India Solar - A review of 2013


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India Solar - A review of 2013

  1. 1. India Solar – A Review of 2013 The solar capacity in India crossed the 2 GW milestone in the third quarter of 2013 with the addition of about 900 MW (as of October 2013) driven primarily through the capacity additions under the Batch II of Phase 1 of the National Solar Mission. In addition to this, a few large scale power plants were added in states such as Madhya Pradesh and Maharashtra as part of the states drive to fullfil their solar RPO quota. In terms of policy announcements, 2013 was an eventful year for solar. The solar industry was kept busy with some very big announcements including the bidding scheduled to come up under the Tamil Nadu and Andhra Pradesh solar policy. The turn-out of the policies though was not what the industry had expected. That being said, the solar policies in these states did not turn out to be a total bust with significantly large allocations being made under the TN solar policy and successful allocations under the Rajasthan and Karnataka solar policies. The Andhra Pradesh solar policy though left a bitter taste in various developers’ mouths. A brief review of the major announcements/events that took place over the course of the year has been highlighted below. First Quarter – 2013 January 2013        The bids under the Tamil Nadu solar policy were opened resulting in the allocation of 499 MW of capacity across 104 projects. This was followed by the opening of the financial bids which resulted in the (then) lowest tariff seen across the country – a bid of Rs. 5.97 per kWh by MBDL. Andhra Pradesh releases revised solar RfS. KREDL released the rooftop PV tender for projects to be setup in Karnataka. The tender was for about 1300 0.5 kW and 650 1 kW projects to be setup across 5 cities in the state with the total value of the tender being estimated at Rs. 35 crores. Solar Energy Corporation of India (SECI) released the RfS document for setting up of rooftop PV projects under Phase 2 of the JNNSM across six cities totalling 10 MW. This would be one of the many phases for allocation of rooftop PV projects. Rajasthan Renewable Energy Corporation Limited (RRECL) released the list of bidders who participated in the bid for 100 MW of Solar PV projects. The list named a total of 25 participants including Solardirect, Azure Power, Emami Cement, Alex Green Energy, Refex Energy, Jindal Power and Waaree Energies. The Kerala government through ANERT announced the list of fourteen empanelled installers who were empowered to undertake installations under Kerala’s 10,000 Solar PV rooftop programme. The first REC trading session of the new year proved to be fruitful for the Solar REC segment as there was significant growth in demand (as indicated by the number of buy bids) as well as an increase in the solar REC price which increased by Rs. 140 per REC. February 2013     US initiates complaints against the Domestic Content Requirement (DCR) provisions of the JNNSM, India’s flagship solar policy with the World Trade Organization (WTO). TANGEDCO proposes Rs. 6.48 per kWh (with a 5% escalation every year for the first ten years) as the workable tariff under the Tamil Nadu solar policy. The tariff for the 100 MW of solar projects to come up under the Rajasthan allocation was fixed at Rs. 6.45 per kWh after RRECL opened the financial bids. The bidding mechanism adopted here was L1 based and the lowest bid stood at Rs. 6.45 per kWh. Central Electricity Regulatory Commission (CERC) extended the validity of Renewable Energy Certificates (REC) to 2 years (730 days) from the initial level of one year.
  2. 2.     Andhra Pradesh Transmission Company (APTRANSCO) announced the list of bidders who submitted their RfS for allocation of 1000 MW under the AP solar policy. The list included 184 bidders who put up 294 bids for a cumulative capacity of 1339.5 MW. Some of the big name bidders included include Welspun, Lanco, Waaree, Swiss Park Vanijya, GR Thanga Maligai group, Alex Green Energy, among others. Bihar Government, through Bihar State Power (Holding) Company Limited (BSPHCL), floated an RFP for co-development of solar plants and pisci-culture projects. The total solar capacity envisaged under this allocation was 150 MW. The Kerala government released the draft Kerala State Solar Policy 2013 which was scheduled to come into effect from April 1st 2013. The policy had solar capacity addition targets of 500 MW by 2017 and 1500 MW by 2030. Solar REC prices rose to Rs. 13,000 per solar REC at PXIL with the number of buy bids dropping significantly. March 2013        The Odisha state government, through OREDA (Odisha Renewable Energy Development Agency) floated a tender for 25 MW of solar capacity to be installed in the state. This tender follows the two previous tenders for 25 MW issued last year. The financial bids for project allocation under the Andhra Pradesh Solar Policy were opened which showed the lowest bid in the state stood at Rs. 6.49 per kWh (proposed by Sunborne Energy) which was comparable to the tariff under the TN solar policy but without an escalation clause. Karnataka issued an RfP for the addition of 130 MW of solar capacity in the state through either Solar PV or Solar CSP (thermal). This was the first solar policy of the year that did