The first quarter of calendar year 2018 was the best on record for solar installations in India with 3,269 Mw installed -- a 34 per cent increase compared to 2,448 Mw installed in the fourth quarter of 2017, according to Mercom India. The cumulative installed solar capacity totalled 22.8 Gw at the end of January-March 2018.
Installations were also up when compared to the 2,991 Mw installed in the first quarter of 2017.
The surge in installations in Jan-Mar 2018 was primarily due to the completion of projects that were scheduled for commissioning the previous quarter but had experienced delays due to grid connection issues.
This is the first quarter with over 3 Gw capacity installed in the Indian solar market and the fifth quarter in a row where at least 2 Gw of solar was installed.
"Even though Q1 was a record quarter, solar procurement activity has been muted over the past few quarters. But with an anticipated decline in module prices, we expect to see tariffs decline and distribution companies ramp up procurement activity," said Raj Prabhu, the CEO and co-founder of Mercom Capital Group.
In the first quarter of 2018, large-scale installations continued to drive the Indian solar market at 2,879 Mw compared to 2,188 Mw in the fourth quarter of 2017 and 2,746 Mw installed in the first quarter of 2017.
Rooftop installations accounted for 390 Mw, which was up compared to 260 Mw installed the previous quarter and 245 Mw installed in the first quarter of 2017. Of the total installed solar capacity, large-scale projects accounted for 88 per cent and rooftop accounted for the remaining 12 per cent.
The large-scale solar project pipeline for India stands at 9.7 Gw with 10.2 Gw tendered and pending auction as of the end of the first quarter of 2018.
"Coming off a record quarter, there are still several issues that need to be resolved by the government before strong growth resumes in the Indian solar sector at a healthy pace," added Prabhu.
The uncertainty around trade cases has put a freeze on development activity. The industry needs clarity on safeguard duty to understand how it will be imposed and at what levels. Even with the announcement of the pass-through provision, concerns remain in the industry.
Mercom is forecasting approximately 8–9 Gw of solar being installed in calendar year 2018. Uncertainty in the solar industry, created by the announcement of trade cases, has led to a smaller development pipeline with slowing tender activity, leading to a lower installation year compared to 2017.
The India Solar Market Update stated that rooftop solar has been growing at a healthy pace but it is very dependent on government tenders and projects. While open-access projects are really sought after, states are slowly making them less attractive by levying wheeling and banking charges. Residential solar is still untapped as financing and upfront costs continue to be big challenges. Further, government subsidies are not getting paid on time, affecting small installers.
On the bright side, average selling prices (ASPs) of solar modules began to decline in the first quarter of 2018 after two consecutive quarters of increasing prices.
In a recent development, the Chinese government made a new policy announcement imposing installation caps and reducing feed-in-tariffs (FiTs) to essentially slow down solar installations in China amid ballooning solar subsidy deficits. This could lead to a massive oversupply situation, which would lead to a crash in solar module prices worldwide, including in India.
This creates an optimistic scenario for Indian solar developers who could begin to bid lower, which in turn could open the auction floodgates as states jump in to lock in low tariffs.
"It now comes down to how the safeguard duty will be handled. Will the government apply a low tariff, which could be easily absorbed by the industry as Chinese module prices decline, or will trade cases drag on, continuing to create uncertainty in the near future? There is a clear opening for the government right now to use this opportunity to lay the path for growth. Overall, things are looking much brighter for the Indian solar industry going into the second half of 2018," said Prabhu.
Gajanan Nabar, CEO, CleanMax Solar, said, "These growth numbers where on expected lines and we are extremely optimistic to observe similar growth in the coming quarters as well. At CleanMax Solar, our current operating capacity in FY 17-18 ie for March 2018 was 450 MW while in March 2017 ending it was 145 MW. The increased growth in FY 17-18 is a result of the Karnataka Government's Open Access policy wherein we have commissioned 275 MW of solar farms for our corporates customers in the state. The beginning of FY 17-18 there was some slow down in capacity additions due to the fluctuations in module prices and the last quarter of the same year saw staggered growth due to uncertainty of regulations like anti-dumping and safe-guard. With better clarity on regulations and stability in pricing, we foresee an accelerated growth this year".