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The India solar market was witness to addition of 8,263 MW during 2018, down 15.5 per cent compared to 9,782 MW in 2017.
This was mainly due to the safeguard duty, goods and services tax (GST) issues, and land and transmission issues which took a toll on the large-scale installations, according to Mercom India Research’s Q4 and Annual 2018 India Solar Market Update.
Total power capacity additions in India were 16.3 GW in 2018 from all generation sources. Of this, renewable energy sources accounted for nearly 70 per cent of installations, with solar representing 50.7 percent of new capacity and wind with 14 per cent. Coal accounted for 27.5 per cent of new capacity added.
“For the first time in India’s history, solar made up over 50 per cent of new power capacity in 2018. We will continue to see a steady shift toward solar as prices continue to drop. This is going to be the new normal as coal plants continue to shutter,” said Raj Prabhu, Chief Executive Officer (CEO) and co-founder of Mercom Capital Group.
In Q4 2018, solar installations came to 1,638 MW, up three percent quarter-over-quarter from the 1,589 MW installed during Q3 2018, but 52 per cent lower year-on-year (YoY) compared to the 2,491 MW installed in Q4 2017.
The rooftop installations in 2018 totalled 1,655 MW, a 66 per cent growth year-over-year. Cumulative rooftop solar installations have reached 3,260 MW. In terms of annual growth, rooftop solar continues to be a bright spot, as commercial and industrial entities see rooftop solar as a viable way to combat higher power tariffs. Following a significant increase of 50 per cent quarter-over-quarter growth from Q4 2017 to Q1 2018, installation growth remained steady for the rest of the year.
Financing rooftop installations could be challenging in 2019 as Indian banks are facing a liquidity crunch with many banks hitting the exposure limits to the power sector.
The report found that solar parks continue to face issues in providing clearly demarcated-ready land for project development, causing undue delays and putting additional pressure on large-scale projects.
The market is adjusting to the safeguard duty regime, but much will depend on Chinese solar policy and installation goals going forward. Any increase in installation targets in China will tighten supplies and harden module prices while oversupply and module price declines could result if China decides to pull back on its solar installation targets.
“Tariff caps and retroactive cancellation of solar auctions have been the biggest concerns in the investment community,” added Prabhu.
As the general election nears, the rules of the election commission could affect land acquisition and government approvals for solar projects. However, elections generally mean fewer power cuts and increased power demand.
In 2018, investments in the Indian solar sector totalled over $9.84 billion, 15 per cent lower compared to the previous year.
The year was highlighted by 11 mega tenders of 1 GW in size or more.
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