020, Rays Power Experts, Amplus Solar, and CleanMax Solar were the top open access developers in the country in terms of cumulative installed capacity as of 1H 2020.
For the complete report, visit: https://mercomindia.com/product/open-access-solar-market-india-key-states
Nithin Thomas is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.