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September 01, 2019

Sector Report: Solar Energy

This report is available to users in India for ₹40,000 + applicable taxes

 

Table of Contents

 

  • Summary
  • Review
  • outlook
  • Project economics
  • Solar Rooftop

 

Summary

 

Solar power capacity additions of 51-53 GW expected over the next five years (2020-24)

 

CRISIL Research expects solar power capacity additions of 51-53 GW over the next 5 years (FY 2020-24) as compared to 26 GW over the last 5 years (FY 2015-2019). Capacity additions will be driven by the following:

 

  • NSM: With 3000 MW of Tranche I of NVVN bundling Scheme almost entirely commissioned (1 project of 250 MW remains), central level allocations have picked up under Phase II Batch III and IV with ~2 GW under implementation.
  • Other Central Schemes: The Solar Energy Corporation of India (SECI) has also started tendering projects outside the JNNSM Batch program. It has initiated the Inter-State Transmission System (ISTS) scheme, wherein projects are planned for connection with the ISTS grid directly. Under this, SECI has already allocated 5 GW and has another 2.4 GW in tendering phase. It has also tendered close to 2.7 GW and allocated ~3 GW under other schemes till July 2019.
  • State solar policies: With thrust from the central government, states have also come out with aggressive targets to be achieved by 2022 under their state solar policies. A total of ~9.5 GW is under construction based on already allocated schemes and another 4.2 GW is in tendering phase based on released tenders under various state policies.
  • PSUs: The CPSU program under JNNSM has been extended to 12 GW in February 2019. Also, the government is encouraging cash rich PSUs to set up renewable energy projects. In particular, NTPC has already commissioned a total of over ~870 MW of capacities, has allocated ~2.9 GW and tendered a further ~2.2 GW, under various schemes. It has a target of installing ~10 GW of renewable energy capacities by FY2022. Similarly, Indian railways has committed to 5 GW of solar power by 2025. Other PSUs such as NLC, NHPC, defense organizations and governmental establishments are also expected to contribute to this addition.
  • Rooftop Solar projects: We expect ~6-7 GW of rooftop projects (under CAPEX and OPEX mode) to commission by FY 2024 led by high industrial and commercial tariffs and declining levelised cost of energy for solar rooftop projects. However, growth in rooftop solar capacity additions need to be supported by improvement in the discoms infrastructure, continuation of net metering regulations/benefits and other regulatory incentives.

CRISIL Researchs outlook has been taken factoring in the prevailing market dynamics, where regulatory / policy support is itself emerging as a key risk. The renewable energy domain is highly dependent on policy support and any uncertainty with regards to the same is highly negative. Consequently, considering the current regulatory haze, outlook is constrained. We continue to monitor the same and remain aware of a possibility of upsides to our call, once regulatory risk is mitigated to an extent.