BRIDGE to INDIA_The India Solar Handbook

Th India Sa Handb Th wh’s wh and what’s what A complete industry overview or solar energy in India

With st m:

© BRIDGE TO INDIA, 2011 Illustration by Dwarka Nath Sinha © BRIDGE TO INDIA, 2011

SupporTerS The US$ 14.4 billion Mahindra Group aims to be at the oreront o the solar revolution in India through ‘Mahinda Sa’ . Powered by proven engineering expertise and leading technology partners, Mahindra Solar is committed to deliver reliable turnkey EPC (Engineering, Procurement and Construction) services and build over 75MW o large grid-connected solar power plants across India.

empowering commercial organizations and telecom towers to reduce their cost through diesel savings. In 2011, we received the highest CRISIL-MNRE rating o SP1A or o-grid solar PV system integration. Tel: +91 22 24 90 14 41, Extn.: 2259 Fax: +91 22 24 96 65 73 emai ntats.sa@mahinda.m @mahinda.m

Backed with innovative and costeective solution or rootops and captive power plants, we are

www.mahinda.m www.mahinda.m

GIZ is a ederal ederal enterprise, enterprise, which supports the German Government in achieving its objectives in the eld o international cooperation or sustainable development.

conservation and climate change conservation mitigation. We support our partners with management and logistical services, and act as an intermediary intermediary,, balancing diverse interests in sensitive contexts.

GIZ operates in many elds: economic development and employment promotion; governance and democracy; security, reconstruction, peace building and civil confict transormation; ood security, health and basic education; and environmental protection, resource

Bsh Sa eng , the Solar Energy division o the Bosch Group, is a leading supplier o photovoltaic solutions. From small-scale systems or single amily homes to large turnkey photovoltaic projects, Bosch Solar Energy is a global provider o high-quality solar cells and modules or turning sunlight into electricity. The company also takes on contracts to build entire solar parks which cover everything rom the initial planning stages through to the actual construction and the nal handover

© BRIDGE TO INDIA, 2011

Tel: +49 61 96 79-0 Fax: +49 61 96 79-11 15 emai in@giz.d www.giz.d

o the completed turnkey system to the owner. Bosch Solar Energy is also part o Bosch Limited in India, India’s largest auto component manuacturer and also one o the largest IndoGerman companies in India. Tel: +91 80 22 99 23 66 emai vngaan.[email protected]sh.m www.bshindia.m

SupporTerS The US$ 14.4 billion Mahindra Group aims to be at the oreront o the solar revolution in India through ‘Mahinda Sa’ . Powered by proven engineering expertise and leading technology partners, Mahindra Solar is committed to deliver reliable turnkey EPC (Engineering, Procurement and Construction) services and build over 75MW o large grid-connected solar power plants across India.

empowering commercial organizations and telecom towers to reduce their cost through diesel savings. In 2011, we received the highest CRISIL-MNRE rating o SP1A or o-grid solar PV system integration. Tel: +91 22 24 90 14 41, Extn.: 2259 Fax: +91 22 24 96 65 73 emai ntats.sa@mahinda.m @mahinda.m

Backed with innovative and costeective solution or rootops and captive power plants, we are

www.mahinda.m www.mahinda.m

GIZ is a ederal ederal enterprise, enterprise, which supports the German Government in achieving its objectives in the eld o international cooperation or sustainable development.

conservation and climate change conservation mitigation. We support our partners with management and logistical services, and act as an intermediary intermediary,, balancing diverse interests in sensitive contexts.

GIZ operates in many elds: economic development and employment promotion; governance and democracy; security, reconstruction, peace building and civil confict transormation; ood security, health and basic education; and environmental protection, resource

Bsh Sa eng , the Solar Energy division o the Bosch Group, is a leading supplier o photovoltaic solutions. From small-scale systems or single amily homes to large turnkey photovoltaic projects, Bosch Solar Energy is a global provider o high-quality solar cells and modules or turning sunlight into electricity. The company also takes on contracts to build entire solar parks which cover everything rom the initial planning stages through to the actual construction and the nal handover


Tel: +49 61 96 79-0 Fax: +49 61 96 79-11 15 emai in@giz.d www.giz.d

o the completed turnkey system to the owner. Bosch Solar Energy is also part o Bosch Limited in India, India’s largest auto component manuacturer and also one o the largest IndoGerman companies in India. Tel: +91 80 22 99 23 66 emai vngaan.[email protected]sh.m www.bshindia.m

Th India Sa Handb Th wh’s wh and what’s what A complete industry overview or solar energy in India


DISclAIMer

BrIDGe To INDIA

THe INDIA SolAr HANDBook January 2012 Edition

© 2011 BrIDGe To INDIA pvt. ltd. A ights sv svd d Dmb 2011, Nw Dhi Aths Dr.. Tobias Engelmeier Dr Engelm eier Mohit Anand Shishir Basant Shivansh Tyagi Dsign & lat Dwarka Nath Sinha

No part o the India Solar Handbook may be used or reproduced in any manner or in any orm or by any means without mentioning its original source. BRIDGE TO INDIA is not herein engaged in rendering proessional advice and services to you. BRIDGE TO INDIA makes no warranties, expressed or implied, as to the ownership, accuracy, or adequacy o the content o this product. BRIDGE TO INDIA shall not be liable or any indirect, incidental, consequential, or punitive damages or or lost revenues or prots, whether or not advised o the possibility o such damages or losses and regardless o the theory o liability. For urther enquiries, please contact: ntat@bidgtindia.m BRIDGE TO INDIA Pvt. Ltd. S-181, Panchsheel Park New Delhi 110017 India www.bidgtindia.m

Read our blog or up-to-date market insights and opinions www.bidgtindia.m/bg Follow us on Facebook www.ab.m/bidgtindia


coNTeNTS

The PV market opportunity in India Intnatina i maisn Sa iadiatin in India Indian sa iis Dmand and gwth jtins Th gid mat tnit rpos and rec mhanism

01 03 05 10 11 14

The PV manuacturing industry in India Stats Dmsti ntnt qimnt otnitis  ign manats pV manating ast

16 17 17 19

Expert Interviews M. Aan rsing, kian eng M. chandan Gha, Mahinda Sa on M. Shnidwind pt, Bsh Sa eng D. Tbias engmi and M. oiv Hzg, Bidg t India

Annexure


20 23 25 27

29

THe pV MArkeT opporTuNITy IN INDIA

The current economic slowdown in many European countries, especially Spain and Italy, has contributed to a signicant reduction o FiTs, making these markets less attractive.

INTerNATIoNAl polIcy coMpArISoN

The introduction o highly attractive FiTs and the maturing o the industry have contributed to large-scale capacity additions in these markets.

In the initial, Feed-in-Tari (FiT) driven phase o the global PV market, European countries, especially Germany, Spain and Italy, have taken the lead. The concept o compulsory consumption quotas o renewable energy (RPOs) has also rst been introduced in Europe. Both market instruments have subsequently been replicated and urther developed by other countries across the world.

