Solar Energy Market in India
India is emerging as one of the major solar energy markets in the world and in the process of catching up with the two leading countries like China and the US.
Currently, India ranks as the third-largest solar market in the world.
Over the past decade, a lot of things have changed in the Indian solar market. After a significant policy reshuffling by the current government and increasing adaptation of solar energy throughout the country have proved to be the right move towards achieving renewable energy solutions.
The Indian government has set a target to reach 100 GW of solar capacity by 2022.
The increased capacity will help to meet one of the goals according to the Paris climate agreement. The goal is to make renewable sources account for 40% of the total power-generation capacity by 2030.
Fig.1: Estimated Potential of Renewable Power in India 2018 (Source: mospi.gov.in)
In 2018, the country’s cumulative solar capacity was 28 GW, and in 2019, it is already set for a record solar capacity additions.
A report by Mercom Communications India shows that solar installations in India have reached 8.3 GW in recent times, including rooftop solar panels and large-scale solar units.
The same study further shows that there was a spike in rooftop installations in the country by a substantial 66% year-on-year with total cumulative installations were nearly 3.3 GW at the end of 2018.
Another report by renewable energy consultancy firm Bridge to India, new installations are likely to reach approximately 14 gigawatts (GW) in 2019. This is nearly 50% more than the capacity added in 2018.
Adding new solar capacity will take India’s installed solar capacity to almost 38 GW by the end of 2019.
Overall, India is set to add up nearly 16 GW of clean energy capacity in 2019, which are mostly driven by large-scale solar projects.
On a year-to-year basis, the share of solar capacity in India went up from 6.6% in March 2018 to 8.4% in March 2019.
Among all the renewable energy sources, solar accounts for nearly 38% of the installed capacity, which was up by 2% compared to the earlier quarter.
Currently, as many as 80 large-scale projects are in the pipeline of 5 MW capacity or more.
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Leading Indian states in Solar Energy in 2018-19
The government of India has set a target of solar installed capacity of 100 GW by 2022.
Achieving this installation goal will be a cumulative effort by the Indian states.
Currently, the states in the southern part of India are ahead when it comes to solar panel installations by the end of 2018.
Other states that are trying to stay close are mainly Telangana, Rajasthan, and Gujarat.
Fig.2: Top 10 Indian States in Solar Installation (Source: mercomindia)
Karnataka
Currently, Karnataka is leading the solar race among the Indian states. According to Mercom’s India’s Solar Project Tracker, the state has gone past 5 GW of total solar installations in 2018. It has a 24% market share of the total installed capacity in India.
It seems that Karnataka is likely to maintain its lead in 2019, while other states such as Telangana, Rajasthan, and Andhra Pradesh will try to catch up as the year goes.
Telangana
Telangana is the second among the leading states with an installed capacity of 3.2 GW. There is a pipeline of solar projects with approximately 200 MW capacity.
Rajasthan
Rajasthan is another state with a high potential for solar market expansion due to its sunny weather. Currently, the installed capacity in the state is nearly 2.3 GW. Also, there is a significant solar project pipeline of nearly 1.5 GW.
Andhra Pradesh
The solar installed capacity of Andhra Pradesh is 2.3 GW, and the state has a project development pipeline of more than 600 MW.
Tamil Nadu
Tamil Nadu has installed a solar capacity of 1.8 GW and has a substantial solar project pipeline of more than 2 GW.
Gujarat
Gujarat has nearly 1.4 GW of installed solar capacity, and a project development pipeline of more than half a gigawatt.
Madhya Pradesh
The solar installed capacity of Madhya Pradesh is 1.3 GW, and another gigawatt of projects that are in the project pipeline.
Maharashtra
Maharashtra’s installed solar capacity is 1.1 GW, and the state has projects of 350 MW in the pipeline.
Punjab
The installed solar capacity in Punjab 810 MW, and currently has a small pipeline of solar projects.
Uttar Pradesh
The 10th spot goes to Uttar Pradesh, which has an installed capacity of 635 MW and has a project pipeline of around 300 MW.
The remaining Indian states together have 4% solar installed capacity.
Solar Growth Statistics
India continues to add renewable energy capacity to its overall energy mix.
During the financial year 2018-19, solar energy will account for nearly 22.3% of India’s energy capacity mix. This is a significant spike from the previous financial year (2017-18) of 20.3% share.
India has recently gone beyond the landmark of 80 GW in terms of renewable energy capacity. Out of the total capacity, the share of solar energy is 29.55 GW, and the rest is wind power with a capacity of 36.37 GW.
As mentioned earlier, the government of Indian has set a target of reaching 175 GW of clean energy capacity by 2022, in which 100 GW for solar energy.
According to the Power and New & Renewable Energy Ministry, to keep pace with this energy target, a total of 29.55 GW of solar energy capacity has been installed in the country as on June 30, 2019.
The major contributing factor to Indian’s overall solar energy market growth is attributed to large-scale solar projects.
Fig. 3: Large-scale Solar Capacity Addition 2019 (Source:qz.com)
Besides large-scale projects, installations of rooftop solar panels also continue to go up.
Residential consumers in India still have not completely adopted the rooftop solar panels due to their relatively high cost.
Commercial and industrial buildings, however, buy grid electricity at significantly higher rates than residential consumers and find it more economical to switch to solar panels.
Fig. 4: Rooftop Solar Capacity Addition – 2015-19 (Source:qz.com)
At the end of March 2019, India’s total installed power capacity was 358 GW with renewable energy accounted for 80 GW, comprising 22%. It is an increase of 1.1% compared with the financial year 2017-18 with a cumulative energy installation of 70 GW.
What are the reasons behind the surge of the solar industry?
One of the major reasons behind the surge in the solar energy industry is the government’s push to reach 100 GW of solar capacity by 2022 as per the Paris climate agreement.
The state and central governments are issuing tenders and inviting bids for large-scale projects. The main customers of these projects are state-owned power distributing companies.
Commissioning these projects may take up to 2 years, and that is when it is considered that the new capacity is added.
Here is a list of the primary reasons that have pushed India towards solar energy growth:
Government Initiatives & Policies – The government specialized bodies like the Ministry of New and Renewable Energy (MNRE) have played a crucial role in revising and rolling out new energy policies.
By implementing those policies and setting aggressive targets, it has been possible for the country to become one of the major solar energy markets.
Incentives – Since 2010, there were several subsidies and incentives that the government implemented that have encouraged the process of adopting solar energy.
In the beginning, there was up to 30% that the government provided for all rooftop solar projects, boosted the development of the rooftop solar market.
Some of the incentives that contributed to the growth of the solar market were under 80-1A, rolled out between 2010 and 2015. Those incentives had given major relief to solar developers by offering tax breaks.
Low Cost of Labour – Low labour cost in the Indian solar market helped to employ a large number of people, which made it possible to speed up the projects.
The easy availability of low-cost labour offered consumers energy at the lowest cost as well as created a significant number of jobs in the market.
These days, in India, a large solar plant with 500 MW capacity can be set up within 18 months, whereas a similar hydro or thermal plant might take 2-3 times more.
Streamline Land Acquisition – In 2016, the government had introduced guidelines that instructed the state governments to identify suitable large lands with an appropriate level of insolation.
Also, the states had to prioritize the use of government non-agricultural or wasteland to speed up the acquisition process for establishing solar parks.
The Economic Index of the Solar Industry
Renewable energy has secured a prominent place in the Indian energy space to its low-cost power generation capacity.
India’s new status as the cheapest solar energy producer has further created a shift towards complete reliance on renewable energy.
A recent report by The International Renewable Energy Agency (IRENA) shows that the costs for setting up solar PV projects in India dropped by nearly 80% between 2010 and 2018.
Fig.5: Solar Capacity in 2019 (Source:qz.com)
The initiatives taken by the government of India as early as 2010, fostered consistent growth in the solar energy segment.
The encouraging surge in the energy sector had further helped the solar industry to get the cost advantage through the economies of scale in a short period.
The total installed solar capacity in 2010 was 10 MW, and subsequently, the installed capacity went up significantly to 6000 MW. Overall, it was a spike of 600 times in just 6 years.
In March 2019, the total installed solar capacity in the country reached 30 GW, which was a jump of 5 times in 3 years.
Currently, solar energy has reached 30% of the target set of 100 GW by 2022, which is contributing 38% to the total renewable energy capacity.
Solar Energy Production Statistics
The capacity of solar energy production in India has gone up significantly in recent years. A report by the Central Electricity Authority (CEA) shows that in the Q1 of 2019, solar power accounted for more than 11.4 BUs of electricity produced.
There is an increase of 34% year-over-year (YoY) from 8.5 BUs energy produced in the Q1 of 2018.
During the financial of 2018-19, India generated solar power of nearly 39.2 BUs, which is an increase of almost 52% compared to the previous financial year 2017-18.
Fig.6: Solar Electricity Production in India (Source: mercomindia)
Another report by Mercom’s India Solar Project Tracker reveals that installed solar capacity in the country will increase by 32% by the end of 2019, compared to 22.7 GW installed in the previous financial year.
Currently, renewable energy initiatives in India have boosted the solar industry. It has further helped the nation become the second most attractive market in the world for equipment related to renewable energy.
The transition of the solar energy industry in India has got the much-needed momentum, keeping up with yearly energy target. Despite the fact that the target of 100 GW of solar energy by 2022 seems ambitious, India has geared up with a clear intent to achieve it.
In the current global energy market scenario, India has already surpassed the US to become the second-largest solar power market in the world (based on solar power installations).
As stated earlier, the government is focusing more on initiating and completing large-scale solar installations in the country, which accounts for 87% solar capacity.
On the other hand, rooftop solar installations are also set to pick up. During FY 2018-19, rooftop installations accounted for 1,836 MW and contributed significantly to the country’s total energy capacity of 53%.
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Conclusion
Deployment of solar projects and the production of solar energy have gone up substantially in India. However, there are still some gray areas, particularly in the area of solar equipment manufacturing, as only a handful of companies are dominating this segment.
To become a global leader in the solar energy segment, the country cannot rely mainly on large-scale solar projects. India has the second-largest population in the world, and reaching out to residential customers with low-cost solar energy will expand the market substantially.
Currently, the need-of-the-hour is to develop an end-to-end value chain to be more competitive and achieve sustainable energy growth in the long run.
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