not adopt an L1 based bidding process. Tamil Nadu Electricity Regulatory Commission (TNERC) issued an order related to the TN solar policy which detailed guidelines for the implementation of net-metering for domestic rooftop solar generators. The Punjab Energy Development Agency (PEDA) released an RfP for the addition of 300 MW of solar capacity in the state as part of the ‘New and Renewable Sources of Energy (NRSE) Policy –2012’ being implemented in Punjab. The policy targets the installation of 1000 MW of solar capacity in the state while the RfP was for the first phase which aims to add 300 MW. Uttar Pradesh announced its intention to setup solar PV capacity in the state by releasing a tender for the procurement of 200 MW of Solar PV. Continuing with its good showing in the new year, the Solar RECs for the first time reached its forbearance value (then) indicating a positive outlook for the segment. Second Quarter – 2013 April 2013      SECI announced the list of successful bidders for four of the six cities under the first phase of bidding for 10 MW of rooftop PV to be setup with Sun Edison, Azure Power and Thermax being alloted a cumulative 5.5 MW across the different cities. Rajasthan Renewable Energy Corporation Limited (RRECL) released the list of 7 solar projects totaling 75 MW (of a target of 100 MW) under the competitive bidding of the Phase 1 of the Rajasthan State Policy at a tariff rate of Rs. 6.45 per kWh. The total installed solar PV capacity in Rajasthan crossed 500 MW reaching 510.25 MW in the month. CERC amended the REC regulations clarifying various points such as issues pertaining to RECs and reverse bidding, definition of APPC tariff, electricity duty, minimum capacity for REC based projects etc. MNRE released the draft guidelines for setting up/alloting 750 MW of solar PV projects under the second phase of the JNNSM. The draft guidelines provided information into the domestic content requirement, the different categories which the
  3. 3.    developers could bid under (DCR vs. non-DCR category) and more importantly a lot of insight on the viability gap funding (VGF) mechanism which was to be adopted. Andhra Pradesh fixed the solar tariff payable to bidders at Rs. 6.49 per kWh. The state opted to go for a statewide L1 tariff when it was initially stated that the L1 tariff would be applicable disctrictwise. The caused significant dissent amongst the various developers many of whom opted to not go ahead with the allocation. Tamil Nadu announced a capital subsidy of Rs. 20,000 per kW for 10,000 small scale projects on a first come, first serve basis. The subsidy would be over and above the central subsidy of 30% of the capital cost. The volue of solar RECs traded dropped by about 40% with a discovered price of Rs. 12,206 at IEX and Rs. 12,000 at PXIL per solar REC. This month marked the beginning of the downward spiral of the solar REC market. May 2013      TANGEDCO issued Letter of Intent (LoI) to several bidders who had expressed their interest in setting up solar PV projects in Tamil Nadu under the Tamil Nadu state solar policy. It is estimated that the LoI at the time was issued to projects totalling over 200 MW. After allocating 5.5 MW of Solar rooftop projects in 4 cities, SECI invited RfS for allocation under Phase II. This covers 6 cities, including Bhubaneswar and Raipur which were part of the Phase I, but did not receive allocation, and Gurgaon, which received only a partial allocation of 0.5 MW out of 2 MW. The new cities in the list included Jaipur, Hyderabad and Noida. SECI clarified the guidelines for the Phase 2, Batch 1 under the JNNSM stating that there would be separate bidding processes in place for developers opting to go for domestically manufactured modules vs. those opting to import. At the time it was estimated that the domestic content bidding process would total 300 MW. MNRE released revised benchmark tariff for off-grid systems. Solar RECs continued its downward spiral with the volume of solar RECs being traded dropping by about 30% and the price falling to Rs. 10,990 per REC (at PXIL). June 2013       Punjab released the details of the winners who bid for 300 MW of projects allocation in the state where bids were invited under two categories. The average bid price for the Category 1 (1 to 4 MW) was Rs. 8.22/kWh and the weighted average was Rs 8.27/kWh. The average bid price in category 2 (5 to 30 MW) was Rs. 8.41/kWh and the weighted average was Rs.8.34/kWh. 34 bidders accepted the Rs 6.49/kWh price offer for setting up projects under the Andhra Pradesh state solar policy. These developers were scheduled to install and commission a total of 350 MW. Project developers in Tamil Nadu come forward to set up 690 MW under the Tamil Nadu Solar Policy. The cumulative global solar PV installed capacity crossed 100 GW ending up a shade over at 102 GW. Bihar State Power (Holding) Company Limited (BSPHCL) issued an RFP inviting eligible bidders to submit proposals for procurement of 100 MW of solar PV power. The projects are to be located in Bihar for which a PPA would be signed for a period of 25 years. The Solar REC market crashes, with the solar REC price bottoming out and hitting the floor price. The price of the solar RECs hit the floor price trading at Rs. 9300 on both IEX and PXIL with the prices having fallen by 24% and 18% respectively.