The current economic slowdown in many European countries, especially Spain and Italy, has contributed to a signicant reduction o FiTs, making these markets less attractive. Also, with large capacities o solar power already installed, the growth in these markets has been declining or the past ew years. As a result, the PV industry is now engaging with new markets that oer opportunities or uture growth and give them a more diversied portolio o market risks.

As the solar PV industry enters into its second phase – o nearing commercial parity with other energy sources - new markets, with new policy support and high irradiation levels are increasingly coming into ocus.

Nw Mats Many new markets like India, Australia or South Arica have the advantage o

Fndamnta

Div

Iadiatin

lng Tm FiT  Wh

rpo

caita

Wh/m2/

eng

 da

Dfit

Gman

2.7

No

~M12 ($0.30)

No

Yes

Ita

3.3

No

~M11 ($0.27)

Yes

Yes

Sain

3.7

No

~M11 ($0.27)

Yes

Yes

India

5.5

Yes

M12

Yes

Yes

Sth Aia

5.2

Yes

M22($0.55)

Yes

Yes

Astaia

5.5

No

Yes

Yes

ontai canada

3.1

No

No

Yes

Sbsid

Mat mats

Nw Mats ($0.30)

M17($0.425)*

Sources: REN 21 Global Status Report, BRIDGE TO INDIA analysis *For projects less than 10MW

Mat Mats The PV market in these countries is based on two main drivers: their commitment to reduce their carbon ootprint and their desire to reduce the dependency on imported ossil uel. The average solar irradiation levels tend to be lower in these countries. 01


high solar irradiation. Their current installed capacities are still negligible as compared to the mature markets. Growth o solar power in these markets has been initiated by new government initiatives through FiTs and Renewable Purchase Obligations (RPOs).

India, with liberalized policies or the power sector, a high potential or solar power and a variety o central and state-level incentive systems, presents a particularly good opportunity or the solar industry.

Sth Aia has high solar resources, which are yet to be harnessed and very high FiTs. Currently, PV applications in the country are limited to o-grid solutions. The government plans to add 300MW per year starting rom year 2012. However, the country has only one state-run distribution utility that can purchase solar power under the FiT scheme.

mounted solar PV projects is around M24 ($0.42) per kWh, which is highest in the world. The market potential or large solar PV projects without the support o government is low. There are doubts about the long term strategy o the government.

India, with liberalized policies or the power sector, a high potential or solar power and a variety o central and Astaia has some o the highest state-level incentive systems, presents average solar irradiation levels in a particularly good opportunity or the world and has a competitive, the solar industry. The market is open electricity market. The remote supported by FiTs to provide an initial locations in Australia, which oer the thrust. Further, by introducing the best solar resource, however, oten Renewable Energy Certicate (REC) lack grid and road inrastructure. mechanism and Renewable Purchase Also, Australia, like South Arica, Obligations (RPOs), the government has signicant, domestic ossil uel has tried to create an independent resources available. market or solar power in India. Reverse-bidding auctions in some ontai (Canada) is a ast emerging programs have signicantly reduced solar market with an expected the FiTs, reducing the protability o installed solar PV capacity o 2,800MW projects. In the long-term, however, by 2015. The capacity addition is mainly solar power is considered to be a driven by the FiT policy. The FiT policy key strategic choice or this energywas introduced in 2009 but is only strapped, large and high growth applicable or projects smaller than economy. 10MW. The tari oered or ground

Mature markets New markets


02

SolAr IrrADIATIoN IN INDIA

03



04

INDIAN SolAr polIcIeS Natina Sa Missin

THe INDIA SolAr coMpASS

Since its launch in 2009, the National Solar Mission (NSM) has been the keydriver o the growth o the Indian solar industry. It targets installations o 20 GW o grid-connected and 2GW o ogrid solar power by 2022 (both PV and CSP). In the rst o its three phases, rom 2010 to 2013, the government incentivizes the construction o 1,000MW o grid-connected power plants, encouraging the more developed PV technology as well as CSP equally with 500MW each1.

For the rst batch o projects under the NSM oered in autumn 2010, as many as 333 project developers had put orward bids worth 1,815MW or 150MW o PV projects. Given this unexpected oversubscription, the government decided to award contracts based on a competitive reverse bidding process. Developers that oered the highest discount on the initial tari o M17.91/kWh ($0.45 per kWh) were awarded the projects. As a result, taris ell by around 30% to an average o M12 per kWh ($0.32 per kWh). The NSM has also introduced the concept o bundling, where the

Bnding  sa w

BRIDGE TO INDIA’s expertise lies in combining keen market insight with in-depth and precise knowledge o the industry and policy ramework in India. We publish this knowledge through our quarterly India Solar Compass. The India Solar Compass is an essential tool or all companies and investors engaging with the Indian solar market. Subscribers include some o the leading international solar companies, such as Bosch, IBC Solar, Gehrlicher Solar and Belectric. In addition to the India Solar Compass, BRIDGE TO INDIA has authored or co-authored a number o reports on the Indian energy, renewable energy and solar markets, most recently the report: “India Solar Market: Strategy, Players and Opportunities” with GTM Research (November 2011). cntnt I. India’s Sa Mat Overview and Latest Market Developments Status o the States Focus on Resale o PPAs in Gujarat Industry Developments Challenges and Outlook II. Indth et Intviw III. k Qstin Answd What is the captive commercial diesel o-set opportunity in India? •

•

•

•

* Approximate - actual tari could vary rom project to project

•

To purchase our reports or subscribe to the India Solar Compass, please visit the Reports section on www.bidgtindia.m or send an email to mhit.anand@bidgtindia.m

Each ederal power generator such as NTPC has to sell 90% o power generated to state distribution companies (DISCOMS) as enorced by the government. The other 10% is termed as un-allocated and this power can be sold by NTPC through NVVN in the open market.

Currently NTPC has 4,000MW o unallocated power, which can be bundled with solar power rom projects. However, NSM’s target o 4,000MW o solar power by 2017, will need 16,000MW o unallocated thermal power.

--------------------1 - MNRE National Solar Mission, Guidelines or New Grid Connected Solar Power Projects, July 2010 05


government (through the state-owned power trading company NVVN) is to buy the expensive solar power rom developers and then bundle it with unallocated cheap thermal power rom the ederally-owned power generator NTPC beore selling it o at an average cost o around M4 per kWh ($0.10 per kWh) to the state utilities. In order to reduce the payment deault risks inherent in the power purchase agreements (PPAs) with the nancially weak State Electricity Boards (SEBs), the ederal government later approved a Payment Security Scheme worth M4.86 billion ($122m) or projects under Phase 1 o the NSM. The scheme is implemented by the Ministry o New and Renewable Energy (MNRE), which will allocate the unds to the NVVN through a Solar Payment Security Account (SPSA).

banks (large areas o land acquired and consolidated by the government or the use o developers), thereby pushing developers to purchase private land, which is usually a tedious process taking anything between eight to twelve months. A new solar park at Charanka is meant to solve many inrastructure-related problems. So ar, however, there have been some issues with land allocation and the provision o evacuation inrastructure by the Gujarat Energy Transmission Corporation Limited (GETCO). While such issues will not necessarily derail the solar park, they will create urther delays or developers who are already acing challenges in meeting their deadlines. The state is also planning to allocate another 1,000MW worth o projects in the beginning o 2012 with the new tari control period.

