India saw a surge in solar open access installations with the addition of 907 MW in the third quarter (Q3) of 2023, a 36.1% increase over 666 MW in the previous quarter, according to the recently published Q3 2023 Mercom India Solar Open Access Market Report.

The installations showed a growth of 20.6% from the 752 MW installed in the same quarter in 2022.

Maharashtra added the most capacity (26.5%), followed by Karnataka (20.3%) and Tamil Nadu (19.5%). The top five states collectively accounted for 88.5% of the installations during the quarter.

As of September 2023, the country’s total open-access solar capacity reached 11 GW.

Karnataka maintained its lead, accounting for 33.3% of the cumulative capacity by the end of Q3 2023. Maharashtra and Tamil Nadu followed with 14.1% and 10.3% of the total installed open-access solar capacity, respectively.

The top five states accounted for 72.8% of cumulative open-access solar installations.

Managing Director of Mercom India, Priya Sanjay, commented, “Developers deploying open access solar projects for commercial and industrial (C&I) consumers have the advantage of faster execution. C&I consumers, eager to seize the opportunity presented by lower prices, promptly initiated and completed projects during the quarter.”

Cost is not the only consideration for consumers to opt for open access solar. The recent push from domestic and international companies to address carbon emissions in business operations across the value chain encouraged them to go for green energy.

“Many consumers are driven by a commitment to green their supply chains. Some companies, motivated by obligations like the EU’s Carbon Border Adjustment Mechanism (CBAM), are compelled to report carbon emissions for exporting to Europe. Non-compliance could negatively impact their businesses,” Priya Sanjay said.

The end of the ALMM mandate relaxation in March 2024 has added to the urgency. The return of the Approved List of Models and Manufacturers in a few months will mean higher project costs.

“C&I consumers would want to make quick decisions to secure better deals. With the financial year ending for Indian companies in Q1 of the next year, many projects aim for commissioning to claim depreciation and tax benefits,” she said.

However, some states have significantly lagged in adding more open access solar installations. DISCOMs with progressive thinking recognize the impending increase in power demand and aim to delicately balance demand and power procurement at favorable rates.

Priya Sanjay explained, “States that successfully navigate this balance actively promote the open access model. In states where DISCOMs are hesitant to lose consumers, they impose excessive charges, rendering the open access model unviable.”

Also, states with already low retail tariffs offer minimal savings, which dissuades consumers from opting for open access solar.

Karnataka led sales in the Green Day Ahead Market (G-DAM) with a 16.3% share. Maharashtra topped energy procurement from G-DAM, with Damodar Valley Corporation following closely, accounting for 28.4% and 13.8% of total power purchased, respectively.

Renewable Energy Certificates trading on the Indian Energy Exchange (IEX) saw a 59% increase compared to the previous quarter. The volume traded in the Green Term Ahead Market experienced a 55% quarter-over-quarter growth.

As of the end of Q3 2023, there were 12.5 GW of open access solar projects in different stages of development.

Sanjay opined, “In Rajasthan, a substantial pipeline of solar projects exists, yet uncertainty looms over their execution. The primary obstacle lies in the ambiguous regulations surrounding captive ownership stakes. Despite the availability of land at lower cost and high solar irradiation in Rajasthan, developers are hesitant to proceed due to regulatory challenges and a lack of clarity.”

Envisioning greater growth, Sanjay noted that, aside from the common land acquisition issue, insufficient sub-stations and poor evacuation infrastructure are impeding many projects, hindering growth.

The report covers a detailed analysis of the solar open access business, retail electricity tariffs, open access charges, and costs for seventeen states.

The “Q3 2023 Mercom India Solar Open Access Market Report” report is 73 pages long and covers vital information and data on the market. For the complete report, visit: https://www.mercomindia.com/product/q3-2023-mercom-india-solar-open-access-market-report