India added 3.2 GW of new solar open access capacity in 2023, the most in any calendar year to date, with the top five states accounting for 84.2% of the new installed capacity.

The installations surged 5.7% YoY from 3 GW in 2022, according to the recently released 2023 Q4 and Annual Mercom India Solar Open Access Market Report.

The Approved List of Models and Manufacturers (ALMM) order suspension and the fall in module prices helped significantly reduce project costs during the year.

Lower costs allowed developers to offer open access solar power at significantly lower tariffs, leading to higher capacity additions. Most of the installations during the year were executed under the captive and group captive models across the top states.

Here is a look at the top states for open access.

 

Karnataka

Karnataka led the solar open access installations in CY 2023 as well cumulatively, accounting for 27.9% and 33.1%, respectively, of the total capacity.

Solar Open access represented 99.8% of the large-scale solar projects installed in the state during the year and 42.1% of the cumulative large-scale solar capacity.

Solar-wind hybrid projects accounted for 14.3% of the cumulative solar open access installed capacity.

According to Mercom India Research, in 2023, the cement, metallurgical, automobile and auto parts, dairy, electronic hardware, and pharmaceutical industries were the main off-takers of open access power.

Gujarat

Gujarat had the second-highest solar open access installations, accounting for 16.4% of the new capacity added in 2023. The state ranked fourth with respect to cumulative installations, accounting for 7.6% of the total solar open access capacity.

In 2023, 42% of large-scale solar installations in Gujarat were under the open access model, and cumulatively, the model accounted for ~13.3% of the state’s total large-scale solar capacity.

In 2023, the main off-takers of open access power were the jewelry, textiles, metallurgy, silk, steel, healthcare, printing, petrochemical, engineering services, chemical, and steel industries.

Gujarat’s renewable-based hybrid power policy and favorable weather conditions have been highly conducive for solar-wind hybrid open access projects.

Solar-wind hybrid projects accounted for 77.7% of the solar open access capacity commissioned in 2023 and 55.6% of the cumulative capacity.

The state has favorable banking regulations for solar-wind hybrid projects, permitting monthly energy banking while requiring daily banking for solar open-access projects.

It has also announced an amendment allowing captive customers to hold a minimum equity stake of 26% cumulatively in a group captive project per electricity rules, as opposed to the previous 100% requirement for captive approvals.

Maharashtra

Maharashtra came in at a close third in terms of new solar open access capacity added in 2023, accounting for 16.2%. The state ranks second for cumulative solar open access installations at 13.5%.

Solar open access in the state accounted for 38.6% of the cumulative large-scale capacity and 79.5% of the large-scale projects installed in CY 2023.

All the installations in the state were standalone solar projects. Even with a good potential for solar-wind hybrid projects, the growth is stalled in the absence of distinct hybrid policies.

The energy tariff in Maharashtra remained unchanged from the previous quarter and is the highest among C&I customers. The primary incentives to opt for solar open access were high retail tariffs and potential savings.

The state saw a significant decline in project commissioning in Q4 2023. Several projects scheduled for commissioning during the quarter were pushed to the next quarter as consumers anticipated lower PPA prices.

During the quarter, the state also hiked the banking charges for open access projects from 2% to 8%. The higher banking charges are expected to cut the financial benefits of open access for C&I consumers.

In 2023, the primary off-takers of solar open access were the chemical, metallurgical, paper, plastic, pharmaceutical and cosmeceutical, data centers, telecommunications, seaports, automobile and auto component, dairy, and IT industries.

Tamil Nadu

Tamil Nadu stood fourth on the list for installations in CY 2023, accounting for 15.6% of the total capacity. The state accounted for 11.4% of the cumulative solar open access capacity.

Solar open access projects in Tamil Nadu account for 25.8% of the large-scale installations in the state and 94.6% of such additions in CY 2023.

Solar-wind hybrid projects accounted for 12.7% of the cumulative installed solar open access capacity.

Tamil Nadu released an annual tariff update in July 2023, increasing its retail supply costs by 2.2%-2.5% for C&I consumers, driving them to adopt solar open access to save on energy costs. The updated tariff order also exempted additional surcharges for open access projects, which helped boost installations under the state’s third-party open access model.

A well-structured regulatory framework and Tamil Nadu Generation and Distribution Corporation’s (TANGEDCO) accelerated approvals for captive and group captive projects have helped in the addition of new solar open access capacity.

In 2023, the main off-takers of open access power were cement, sugar, leather, metallurgy, automobile and auto parts, dairy, electronic hardware, petroleum and gas, glass, and other small-scale local industries.

Rajasthan

Rajasthan was fifth on the list, accounting for 8.1% of the new capacity added in 2023. The state accounted for 6.1% of India’s cumulative solar open access capacity.

Solar open access projects in Rajasthan account for 4.4% of the large-scale installations and 19% of the large-scale capacity additions in CY 2023.

In 2023, the state’s main off-takers of open access power were the petroleum and gas, bioenergy, IT, and other C&I industries.

Rajasthan’s solar open access installations have been slow over the years due to high surcharges and difficulties executing projects. Stakeholders have witnessed a lag from DISCOMs in approving captive projects, with demands of increasing the equity shareholding to 100% instead of the standard 26%.

Rajasthan has one of the country’s largest solar open access solar project pipelines, but most of these projects have been unable to obtain DISCOM approvals, stalling development in the segment.

Mercom recently reported on the state’s challenges in harnessing its full solar open access potential.

Recently, the Ministry of Power instructed state electricity regulatory commissions (SERCs) to comply with the Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules and align their states’ Open Access Regulations with the notified rules and all the amendments.

The “Q4 2023 Mercom India Solar Open Access Market Report” report is 85 pages long and covers vital information and data on the market. For the complete report, visit: https://www.mercomindia.com/product/q4-2023-mercom-india-solar-open-access-market-report.