Gjaat Sa pi

rajasthan Sa pi

The state o Gujarat was the rst Indian state to launch its own solar policy in 2009. The current policy is operative until 2014. The initial target was to achieve an installed capacity o 500MW. Given the interest rom a large number o developers and a likelihood that a signicant number o the initial projects will not materialize, the government allocated projects worth 935MW.

The Rajasthan Solar Policy, launched in July 2011, has a long-term target o 12GW o installed solar power in the state by 2022. In the rst phase, PV projects worth 300MW will be awarded through a competitive bidding process. The bidding is expected to take place by end 2011. Projects are then to be installed by 2013.

The Gujarat Solar Policy is the only policy, which has awarded projects with a xed FiT, on a rst-comerst-serve basis. This has resulted in the allocation o a number o projects to in-experienced or unknown developers. Land acquisition has proved to be a challenge or projects in Gujarat. There are a limited number o land-

The Rajasthan Solar Policy has incorporated some lessons rom orerunners like the NSM and the Gujarat Solar Policy. It does not have the 5MW limit on individual projects which made the NSM less attractive to large players but, unlike the Gujarat policy, it has placed xed limits o 61MW (accumulated capacity under dierent scheme o projects) on overall capacity allocation to encourage the development o a competitive developer landscape. The policy also

Gjaat Tais lvizd tai

F fst 12 as

F nt 13 as

F jts m missind b 28th Jana 2011

M13.30 per kWh

M15

M5

F jts m missind st 28th Jana 2011

M10.81 per kWh

M12.04 per kWh


per kWh

per kWh

M6.84 per kWh

06

addresses the concerns o developers with regard to the allocation o land and water, availability o a transmission network and the localized supply chain. In October 2011, the state government announced a tax exemption o 4% on entry o 43 capital goods like solar PV modules, batteries, inverters and other goods used in solar power plants.

1 o the NSM the state has already attracted around 60% o the bids or projects and is likely to attract more developers under its state policy.

kanataa Sa pi

Karnataka announced its solar policy in July 2011 and targets 350MW o projects by 2016. The state has already called or bids or 80MW worth o projects. The last date to submit the bid was November 24th, 2011. The selected projects will be announced by The policy promotes domestic manuacturing by providing incentives the end o 2011. The size o individual projects is limited to 3MW to 10MW. or developers with manuacturing acilities in Rajasthan. O the 300MW o It allows plants to eed power into the low voltage, 11KV distribution grid. PV projects available under its policy, With these measures, Karnataka 200MW are reserved or allotment is looking to attract investors that to developers planning to build are interested in developing smaller manuacturing acilities in Rajasthan. These projects are required to use the plants or a more decentralized energy supply. The policy has no domestic modules manuactured in-house. content requirement. Due to its high irradiation levels and availability o space, Rajasthan will likely become the hub o solar power generation in India. Under Batch I o Phase I o the NSM, out o 145MW o solar PV projects selected, 70% are in Rajasthan. Under Batch 2 o Phase

In October 2011, MNRE reused to give subsidies to 129MW o projects allotted by the Karnataka government, which led to the cancellation o these projects.

pi

Tagt

pjt atmnt mthd

FiT

pjt Sizs

Dmsti ntnt gidin

etd instad aait b 2013**

NSM

500MW by 2013

Reverse competitive bidding

Average FiT or rst batch: M12 ($0.3) per kWh

Batch 1: 5MW Batch 2: 20MW

Yes. Exception: Thin lm modules

480MW

Gjaat

500MW by 2014

Fixed FiT on M15 rst come ($0.375) basis per kWh or rst 12 year and M5 ($0.125) per kWh or the next 13 years

Min 5MW; Max no cap

No

700MW*

rajasthan

300MW by 2013


Biddings yet to take place

Min: 1MW Max: 50MW

No. Exception: 200MW projects or module manuacturers

250MW

kanataa

126MW by 2013


Biddings yet to be take place

Min: 3MW Max: 10MW

No

100MW

*Projects awarded are more than the targets o policy **BRIDGE TO INDIA market projections For procedures and timelines o project allotment, criteria and development, reer to AnnexureI 07


STATuS oF THe STATeS pV proJecTS FINANcIAl ppAs cloSure/ SIGNeD coNSTrucTIoN

STATe

SolAr polIcy STATuS

GuJArAT

State Solar Policy under execution Phase 1: Deadline Dec. 2010 Phase 2: Deadline Dec. 2011 Phase 3: To be announced by end o 2011

NSM State Policy

State Solar Policy announced in April 2011 Base FiTs announced. Bidding expected by end o 2011 (250MW to be allotted)

NSM RPSSGP GBI Direct RPO

r rAJASTHAN e M r o F r e p p kArNATAkA o T

MAHArASHTrA

TAMIl NADu

S ANDHrA prADeSH r e S I r l A I orISSA T N e T o p HAryANA

State Solar Policy announced in July 2011 NSM Bids totake place by end o 2011 (80MW to GBI be allotted) Deadline or RS: October 2011 Broad Renewable Energy Policy, No policy NSM RPSSGP specic to solar energy Direct RPO

State solar policy likely to be released soon

0MW 933.5MW

0MW 400MW

171MW 12MW 5MW 100MW

170MW 12MW

5MW 6MW

5MW

16MW 1MW 153MW

12MW

40MW

1MW 5MW

40MW

6MW

150MW

4MW 1MW 3MW

NSM RPSSGP GBI

5MW 7MW 5MW

5MW 5MW

Drat solar policy expected by end o 2011 NSM RPSSGP GBI

65MW 10.5MW 2MW

65MW 8.5MW

Drat solar policy expected by end o 2011 NSM RPSSGP

5MW 8MW

5MW 5MW

3MW 2MW 0MW

Broad renewable energy policy, No policy specic to solar energy

RPSSGP Direct RPO

7.8MW 5MW

5.8MW 5MW

uTTAr prADeSH

No state solar policy

NSM RPSSGP Direct RPO

5MW 4MW 5MW

5MW 4MW 5MW

puNJAB


NSM RPSSGP Direct RPO

7MW 8.5MW 6MW

5MW 8.5MW 6MW

uTTArAkHAND

Existing broad renewable energy policy

RPSSGP

5MW

5MW

WeST BeNGAl


GBI

7MW

5MW

cHHATTISGArH


RPSSGP

4MW

4MW


RPSSGP

14MW

14MW

Only central policy

RPSSGP

1MW

1MW

No state solar policy (Rootop projects initiated by MANIREDA)

Direct RPO

1.5MW

1.5MW

S JHArkHAND r e V o puDucHerry M W MANIpur o l S

coMMIS SIoNeD


2MW 5MW

2MW 2MW

2MW

2MW

08

pV proJecTS ppAs SIGNeD

STATe

SolAr polIcy STATuS

DelHI

No solar policy yet, notied their RPO requirments. Solar rootop policy expected.