  4. 4. Third Quarter – 2013 July 2013     MNRE released a notice saying that it is no longer accepting any new applications to become channel partners officially stopping the process indefinitely. The CERC, vide an order dated July 10th 2013 titled Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) (Second Amendment) Regulations, 2013 made the amended guidelines released in April 2013 enforceable. The total solar installed capacity in Rajasthan reached 608.5 MW following the commissioning of the first Solar CSP plant under JNNSM Phase 1. The demand for solar RECs increased slightly in the month. There however was no increase in the price discovered for Solar RECs which continued to languish at the floor price. August 2013      Tamil Nadu Electricity Regulatory Commission (TNERC) released a consultative paper which proposed to set the tariff for solar PV based projects at Rs 5.78 per kWh. It was made clear that this recommendation had nothing to do with the tariff arrived at during the tender process under the TN solar policy and who have no effect on the tariff arrived at (under the TN solar policy). The Gujarat Electricity Regulatory Commission (GERC) rejected Gujarat Urja Vikas Nigam Limited’s (GUVNJ) petition to retroactively cut the solar tariff offered in Gujarat which cited that the capital costs had fallen considerably by the time the projects had been commissioned in the state. GERC stated that the PPA signed was binding and that retroactive tariff cuts were not lawful. SECI announced the list of successful bidders under the second phase of the rooftop solar PV scheme totalling 11.1 MW across six cities in the country. The winners under the Karnataka state policy were announced with the opening of the financial bids taking place earlier in the month. The lowest bid stood at Rs. 5.51 per kWh quoted by Sun Pharma Medication Pvt. Ltd. This bid currently stands as the lowest bid seen thus far in the country. There were no major developments in the solar REC front as the solar REC market maintained its status quo with the solar REC prices stagnating at the floor price levels and the demand dipping. September 2013      With the lackluster adoption rate under the AP solar policy, the APTRANSCO issued an open offer to prospective project developers for development of solar projects in the state. Any developer opting to setup projects under the policy can choose to do so at the predetermined tariff set at Rs. 6.49 per kWh. RESolve released it’s updated Gujarat solar power plant rankings where Konark, Welspun and Palace Solar took top honours among 50 plants. The updated rankings also provided additional details on the EPCs employed for project development, the components used in the power plants etc. SECI issued an RfS for the addition of 10 MW of rooftop solar PV capacity across nine states under the third phase of the rooftop scheme being adopted as part of the JNNSM. Rajasthan Renewable Energy Corporation Limited (RRECL) released an RfP for the selection of 50 Solar PV plants of 1 MW(AC) to be connected on 11 kV level at 33/11 kV Discom’s substation in the state. This followed the allocation of 100 MW of projects in February 2013. The solar REC market showed marginal improvement in the month with the volume trading increasing by 64% compared to the previous month. The price of the solar RECs however continued to stay at the floor price.
  5. 5. Fourth Quarter – 2013 October 2013     MNRE/SECI released revised guidelines for projects scheduled to come up under Phase 2, Batch 1 of the JNNSM. The major changes were on the VGF disbursal guidelines and clarity on the domestic content requirements. The Government of India announced its approval for the implementation of the scheme for setting up 750 MW of solar capacity under the first batch of Phase 2 of the National Solar Mission. An estimated Rs. 1875 crores @ Rs. 2.5 crores per MW (earmarked from the NCEF) was announced to have been set aside to fund projects under the VGF mechanism. The draft guidelines were finalized and released later in the month. Various other details including the last date for submission of bids (28/12/2013) etc. were also announced. The installed solar PV capacity in the country crossed the 2 GW milestone. As the non-solar REC market posted significant growth where the volume of nonsolar RECs being traded tripled, the solar REC market showed modest growth with the traded volume increasing by 28.4% over the previous month. November 2013   The Solar Energy Corporation of Indian (SECI) released the standard PPA and VGF securitization agreement. Solar REC market continues to dip with a drop in traded volume and the price remaining at the floor price levels. December 2013      The Solar Energy Corporation of Indian (SECI) had earlier released the standard PPA and VGF securitization agreement following which a pre-bid meeting was scheduled to clarify the details under the RfS as well as the PPA and VGF agreements. SECI has now released the clarifications to the queries raised in the pre-bid meeting. SECI announces the winners of the Phase III of allocations of rooftop SPV systems. SECI extended the deadline for the submission of bids for projects under Phase 2, Batch 1 of the JNNSM to January 20th 2014 following requests from stakeholders to do so. Solar REC trade increased marginally while the solar REC inventory increased significantly from the previous month. Uttar Pradesh signs PPAs with 6 developers for setting up a total of 110 MW of solar power projects under the state’s Solar Power Policy 2013. Source: