INDIA SOLAR COMPASS 2019 Q3 Dire straits Sentiment gets worse as policy uncertainty and financing woes mount © BRIDGE TO INDIA, 2018 Page 1 C 8/5, DLF Phase I © 2019 BRIDGE TO INDIA Energy Private Limited Gurgaon 122001 India Authors www.bridgetoindia.com Sai Siddhartha Nandamuri, BRIDGE TO INDIA Subscribe to our reports Shobhit Srivastava, BRIDGE TO INDIA [email protected] Vinay Rustagi, BRIDGE TO INDIA For all other enquiries, please contact TERMS OF USE [email protected] This report is owned exclusively by BRIDGE TO INDIA and is protected by Indian copyright, international copyright and intellectual property laws. Track the Indian RE market with our reports and blog BRIDGE TO INDIA hereby grants the user a personal, non-exclusive, non- www.bridgetoindia.com/reports transferable license to use the report pursuant to the terms and conditions of this agreement. The user cannot engage in any unauthorized use, reproduction, distribution, publication or electronic transmission of this report or the information/forecasts therein without the express written permission of BRIDGE TO INDIA. The information contained in this report is of a general nature and is not intended to address the requirements of any particular individual or entity. BRIDGE TO INDIA aims to provide accurate and up-to-date information, but is not legally liable for accuracy or completeness of such information. © BRIDGE TO INDIA, 2019 This report is for use only by authorised, paying subscribers of BRIDGE TO INDIA Energy Private Limited. Unauthorised use, reproduction, production, distribution and transmission of this report is expressly not permitted. Contents Executive summary 1 1. Commissioned and pipeline capacity 4 2. Capacity addition 6 2.1 Performance of states 6 2.2 Progress on key projects 7 2.3 Estimate for next two quarters 8 3. Leading players 9 3.1 Project developers 9 3.2 Module suppliers 9 3.3 Inverter suppliers 10 3.4 EPC contractors 11 3.5 Domestic manuf acturers 11 4. Tender progress 13 4.1 New tender issuance 13 4.2 Auction results 20 4.3 Tenders pending allocation 22 4.4 Tenders cancellations 24 5. Pricing 26 5.1 Modules 26 5.2 Inverters 26 5.3 EPC cost 27 6. Funding 28 6.1 Equity funding 28 6.2 Debt funding 29 6.3 Mergers and acquisitions 31 7. Policy and regulations 33 7.1 Central government 33 7.2 State government 34 7.3 Others 35 8. Market trends and developments 36 8.1 States reneging on PPAs, payment delays rising 36 8.2 Balance of system (BOS) costs drop significantly 37 8.3 Chinese solar market stays depressed 37 8.4 International auctions witness record low bids 38 © BRIDGE TO INDIA, 2019 This report is for use only by authorised, paying subscribers of BRIDGE TO INDIA Energy Private Limited. Unauthorised use, reproduction, production, distribution and transmission of this report is expressly not permitted. List of figures Figure 1.1: Total installed and pipeline capacity as on 30 September 4 2019, MW Figure 1.2: State-wise utility scale solar commissioned and 5 pipeline capacity, MW Figure 1.3: Top 20 developers by commissioned capacity, MW 5 Figure 2.1: Utility scale solar capacity addition by type of tenders, MW 6 Figure 2.2: State-wise utility scale solar capacity addition in Q3 2019, MW 6 Figu re 2.3: Capacity addition in Q3 2019 for key tenders, MW 7 Figure 2.4: Capacity addition estimate for Q4 2019 and Q1 2020, MW 8 Figure 3.1: Leading developers by capacity commissioned in Q3 2019, MW 9 Figure 3.2: Market share of module suppliers by projects commissioned 10 in Q3 2019 Figure 3.3: Market share of inverter suppliers by projects commissioned 10 in Q3 2019 Figure 3.4: Market share of EPC contractors in Q1 2019 11 Figure 3.5: Market share of domestic module manufacturers in Q3 2019 11 Figure 4.1: Utility scale solar tenders issued in Q3 2019, MW 13 Figure 4.2: Capacity tendered in Q3 2019 14 Figure 4.3: Utility scale tender issuance and auctions, MW 14 Figure 4.4: Project development capacity allocation, MW 20 Figure 4.5: Auction results, INR/ kWh 21 Figure 5.1: BTI India Module Price Index, US cents/ W 26 Figure 5.2: BTI India Solar Inverter Price Index, INR/ W 26 Figure 5.3: BTI India Solar EPC Cost Index, INR/ Wp 27 Figure 5.4: BTI India Rooftop Solar EPC Cost Index, INR/ Wp 27 Figure 6.1: PE fund flow in the Indian solar sector, USD million 28 Figure 6.2: Renewable stock trading pattern vs indices 29 Figure 6.3: State Bank of India MCLR 30 Figure 8.1: DISCOM dues to power producers, INR billion 36 Figure 8.2: BOS costs for utility scale solar projects, INR/ Wp 37 Figure 8.3: International multicrystalline cell prices, USD/ Wp 38 © BRIDGE TO INDIA, 2019 This report is for use only by authorised, paying subscribers of BRIDGE TO INDIA Energy Private Limited. Unauthorised use, reproduction, production, distribution and transmission of this report is expressly not permitted. List of tables Table 4.1: Key details of tenders issued in Q3 2019 15 Table 4.2: Rooftop solar tenders issued in Q3 2019 20 Table 4.3: Tenders pending allocation 22 Table 6.1: PE transactions in the sector 28 Table 6.2: Offshore debt funding deals 30 Table 6.3: M&A transactions in Indian solar sector 31 © BRIDGE TO INDIA, 2019 This report is for use only by authorised, paying subscribers of BRIDGE TO INDIA Energy Private Limited. Unauthorised use, reproduction, production, distribution and transmission of this report is expressly not permitted. Executive summary India’s total solar capacity India added 2,205 MW of solar power generation capacity in Q3 2019 taking grew to 36,359 MW by total installed capacity to 36,359 MW by 30 September 2019. New capacity September 2019 addition was split 79:21 between utility scale solar (1,734 MW) and rooftop solar (471 MW). Total installed capacity for utility scale projects, rooftop solar and off-grid solar has reached 29,668 MW, 5,431 MW and 935 MW respectively. Figure: Total installed and pipeline capacity at the end of September 2019, MW State government NTPC offtake Public sector tenders 7,273 4,662 development SECI 130 offtake Central 5,083 government Public sector tenders development 11,333 1,091 Miscellaneous 497 Pipeline SECI offtake 22,451 Central 12,956 government Commissioned tenders 36,359 15,178 State government tenders 14,636 Rooftop solar 5,431 Others NTPC offtake Off-grid 4,071 2,092 solar 936 Source: BRIDGE TO INDIA research, MNRE Notes: ‘Others’ include projects executed under open access, REC and other miscellaneous categories. All project capacity numbers in this report are stated in AC MW, unless noted explicitly otherwise. For solar-wind hybrid projects, entire capacity is considered as solar capacity in this report. The trend of slow capacity addition continued in Q3 2019. Actual utility scale capacity addition was 43% below our estimate of 3,034 MW. Delay in land acquisition, transmission system availability and debt financing continue to be major bottlenecks. © BRIDGE TO INDIA, 2019 Page 1 This report is for use only by authorised, paying subscribers of BRIDGE TO INDIA Energy Private Limited. Unauthorised use, reproduction, production, distribution and transmission of this report is expressly not permitted. Capacity additioncontinuedto be slowinthequarterandis safeguard dutyexpiresnext likely toremainsountil year expressly notpermitted. Limited. Unauthorised use,reproduction, production, distributionand transmissionof thisreportis This reportisforuse onlybyauthorised,payingsubscribers ofBRIDGETOINDIAEnergyPrivate © BRIDGE 4 3 2 1 Figure: Utilityscalesolarcapacityaddition,MW struggling toraisedebtfinancing. Funding environmentalsoremainstightandmostdevelopers are uncertainty, delayedpaymentsfromDISCOMsandexecution delays. It isoverallanexcruciatingtimefortheindustryduetoincreasing policy amendments inbiddingguidelinesarealsofavourableforthe developers. develop megarenewableparksinGujaratandRajasthan.Recent On thepolicyfront,governmenthasinitiatedactionon pooling landto balance ofsystems(BOS)incomparisontolastyear. reduction incostsacrossthevaluechainincludingmodules, invertersand Fortunately, capitalcostsareonthewaydownagain.There wasbeena13% down 16%overthecorrespondingperiodlastyear. estimate forrooftopsolarcapacityadditionduringQ2andQ3is986MW, macro-economic weaknessseemtohaveputoffconsumers.Ourrevised consumers inmanystates,generalelectionsMay2019andoverall unrelated factorsincludingwithdrawalofnetmeteringfromC&I Rooftop solarhasalsosloweddownconsiderably.Acombinationof undersubscribed duetolowmarketinterest. SECI’s 1,200MWISTStenderand2,000PSUwerealso MW and200MW)wereundersubscribedduetounsuitablesiteconditions. and lossofinterestfromthedevelopers.TwotendersissuedbyGUVNL(750 getting undersubscribedduetooperationalchallenges,lowceilingtariffs aggregating 9,807MWissuedinQ32019.However,manytendersare Tender issuancehasremainedstrongwithnewutilityscaletenders delays inprojectcompletion. advantage ofexpirysafeguarddutybyJuly2020andweexpectsignificant be completedoverthenext12months.Butdevelopersarelikelytotake Installation activityshouldpickupgraduallyas12,249MWisscheduledto Source: BRIDGETOINDIAresearch , , , , 00 00 00 00 0 0 0 0 0 Central governmenttenders T 2,082 O INDIA,2019 Q3 2017 1,856 Q4 2017 3,833 Q1 2018 720 Q2 2018 1,178 State governmenttenders Q3 2018 990 Q4 2018 1,885 Q1 2019 1,104 Q2 2019 1,734 Q3 2019 Others 2,919 Q4 2019 estimate 2,435 Q1 2020 P estimate age 2 © BRIDGE TO INDIA, 2018 Page 8 1. Commissioned and pipeline capacity India added 2,205 MW of solar power generation capacity in Q3 2019 taking total installed capacity to 36,359 MW by 30 September 2019. New