JAMMu AND kASHMIr

Drat solar policy (Not ormalized) Projects to be developed under NSM ogrid and RPSSGP

No development so ar

kerAlA

Existing broad renewable energy policy


TrIpurA

Drat solar policy (Not ormalized)


MIZorAM

Drat solar policy (Not ormalized)


ASSAM



HIMAcHAl prADeSH No state solar policy


AruNAcHAl prADeSH











S r NAGAlAND e V o M MeGHAlAyA N o N SIkkIM

GoA

Direct RPO

Tta Dit rpo: Projects initiated to ulll RPO obligations (project specic FiTs negotiated between utility & developers) NSM: First batch o projects allotted under phase-1 o the NSM (includes migration projects) rpSSGp: Rootop & Small Solar Power Generation Program under NSM GBI: Projects under MNRE GBI scheme

* We do not expect that all projects that have attained nancial closure will be constructed and commissioned.


2MW

2MW


uNIoN TerrITorIeS Only central renewable energy policy

09

FINANcIAl cloSure/ coMMIS coNSTrucTIoN SIoNeD

1,575.3MW

957.3MW*

82MW

DeMAND GroWTH AND proJecTIoNS pjtd Mat Gwth  Sa pV in India

Given India’s high irradiation levels, solar power will soon become a easible choice or captive generation in the uture.

caait additin is nt divn amst siv b gvnmnt sbsidis The installed capacity or gridconnected solar power under the various policies by the end o 2011 will be close to 250MW up rom a mere 22MW at the beginning o the year (all PV). The growth has been driven by the launch o the NSM and Gujarat Solar Policy and the preerential FiTs they oer. Currently, growth is centering on grid-connected plants. This trend is expected to continue over the next three years because o a lack o incentives outside the policies and because solar power is not yet commercially viable on a large scale. Growth o captive solar power


installations will be dependent on the solar REC market in the short term. Gid ait is td b 2018 The capital cost or solar power has come down by about 16% to 20% in the last two years. It is expected to continue the downward trend or the next three years as the manuacturing scale increases and the technology matures. At the same time, the cost or ossil uels such as coal is expected to increase and subsidies in the power sector in India are expected to all, thus driving up grid power prices. Given India’s high irradiation levels, solar power will soon become a easible choice or captive generation in the uture.

10

STrATeGIc coNSulTING

Gid pait in India

BRIDGE TO INDIA provides strategic consulting services to Indian and international companies and investors interested in the Indian solar market. With its extensive industry network, market insights and project knowledge on demand growth and projections, BRIDGE TO INDIA is able to provide customized solutionsto generate tangible success or its clients. Our work encompasses the ollowing areas: Market entry advisory Competitive analysis Business model development Partnerships M&A advisory •

•

•

•

•

For more inormation, visit the Strategic Consulting section on www.bidgtindia.m or contact tbias.ngmi@ bidgtindia.m

THe oFFGrID MArkeT opporTuNITy

industrial users, powering telecom towers and rural electrication through small solar applications; solar home systems or mini-grids. The realizable market potential and the The major market segments in the technical and nancial entry barriers Indian solar o-grid market are captive indicate their level o attractiveness power plants or commercial and and business opportunities.

oGid pVMat: ptntia and Mat ent Bais

11


etiit cst

cativ pw pants

Depending on the design o the PV system, a unit o power rom an ogrid solar system currently costs about M11-12 ($0.28-0.30) per kWh (without storage). This is higher than the cost o grid electricity (M4-5 or $0.10-$0.13 per kWh) but competitive to electricity rom diesel gen-sets ( M10-15 or $0.25$0.38 per kWh). Currently diesel costs around M45 ($1) per liter. Thereore, in areas where grid power is erratic and diesel power is used extensively, solar power already has a strong business case.

Solar captive power plants are already a viable option or many locations to complement diesel or grid power. Amongst the advantages or o-grid solar systems vis-à-vis grid connected plants is the act that it is mostly a business-to-business transaction, leaving aside governmental processes. On the other side, there is a risk that PPAs with private customers are less bankable. According to the “Electricity Rules, 2005”, at least 26% o the plant has to be owned by its user and at least 51% o the annually

cmaisn  st  w nit [INr/Wh]**


12

BrIDGe To INDIA pjt Dvmnt BRIDGE TO INDIA supports international investors and Indian companies in their project development process. This includes project scouting, technical and commercial due diligence, energy concepts or captive projects, and site development including permits. BRIDGE TO INDIA is also developing commercially attractive captive PV projects. For more inormation, visit the Project Development section on www.bidgtindia.m or contact iv.hzg@bidgtindia.m

produced electricity must be captive consumption. Market participants estimate the payback period o solar captive power plants to be two to seven years, depending on diesel prices, location and system design. The main challenge is to nd a nancially viable business model with a long-term strategy or scalability. There are two main approaches to this: an EPC or an ESCO model.

epc Md

The payback period or PV systems as power supply or telecom towers is currently two to our years and it is expected to reach one year by 2014 (see Figure 3) 2. The lesser the availability o grid-power and the more remote the location, the better is the case or autonomous PV systems. Further, increasing diesel prices and decreasing diesel subsidies will support this trend.

eSco Md

Power plant is owned by the customer Power plant is owned by the customer ater the contract expires at no extra cost apart rom maintenance Most plants are sold through this ‘Solar as a service’ - more suitable or model achieving economies o scale EPC company nds unding through equity with banks who can provide high upront costs Customer operates the power plant ater commissioning

Design, construction, nancing, operation and maintenance is done by the Energy Service Company (ESCO) Customer only pays or the energy consumed by signing a contract with the ESCO or 7-14 years

Customer takes on the responsibility o maintaining the power plant

ESCO takes the risk o running the power plant or the customer or the contract period

paba  sa w sstms  tm tws

--------------------2 - BRIDGE TO INDIA expert interviews and analysis 13


reNeWABle purcHASe oBlIGATIoNS (rpos) AND THe rec MecHANISM In order to urther encourage power generation rom renewable sources, the ederal government, through the Central Electricity Regulatory Commission (CERC), has introduced RPOs or both renewable power in general and solar power in particular.

distribution licensees, open access and captive consumers (1MW and above) - have to have as a percentage o their total available electricity. Currently, these are set at around 0.25% o the total consumption o state utilities and vary across states. A distribution utility, which distributes one million kWh o electricity in a year, is obligated to obtain 2,500kWh o these rom solar energy. It can meet this obligation by purchasing the required quantity o solar power directly rom producers. Alternatively, it can buy solar RECs to ulll its RPOs.

Solar RPOs are the minimum amount o solar energy that obligated entities -

rec Famw: eigibiit


14

rec Mhanism

The REC market will grow once the solar market strengthens in India and when longerterm price signals are available.

2012. As a result, developers who build their case on RECs ace problems in RECs can be generated by any raising debt because they are unable developer who sells solar power to to project their returns accurately or the public grid at the Average Pooled the loan repayment period. Also, there Purchase Cost (APPC) o the relevant are still too ew solar projects in India distribution utility or sells solar power to generate enough volume or a well to third-party consumers at a mutually unctioning market. decided price. RECs are not applicable or projects in which power is sold to The REC market will grow once the the grid at a preerential tari. Further, solar market strengthens in India and power producers that have begun to when longer-term price signals are sell power at a preerential FiT are available. The market is also looking not allowed to later switch to the REC to the government or making changes mechanism. in the REC policy. Currently the RPOs The REC market is yet to pick up in India. The main challenge it aces, is the lack o a long-term predictability o REC pricing. The current REC foor and orbearance prices are only applicable through 2012, and CERC issued an order to lower the REC price ater

which create the primary market or the RECs have to be ullled on a yearly basis. As a result, obligated entities go to the market to purchase RECs only at the end o a nancial year. This creates a spike in the cash fows o projects rather than continuous cash fows throughout the year.

recs an bst tns signifant

15


THe pV MANuFAcTurING INDuSTry IN INDIA The Indian manuacturing industry currently has module production capacities o about 1,300MW, more than 90% o which is or crystalline silicon modules.

STATuS

In order to remain globally competitive in an increasingly tough market, Indian The Indian manuacturing industry manuacturers will need to improve currently has an overall production their oering by reducing their cost capacity o about 1,300MW or modules positions (through increasing scale and and 700MW or cells. These capacities integrating along the value chain) and ar exceed PV installations in India generating innovation. Currently, most and will do so or some years, even module manuacturers in India are considering the annual growth rates. still dependent on oreign suppliers The Indian PV industry has grown or ingots, waers and cells. Maharishi based on exports to international solar Solar is currently the only Indian markets and continues to depend company with manuacturing acilities on the European countries or more or ingots and waers; it has a total than 80% o its revenues. More than capacity o 15MW. 3 70% o cells and 80% o modules manuactured in India are still exported.

c manats in IndiaMW

Md manats in IndiaMW

--------------------3 - Based on industry interviews and company reports © BRIDGE TO INDIA, 2011

16

Indian Sa pV S chain

DoMeSTIc coNTeNT opporTuNITIeS GuIDelINeS For ForeIGN MoDule SupplIerS For the rst batch o projects in the

About 80% o currently installed capacity use thin-lm modules.

NSM, crystalline modules being used must be manuactured in India. The second batch o projects under the NSM due to be allotted by the end o 2011 are not allowed to install modules with imported cells. Use o thin lm technology is still exempted rom domestic content guidelines.

The installed capacity in India stands at 90MW4.New projects worth more The state policies o Gujarat, Rajasthan than 200MW are expected to be and Karnataka do not have a domestic commissioned by the end o 2011. Most content requirement. Other states o these are expected to be thin lm such as Tamil Nadu, Orissa and Andhra installations. O the currently installed Pradesh are also expected to not capacity o 90MW, 77MW use thin lm mandate domestic content in projects. modules. O the 71MW PV capacity installed in the last one year, 61MW have been thin lm installations.

Mds instad in India: cstain Vs Thin Fim

--------------------4 - as on November 22nd, 2011 17

Going by the current supply contracts, India will import more than 1GW o modules until the end o 2012. More than 60% o these will be or thin lm modules, all rom oreign manuacturers.


cstain siin md sis t India MW

Thinfm md sis t India MW


18

cuSToMIZeD reporTS BRIDGE TO INDIA provides in depth market knowledge to clients through customized reports to cover the Indian energy markets. Past, publicly available reports include, among others, an analysis o the Indian energy market or the German Environment Ministry, support or REN21’s Global Renewables Status Report, an analysis o the Indian Renewable Energy Market with NREL, GIZ and IRADe, a report on the Indian project development processes or DENA and a report on the Indian solar market with Greentech Media.

In the next three years, India’s PV manuacturing industry or the rst time will see a signicant production capacity or ingots and waers.

pV MANuFAcTurING ForecAST The PV manuacturing industry in India has grown six-old rom under 200MW in 2007 to a 1,300MW in 2011. In the next ew years, the growth in module production will be replicated upstream as well. For the rst time, Indian manuacturing industry could be seeing signicant production capacities or waers and ingots as well. Complete integrated module manuacturing acilities o capacities as large as 600MW are currently being built by large Indian business conglomerates such as Lanco Solar and Birla Surya. Various smaller and new business entities such as Ala Solar, JBM Group, Chemtrols Solar, Vorks Energy and Sonali Energies as new entrants in the PV industry are also planning to build new acilities or production o modules. Besides, existing manuacturers like Tata BP, EMMVEE, Moser Baer and XL Energy

Over the next ve years, production capacities or ingots and waers are expected to increase rom a mere 28TPA5 to more than 1,000TPA. A healthy domestic supply chain will bring down the cost o raw material or module production in India. As a result, the domestic ingot and waer productions will be directly reciprocated into new domestic module manuacturing capacities. New module production capacities worth 2GW or more could be realized rom 2015 to 2020. There is no domestic industry or manuacturing equipments in India. It is imperative, thereore, that the Indian PV manuacturing industry will be a signicant market opportunity in the world or the suppliers o PV manuacturing equipments and the turnkey solution providers or them.

pV Manating Fast India

--------------------5 - TPA: Tonnes per annum 19

are investing to expand their existing production capacities. These plans will add to the module and cell production capacities in India by more than 1GW in the next ve years.


experT INTerVIeWS M. Aan rsing Founder, Kiran Energy

Perhaps most importantly, the regulators have developed an umbrella mechanism around RPOs that in the long run is likely to drive the shape o the solar market.

M. Aan rsing is Chairman o Kiran Energy Solar Power Pvt Ltd, a company he co-ounded in Bombay in 2010 together with Ardeshir Contractor. Kiran Energy closed its Series A unding round with a consortium o three private equity investors and is now developing solar power projects in India, typically in joint venture with leading corporates. Kiran signed its rst joint venture with Mahindra & Mahindra in September 2010 and has signed two Power Purchase Agreements to date, a 20MW project in Gujarat and a 5MW National Solar Mission project.

Alan created his own advisory business, Grin Growth Partners Ltd, in 2009 to assist clients develop and implement successul strategies in India, and to work with Asian multinationals as they globalise. Prior to this, he served as an Executive Director o Tata Sons Limited responsible or Tata Group’s drive to internationalise. Alan has also served as a special advisor to the British Prime Minister, Rt. Hon. John Major MP, and a member o the Policy Unit at No. 10 Downing Street.

Many projects under the NSM are yet to begin construction and many PPAs under the Gujarat Solar Policy have been cancelled? How do you rate the success o both solar policies?

support is required to encourage the market to invest, innovate and scale up. The National Solar Mission was a ne policy process and produced a clear roadmap towards an ambitious goal, 20GW o solar in a decade. Its policy prescriptions were well conceived and innovative (reverse bidding, bundling). The rst round o bidding was careully implemented and managed. The second round has shown the government willing to listen and evolve policy. It has also been very welcome that there has been an alternative policy process taking a dierent approach in Gujarat. The level o immediate ambition has indeed been higher in Gujarat with 960MW o PPAs signed in the rst year. The Government has been very supportive over the practical issues o project development, with the Gujarat Solar Park a particularly important initiative. Perhaps most importantly, the regulators have developed an umbrella mechanism around RPOs that in the long run is likely to drive the shape o the solar market. So overall we see 2011, the rst year o solar in India on any serious scale, as a great success which much that entirely outweighs the diculties or non-implementation o any individual projects.

We see the development o solar policy India oers lots o dierent subsidy schemes or PV such as the NSM, state in India as a great illustration o how policies and RPO. How do you assess the Government can and should work attractiveness o those schemes rom with the market to shape a strategic a project development and investment objective o national importance. The country needs power or development, perspective? but increasingly concerns over energy security, balance o payments, climate You should view the various policy impacts and aordability will drive initiatives at state and centre as India towards an increasing share o complementary aspects o an overrenewable in the power mix. Solar arching ambition to see solar develop has huge potential in India given into a major industry in India. The our insolation and land availability. Government has set a target o 20GW However or the next ew years solar in a decade. The regulators have will remain a more expensive source evolved RPOs as the critical market o power until innovation and scale driver. The NSM and Gujarat and other drive costs downwards to parity state policies are mechanisms within with conventional sources. So policy the RPO ramework. © BRIDGE TO INDIA, 2011

20

We also believe in partnering with technology providers and EPC providers (we have a strong relationship with L&T).

To an important degree multiple objectives in a policy will conuse and hold back the delivery o the policy.

21

Does the NSM oer optimum support to this improving and how can the industry project developers? In what other orms address this challenge? do you think the developers could be supported? This year the banking community was getting comortable with the No developer will ever be entirely solar industry and its risks, including satised with any policy structure as questions around technology and there will be trade-os and rub points. the PPAs. Well conceived projects Overall, the NSM has been very well with strong EPC arrangements have conceived and implemented. Our secured nancial closure. I would criticisms o the rst round was over expect the banking process to get the restriction to one 5MW project easier over time, though we need to and the local content requirement or continue to innovate project nancing crystalline. MNRE has listened to our to bring cost o capital, which is too eedback and in the second round has high in India, down towards world adjusted size restrictions upwards, levels. which is very welcome. Our key ask There have been discussions on making o the Government is to have a clear renewable energy a priority sector or roadmap to scaling the industry with regular opportunities to bid or and win lending as a solution to bankability as a world scale plants. Only in this way will challenge. What is your opinion on this? the industry develop and costs come down. We see solar as a strategic industry or India where the country should Project development is the business have a comparative advantage. As such with most risk exposure. What were priority sector status can only assist, your reasons/ inspiration behind especially regarding cost o unds. ounding Kiran Energy as a project developer? How do you assess the infuence o increasing domestic content requirements on the engagement o Ardeshir and I ounded Kiran because we believe that solar will have an oreign manuacturing companies in the Indian solar market? Will other states important uture in India as the ollow the NSM in this regard? technology develops and costs come down. This is one acet o the NSM Kiran Energy has raised PE rom policy where we have a continued three PE investors who jointly hold a reservation. O course we all wish major stake in the company. The other to see the development o local 5MW plant is being developed in a joint manuacturing including Indian module venture with Mahindra. What is Kiran and cell companies with their own IP Energy’s long term strategy as and world scale quality manuacturing. a project developer? India has proved to be a great place or engineering intensive manuacturing, We aim to be a leading pure play given our skills and cost base. And the solar developer ocused on India. We local market or solar will be among believe in partnering to achieve this the largest in the world. However, ambition and our JV with Mahindra is we see the policy objective o cost a critical illustration o our approach, reduction and convergence with grid and together we will grow Mahindra parity as the overarching goal o the Solar One. We also believe in Government. To an important degree partnering with technology providers multiple objectives in a policy will and EPC providers (we have a strong conuse and hold back the delivery o relationship with L&T). the policy. Cost reduction will come rom innovation (largely in Silicon Bankability has been a challenge or Valley or now) and scale (China or solar projects in India. How do you see © BRIDGE TO INDIA, 2011

the conceivable uture) so cutting the Indian market o rom these developments appears counterproductive. As implemented, this protectionism has so ar merely distorted the market in avor o Thin Film. What can oreign investors and EPC companies contribute to solar energy development in India?

An enormous amount. India should welcome all industry players.

increasing number o oreign investors look into such investments despite this act and how successul have oreign investors been in India so ar? What kind o returns are they looking or?

Electricity supply will remain a regulated industry with utility returns. Foreign players are looking to India or growth within sound regulation. How do you assess the role o PV in India’s uture energy strategy?

Increasingly important. According to our assessment, project IRRs are not oering high prot margins at present. Why do an


22

M. chandan Gha CEO, Mahindra Solar One

M. chandan Gha is the Chie Executive Ocer o Mahindra Solar One Private Limited and leads the SPV Operations.

An electrical engineer by proession, he has spent more than 20 years in the Power Sector , mainly on the Thermal and Automation sides, beore moving over to renewable. He was the Director Sales, with GE Energy T&D in his last job. Prior to GE, Chandan had worked with Reliance Energy, Honeywell Automation etc and is a key speaker in most orums o Indian Power Sector.

Our strategy is to oer de-central power solutions because I think this is where the real growth opportunity is in the long-term.

We expect RPOs to be enorced by the end o this nancial year,between January and mid-2012. Accordingly, the REC market should pick up by 2012-13.

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Chandan has vast experience in thermal power plant EPC projects and power plant operations. He worked as vertical market head o a 300 crore company & headed distribution automation in one o India’s largest Utility Distribution Company.

With regards to the domestic content requirement, is there not a confict between the government’s objective o supporting generation as well as increasing domestic manuacturing?

A dichotomy need not necessarily be a confict. In my opinion, the domestic content requirement is a very good initiative by the JNNSM to support the growth o local manuacturing. We need an entire ecosystem o manuacturing and projects in order to meet the solar targets o the country. However, Indian manuacturers at the moment operate on a small scale as compared to larger companies abroad. They continue to look at exports to Europe to sustain their businesses.

On the other hand, there is a great opportunity or large international module manuacturers to set up manuacturing in India. I the What is Mahinda Sa on’s statg government oers the right incentives, with gads t sa ng in India? international manuacturers can take advantage o cheap land and First, Mahindra Cleantech was low labor costs in India. In turn, the ormed to encourage and implement Indian industry can benet rom some renewable energy projects and clean o the best global technology at the technology solutions. As a strategy, lowest costs. Large scale domestic we have been careully watching this manuacturing capacities will reduce space. Solar has been our rst step cost throughout the value chain. as it can oer energy security not just Is the solar-REC market viable? Will through utility-scale plants but also Mahindra Solar One be looking to through o-grid solutions. Mahindra develop projects based on the REC Solar One is currently developing mechanism? projects under the JNNSM and the Gujarat Solar Policy. In the long term, our strategy is to oer de-central We believe the REC market can be a power solutions because I think this is key driver o the solar industry in India. where the real growth opportunity is in The solar-REC market is struggling the long-term. only because the states have not been able to enorce penalties on utilities or Is Mahindra Solar One looking to invest not meeting their RPOs. Although the in the PV manuacturing sector in India? RPOs have been notied by individual state electricity regulatory committees, We are a solar power developer and the market will not pick up unless are technology agnostic. We are not the penalties are enorced. We expect into manuacturing. Currently the RPOs to be enorced by the end o this manuacturing sector has several nancial year,between January and large gigawatt-scale manuacturers mid-2012. Accordingly, the REC market which is good or the industry. India should pick up by 2012-13. would need similar setup to create a sustainable large manuacturing base. Mahindra Solar One has excellent relations with some banks and our


perception is that they would nance REC based projects as well. They trust this mechanism and the market to pick up in the uture. So, yes, we will be looking to develop such projects once the REC market is active. How important are o-grid solutions or India? When do you think will be the tipping point or this market?

