Highlights
- The biggest ‘Policies’ development is expected at the end of the year with the guidelines for the NSM Phase 2 coming out towards that time.
- In terms of ‘Projects’, the REC mechanism is gaining foothold in the market. This can be accounted to India’s first project to have been issued RECs in the last quarter. We also present an analysis on the performance of projects in Gujarat.
- The financial landscape in the market has seen some cause for worry on account of the recent rupee depreciation. Projects who have procured international financing may face a cash crunch.
Findings
1. The last quarter has seen an addition of 360.42MW of solar PV capacity.
2. Guidelines for phase two of the NSM are being formulated and expected to be announced towards the end of this year. Phase two will aim to build 9,000MW of solar power of which 3,000MW shall be through feedin- tariffs and 6,000MW through Renewable Energy Certificates (RECs) and Renewable Purchase Obligations (RPOs).
3. There are limited project development opportunities this year in the Indian market. Several companies have started looking at business models for project development around the REC mechanism.
4. The government of India has set up the Solar Energy Corporation of India (SECI). The SECI is starting with an initial fund of INR20 billion (€307m). It will take over the role of implementing the NSM from NVVN.
5. Indian module suppliers are asking for anti-dumping and additional import duties on internationally manufactured modules. Also, they are asking for the DCR to be extended to cover thin film modules.
6. The Rajasthan Renewable Energy Corporation Ltd. (RRECL) has indefinitely postponed project allocation under the Rajasthan Solar Policy. No official reason has been given for the postponement. This is most likely due to the unavailability of funds.
7. Madhya Pradesh has allocated 125MW capacity to two developers through a competitive bidding process. This bidding was not guided by any policy.
8. India’s first solar REC was issued to M&B Switchgears Ltd. More REC mechanism projects are expected to become operational soon.
9. The payments of three projects in Gujarat have been put on hold by the Gujarat Urja Vikas Nigam Ltd. (GUVNL). GUVNL claims that these projects have violated the clause which states that the power producers have to continue to hold at least 51% of equity from the date of signing of the agreement up to the period of two years after project commissioning.
10. The Indian rupee has depreciated 24% since January 2011. This will cause revenue losses for projects that have opted for un-hedged or partly hedged international financing.
11. In the last quarter (April-June 2012) Indian manufacturers have not announced any further investments to expand their production facilities.
12. Indian manufacturers now run their plants on extremely low utilization rates of 10-15%.
13. After the imposition of antidumping duties on Chinese manufacturers in the US, Chinese manufacturers will increase their effort to sell to India.
14. Several companies have started looking at business models for project development around the REC mechanism. Companies like Kiran Energy, SunEdison, Solairedirect, IBC Solar and BRIDGE TO INDIA’s own project development arm are looking at project development business models around captive consumption and the REC mechanism.
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