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Q1INDIA SOLAR COMPASS 2019

Lying in waitSlew of policy announcements ahead of general elections but all eyes are on the new regime

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TERMS OF USE

© 2019 BRIDGE TO INDIA Energy Private Limited

AuthorsArti Mishra Saran, BRIDGE TO INDIAShobhit Srivastava, BRIDGE TO INDIATanmay Sardana, BRIDGE TO INDIAVinay Rustagi, BRIDGE TO INDIA

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Content

Executive summary 1

1. Commissioned and pipeline capacity 4

2. Capacity addition 62.1 Progress in Q1 2019 62.2 Performance of states2.3 Estimate for next two quarters

69

3. Leading players 113.1 Project developers 113.2 Module suppliers 113.3 Inverter suppliers 123.4 EPC contractors 123.5 Domestic manufacturers 13

4. Tender progress updates 144.1 New tender issued 14

234.3 Auction results4.2 Tender cancellations

234.4 Tenders pending allocation 26

5. Pricing updates 295.1 Modules 295.2 Inverters 295.3 EPC cost 30

6. Funding 326.1 Equity funding 326.2 Debt funding 346.3 M&A 35

7. Policy and regulatory updates 377.1 Central government 377.2 State government 407.3 Others 42

8. Market trends and developments 43 8.1 Global capacity addition outlook 43

8.2 Poor progress on domestic manufacturing adding to uncertainty 448.3 Storage expected to grow gradually 458.4 Solar park development 468.5 The Netherlands issues guidelines for floating solar 468.6 Net metering policies under pressure 47

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List of figuresFigure 1.1: Total installed and pipeline capacity as on March 31, 2019, MW 4Figure 1.2: State-wise utility scale solar commissioned and pipeline

capacity, MW 5

Figure 1.3: Top 20 developers by commissioned capacity, MW 5Figure 2.1: 6Figure 2.2: State-wise utility scale solar capacity addition in Q1 2019, MW 6 Figure 2.3:

Anticipated/scheduled vs actual capacity addition inQ1 2019 for key tenders, MW

7

Figure 2.4: Estimated capacity addition in Q2 and Q3 2019, MW 9Figure 3.1: Leading developers by capacity commissioned in Q1 2019, MW 11Figure 3.2: Market share of module suppliers in Q1 2019 11Figure 3.3: Market share of inverter suppliers in Q4 2018 12

Figure 3.4: Market share of EPC contractors in Q1 2019 12Figure 3.5: Market share of domestic module manufacturers in Q1 2019 13Figure 4.1: Utility scale tender issuance and allocation, MW 14Figure 4.2: Number of tenders issued 14Figure 4.3: Utility scale solar tenders issued in Q1 2019, MW 15Figure 4.4: Auction results, INR/ kWh 23Figure 4.5: Bid results for MSEDCL Maharashtra 1,000 MW tender 24Figure 4.6: Bid results for GUVNL Gujarat 500 MW, Phase IV tender 24Figure 4.7: Bid results for SECI Pan India 1,200 MW, Tranche III tender 25Figure 4.8: Bid results for SECI Rajasthan 750 MW, Phase II tender 25

Figure 5.1: BTI India Module Price Index, USD cents/ W 29Figure 5.2: BTI India Solar Inverter Price Index, INR/ W 29Figure 5.3: BTI India Solar EPC Cost Index, INR/ Wp 30Figure 5.4: BTI India Rooftop Solar EPC Cost Index, INR/ Wp 30Figure 6.1: PE fund flow in the Indian solar sector, USD million 32Figure 6.2: Renewable stock trading pattern vs indices 33Figure 6.3: State Bank of India MCLR 34Figure 6.4: M&A transactions in the Indian solar market 35Figure 8.1: Solar PV capacity addition in 2017 and 2018, GW 43Figure 8.2: Manufacturing initiatives in the solar sector 44Figure 8.3: Share of domestically manufactured modules by

utility scale solar capacity commissioned45

Figure 8.4: Status of solar park development, MW 46

Quarterly utility scale solar capacity addition, MW

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List of tables

Table 4.1: Key details of tenders issued in Q1 2019 16Table 4.2: Tenders pending allocation 26 Table 6.1: Recent PE transactions in the solar sector 33 Table 6.2: Offshore debt funding deals 35 Table 6.3: Recent M&A transactions in Indian solar sector 36

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Executive summaryInstallation activity picked up significantly over last quarter but was still below last year’s level. Total installed solar capacity grew to 31,496 MW by March 31, 2019. As of March 31, 2019 total project pipeline – projects allocated to project developers and at various stages of development – stood at an all-time high at 18,438 MW.

India’s total solar capacity grew to 31,496 MW by

March 2019

Figure 1: Total installed and pipeline capacity as on March 31, 2019, MW

Source: BRIDGE TO INDIA research, MNRENotes: ‘Others’ include projects executed under open access, REC and other miscellaneous categories.

New capacity addition in Q1 was split between utility scale solar – 1,885 MW (76%) and rooftop solar – 590 MW (24%). As the following figure shows, we expect installation activity to stay strong over the next two quarters.

Note: All project capacity numbers in this report are stated in AC MW, unless noted explicitly otherwise.

Rooftop4,445

Off-grid915

NTPC offtake3,337

Others3,750

Commissioned31,496

Central government

tenders 9,388

SECI offtake4,485

Others494

Public sectordevelopment

1,072

State government

tenders12,998

Centralgovernment

tenders10,755

SECI offtake7,122

Public sectordevelopment

575

NTPC offtake3,058

Pipeline18,438

State government

tenders 7,682

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Record project pipeline suggests significant pick-up in

installation activity over next two years

Conclusion and outlook

19 new utility scale tenders aggregating 15,733 MW were issued in Q1 2019 (up 2% over previous quarter). Rooftop tender issuance activity was also strong (295 MW), growing by 354% over previous quarter.

3,697 MW (+ 25% over previous quarter) capacity was auctioned and allocated in the quarter. Winning tariffs came out in the range of INR 2.48-2.91 /kWh.

Module prices firmed up by 10% to USD 0.22/ W increasing financial burden for developers. We expect prices to stay flat with a slight downside risk over next two quarters.

There was a spate of policy related announcements in Q1 2019 in advance of the general elections. The central government announced several new schemes to promote rooftop solar, agricultural solar and domestic manufacturing. Meanwhile, states continued to reverse policy stance on rooftop solar and open access.

Record project pipeline suggests significant pick-up in installation activity over next two years. At the same time, the sector is grappling with growing concerns on land acquisition, network connectivity, delayed payments and tender cancellations. Policy reversals are also adding to woes on the C&I business side. The industry expects new government to bring in a new wave of reforms and instil confidence in the sector.

Figure 2: Quarterly utility scale solar capacity addition by type oftenders, MW

Central government tenders State government tenders Others

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

4,000

3,000

0

2,000

1,000

2,0821,856

3,833

720

1,178

Q1 2019

1,885

Q2 2019estimate

1,536

Q3 2019estimated

3,338

Source: BRIDGE TO INDIA research

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