Currently, we have three business models in PV technology viz. large MW scale solar power plants, smaller ogrid PV plants and building rootops.


The large MW scale power plants will denitely be the rst to take-o as already seen this year. We expect a 1GW installed capacity by mid-2012 and about 2.5GW by mid-2013. We have seen the political will to encourage the growth o solar power. And the market is moving ast: the government’s grid parity target o 2020 might actually be achieved by 2016. The infexion point or the growth o solar power in India will be when the cost o solar alls to M8 per kWh. I believe this will create room or the growth o solar power outside the government policies and subsidy schemes.

24

M. Shnidwind pt CSO, Bosch Solar Energy

This region, which is home to 75% o the world’s population, is currently beset by high electricity prices and also by poor energy supply. Its countries together make up just 40% o worldwide energy demand.

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M. Shnidwind pt is a member o the divisional board with responsibility or all sales, marketing and product management at Bosch Solar Energy.

according to the EPIA, their share will double to 80% over the next 20 years. It is also to be noted that so ar only nine percent o global photovoltaic capacity has been installed in this sunny area.

How do you rate the Indian solar market Especially, in light o the recent in the international context? developments in the Indian photovoltaic market, there is a good The photovoltaic market is becoming chance that India will be one o the ever more dynamic around the world. prominent movers in this direction in In 2010 alone, solar power plants with the Asia-Pacic region. a total output o 18GW were installed. Will the uture o the solar market That equates to the electricity requirements o 24 million Europeans in India be in the on-grid or o-grid space? – or the whole o Sweden, Denmark, Finland, and Norway put together. In 2007, the total output o photovoltaic We expect that within the next ew acilities installed that year was only years the dominant market will remain 2.3GW. the on-grid market at multi-MW and utility scale. Due to the act that Market development will continue photovoltaic is on the verge o being to speed up in the years to come. competitive with diesel-generated The orecast is or a total capacity o electricity there is a good chance 32GW to be installed in 2015 alone. that a very interesting and large This would meet the electricity volume market may arise within the requirements o almost 44 million next years due to reducing diesel Europeans. consumption through photovoltaic power. In addition, rural electrication The orecast is similar or the Asiaby means o photovoltaic and other Pacic region: From 2GW in 2010, renewable energy sources may cause the capacity o newly-installed solar the share o o-grid applications to capacity across the region should rise rise in the Indian photovoltaic market. to almost 13GW by 2015. All around the How quick both o these developments world, the area that is being ocused will be will strongly depend on several on is the land that lies between the actors such as the willingness and th 35 parallel either side o the equator. trust o investors to nance long-term This region, which is known as the photovoltaic assets, the reliability o “sunbelt” thanks to its high level o photovoltaic systems used or oincident sunlight, and which also grid solutions, the development o includes the largest part o India is the diesel prices, a sucient push rom ideal location or solar installations – governments to help the market grow and has the highest opportunities in the initial phases, and others. New or growth. developments and innovations in energy storage technologies will also According to a study by the European help augment the adoption o o-grid Photovoltaic Industry Association, systems, i the resultant solutions are EPIA, photovoltaic will become this more economical. region’s most important source o Do you see thin lm or mono crystalline energy between 2020 and 2030. This modules being best suited to India? region, which is home to 75% o the world’s population, is currently beset by high electricity prices There cannot be “One Size Fits All”. and also by poor energy supply. Its The choice o technology will be countries together make up just 40% application specic. For the time being, o worldwide energy demand. But we see good perspectives or both


technologies in the Indian photovoltaic market.

India is a price sensitive market but given our long standing existence in India or 60 years and our engineering competence, we are very well placed to compete in the Indian solar industry.

in India with 10,000 engineers (mainly electrical, electronic and mechanical specialists) supporting all Bosch Given its strong engineering verticals. Bosch Rexroth designs and competency in dierent sectors, how is manuactures mounting structures Bosch placed to tackle the challenges in suitable or our modules and projects. the Indian solar sector? For our solar projects, both on-grid We are optimistic to contribute to the and o-grid, we bring together the challenges o the Indian photovoltaic experience rom Europe and leverage market by optimizing our products local talent. We believe the integrated in light o the Indian requirements approach rom manuacturing to within the next years. India is a pricesystem engineering and installation sensitive market but given our long will ensure quality and reliability. standing existence in India or 60 years Our emphasis on quality, throughout and our engineering competence, our organization, ensures that all we are very well placed to compete components are mutually compatible in the Indian solar industry. We have and designed into a proessionally experience o installing over 50MW o engineered and integrated power projects in Europe and have a strong system, thus enhancing system network o wholesalers - installers reliability, perormance and longevity there. Bosch’s largest engineering which gives the investor sae and centre outside o Germany is located reliable returns.


26

D. Tbias engmi Founder, Managing Director, Bridge To India

M. oiv Hzg Director, Bridge To India

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D. Tbias engmi was awarded a doctorate in political science rom the South Asia Institute o the University o Heidelberg or his thesis on the relationship between identity and strategy in Indian politics. Prior to his doctorate, he worked or a leading strategy management consultancy. During that time, he advised large European utilities on how to engage with the ast-rising market or renewable energies.

What is the signicance o solar as a resource or India?

D. engmi Solar in India is crucial. It is the only credible long-term power supply strategy that this country can have. Fossil uels are limited and India has its issues with nuclear energy. So, in order to meet India’s enormous energy demands, India needs solar power. Secondly, solar power can provide India with energy security. India’s In 2008, he ounded BRIDGE TO solar irradiation levels are high. So, INDIA as a strategic environmental you already have the undamental consulting company, based in New necessity to develop solar power and Delhi. Since then, he has provided hence, the key driver or the industry. consultancy services to multinationals Given the inrastructure setup and cost as well as SMEs, to institutions, o power generation in India, combined governments and to investors. He has with the irradiation opportunity, published a number o reports, articles commercial viability can be achieved as well as two books on the topics o very soon. India and energy. M. Hzg M. oiv Hzg studied Business It is important to note that solar power Administration with a ocus on in India will reach grid parity much accounting/controlling and general beore the grid is enlarged into rural management at the University o areas. Thereore, solar will be in a Applied Science in Cologne. During his stage to deliver power at a reasonable studies he worked or an international price as an alternative to having a consultancy company with a ocus complete unctioning grid in India. I on strategic management and believe, in the current energy structure restructuring. and scenario in India, a strategy or solar power is completely lacking. Ater his studies, in January 2004, However, as Tobias just mentioned, he joined a leading global renewable with the conditions available the energy company, where he worked or process to make solar commercially 7.5 years in dierent positions. During viable has begun and it will spread to the last two years he headed the the larger parts o the market rom operations o the project development here. and nancing arm in Singapore and What makes the Indian solar market India. In Singapore he successully dierent rom the other new as well as set up a trust worth €200m with GE Financial, which invests into renewable existing global markets? energy projects across Asia. In India, M. Hzg he successully set up a project pipeline o more than 400MW o PV, India, at the moment, is not ullling wind, small hydro and biogas projects. its own energy requirements. Hence Oliver joined BRIDGE TO INDIA in there is a crucial need or every kWh July 2011 as Director. He is based in that can be produced. India needs Hamburg, Germany. Oliver ocuses to produce aordable power and not on renewable energy and advises replace power. However, plans to add companies on entering the Indian capacity in power, as has been seen market and on identiying, screening with coal and nuclear power programs, and developing projects. rarely reach their targets. As compared to other countries that already have running solar energy programs, India © BRIDGE TO INDIA, 2011

has amongst the highest levels o irradiation. This reduces the energy cost per kWh.

India has increased the competitive pressure in the industry signicantly. All players along the value chain have thereore stretched themselves more than ever beore.

D. engmi Perhaps the key dierence is that, India has, through the auction process, signicantly brought down the costs o PV plants. India has increased the competitive pressure in the industry signicantly. All players along the value chain have thereore stretched themselves more than ever beore. This is extremely signicant or the development o solar in India as well as or the world. Reduction o prices in India has been signicant in driving global prices. It is very dicult to argue that they should be much higher anywhere in the global market. India, thereore, has been as undamental in advancing the case or solar power as a business opportunity as China has been or solar as a manuacturing opportunity. India has added an entrepreneurial edge and a competitive pressure to the industry.

What is the market potential o the Indian solar industry? How realistic are the growth projections?

I believe stopping subsidies will open the energy market or a air competition.

M. Hzg The NSM and various state policies at present have capacity addition plans o more than 20GW until 2022. Commercial parity in India is expected by 2017. This will urther boost the solar market and make the case or de-central solar power stronger. Our estimate is that by 2017 itsel we will have a total installed capacity o more than 11GW and by 2022 we could be having close to 30GW o installed capacity.

In terms o the potential, the overall energy structure under the NSM is ocussed on CSP and larger MW scale power plants. However, on-grid power generation will be limited because o the intermittency o solar power generation and limited land space. This, in my view, will build a case to boost o-grid solar power in the


uture. Currently, there is not enough policy support or o-grid. D. engmi Yes, reaching grid parity or commercial parity is going to change the market signicantly. I believe it will be an infection point, and will reset the market potential o solar industry in India, given India’s massive energy demand. Innovation in energy storage technologies will bring a second infexion point which will boost the decentral systems urther. What are the challenges or the industry at the moment and what can be done to overcome them? D. engmi What can the government do to acilitate the growth? One is netmetering or back-up options; the second is to reorm electricity prices. India’s electricity prices at present are not refecting the actual costs o generation. We need to stop subsidizing electricity or the end consumers. This will help us reach grid parity sooner.

In such a case, i we produce solar power cheaper than grid power and then net-metering will become an o-grid topic. As PV o-grid will be a cheaper option and i, or whatever reason you produce power and it’s not o taken, you will always have the option to eed back power into the grid. At the same time, this will also balance the demand and supply. M. Hzg I believe stopping subsidies will open the energy market or air competition. The Indian government must also invest in R & D and or India to become a technology leader and the ocus should be on de-central applications, low cost applications, mini-grids, rural applications, and storage. Then, a world class industry can be ormed which can be also have a good export strength.

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30

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A / N

A / N


d e n f e d t o n

 o s d y a r d a w 5 a 4 e n s i n h t e i c w i l

h t y i w d o e b c t n n a e d r m o n c r c e a v o n i g

A / N

h t y i w d o e b c t n n a e d r m o n c r c e a v o n i g

t c e j o r r e P p , o N l V e v V e N D


A / N


s y a d 5 : 6 x 1 a + M X

s y a d 5 : 4 x 3 a + M X

A / N

s y a d 0 : 3 x 5 a + M X

s y a d 0 5 1 + X

t c e j o r r e P p , o C l R e v A A C E e / / A G D N N P

A / N

d e n f e d t o n

d e n f e d A / A t / o N N n

N V V N


N V V N

t c e j o r r e P p , o N l V e v A V e / N D N

s y a d 5 7 + X

s y a d 0 9 + X

s y a d 0 2 1 + X

s y a d 5 : 3 x 1 A a + / M X N

n o i t c e l e s e R

e r u d e c o r P n o i t c u A

n  i t     S

/ ) I O L ( t d n r e a t n w I g  A n i o e s d r r n t a e t e c w e i A L L

 s n   i l / I o l

g n i t e e M t c e j o r P l a u d i v i d n I

A P P

e r u s o l C l a i c n a n i F

g n i     S


A / N

A / N

A / N

n o i t a v r e s e R d n a L

t i m r e p l a n i F

g n i n o i s s i m m o C

g n i n  i s s i m m  c

s d n  g  l

. . d t d L t L t n n n o i o e i s t m s p i a r l o m o e p v m r o o e . C . C D d t y y y L r d t g g r o r L t m e e e a a e l m n n t t u a E E g i i e N m g i e e g l l r m R N b b a o y s a a p C t w i a w e a t y n c i e i k n n V o r t V e e n e t i c a j R R t u t e y c l r n a n i A d  i l E U a k a o t h t V a t t a a r c r s a C i e t r a n t P i j a j j r t l a T o u u a a e N P G G R K L

s e i n a p m o c y l p p u s y t i c i r t c e l E

S N c c l c l I V A r N e D o M V p e V r e l o G u r r N c k G S e

INSTAlleD cApAcITy MAp oF INDIA (90MW)*

--------------------* - As on November 22nd 2011 © BRIDGE TO INDIA, 2011

32

BRIDGE TO INDIA is a consulting company with an entrepreneurial approach based in New Delhi, Munich and Hamburg. Founded in 2008, the company ocuses on renewable energy technologies in the Indian market. BRIDGE TO INDIA oers market intelligence, strategic consulting and project development

33


services to Indian and international investors, companies and institutions. Through customized solutions or its clients, BRIDGE TO INDIA contributes to a sustainable world by implementing the latest technological and systemic innovations where their impact is the highest.

eArN AND SAVe THrouGH SolAr

BrIDGe To INDIA oers an exciting business proposition or commercial and industrial electricity consumers and rootop owners in the eld o rootop solar energy. We oer ELECTRICITY CONSUMERS a reduction in your electricity bills and ROOFTOP OWNERS an additional income rom your rootop – all at absolutely Zero INVeSTMeNT . We will invest in a solar PV plant on your rootop and provide you with competitively priced, secure power rom it.

our propoSITIoN

our MoDel


BRIDGE to INDIA_The India Solar Handbook

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