Bridge To India India Solar Compass

INDIA SOLAR
COMPASS 2017Q2
BRIDGE TO INDIA, 2017 2
Preface
Dear Reader,
I am delighted to present to you our new, more comprehensive India Solar

Compass. As the Indian solar market matures and grows in volumes, we have
expanded the scope of this report to pack all vital information tender and
project updates, leading players, financing deal flow, policy status etc. The
Compass aims to provide you with not just an update on the previous quarter
but also an insight into the coming quarters. I hope that it will give you a unique
vantage point on the sector dynamics in a concise yet comprehensive format.
I have no doubt that there is huge scope for improvement in both content and
format. Please help us with your feedback.
The Compass shall be a paid report from next quarter onwards. You have a
number of subscription options for more details, please contact
marketing@bridgetoindia.com.
Sincerely,
Vinay Rustagi
Managing Director

Contents
1. Introduction 5
2. Total installed capacity 6
3.
Capacity addition 10
3.1 Slowdown in capacity addition in Q2 2017 10
3.2 Capacity addition estimate for Q3 2017 13
4. Leading players 15
4.1 Leading developers based on capacity commissioned in Q2 2017 15
4.2
Solar modules 15
4.3
Inverters 16
5. Tender progress updates 17
5.1 Increase in tender issuance (and cancellations) 17
5.2 Tender result announcements 21
5.3 Anticipated tenders 25
6.
Pricing updates 26
6.1
EPC costs 26
6.2
Solar modules 26
6.3
Inverters 27
7. Financing 29
7.1
Equity funding 29
7.2
Debt funding 30
7.3 Mergers and acquisitions 31
8. Policy and regulatory updates 33
8.1 Central government 33
8.2
State governments 34
8.3
Other updates 35
9. Key market insights 38
9.1 GST implementation to result in temporary hiccups 38
9.2 Low tariffs to halt solar tracker market 38
9.3 India begins transition from 1,000V to 1,500V systems 39
10. Relevant international developments 40
10.1 Extension of Chinas FIT deadline to delay cycle of 40
module price reduction
10.2 Sunivas safeguard petition to add to increased 41
global Q3 and Q4 demand
10.3 US withdrawal from Paris accord not to have any 41
long-term impact on India
10.4 Increasing adoption of mono c-Si and PERC technology 42

1. Introduction
Q2 2017 was a landmark period in the Indian solar sector, when tariffs fell
below M 3.00/ kWh level making solar power the cheapest new source of power
in India. At these tariff levels, solar power becomes financially attractive for
distribution companies (DISCOMs) and other large users. It is no longer a
regulatory or environmental compulsion.
But Indias energy transition is not proving to be easy. Tariff reduction of 40% in
last year has resulted in several ongoing tenders being scrapped as states and
other agencies are redesigning their procurement schemes. More worryingly,
some states including Uttar Pradesh, Andhra Pradesh and Tamil Nadu are
seeking to renegotiate or cancel previously allocated projects (at higher tariffs).
It is a testing time for project developers, investors and lenders who are
anyway facing many other challenges.
Key highlights of the quarter:
More than 3,000 MW of new tenders were announced, greater than the
aggregate of all new tenders announced in previous three quarters. But at
the same time, 2,100 MW of tenders were scrapped. Slowdown in project
allocation has become a major concern for developers, who are struggling
to find new project opportunities and deploy their capital. This, in turn, is
leading to fierce competition in tenders and reduced returns.
After falling faster than expected over the last year, module prices started
firming up towards the end of the quarter. Prices are expected to remain
firm for another 2-3 months driven by strong demand from China and
the USA (in anticipation of possible safeguard duties). Availability is also
becoming very tight and is likely to lead to delays in project execution
timelines for Q3 and Q4.
Goods and Services Tax (GST) was introduced from July 1, 2017. The
industry is relieved that modules qualify for a concessional rate of 5%,
but there is still confusion about the rate on other equipment. Overall, we
expect a net increase in project cost of 3-8% depending on GST rate for
other equipment.
On the financing side, private equity and M&A activity in the sector
remains buoyant. There is huge investment interest in the sector and we
expect M&A deal flow to accelerate as primary project pipeline slows
down.
While the sector still presents an immense growth opportunity in the long run,
developers and manufacturers face considerable challenges in the short run.
But it can now be termed as a mature market, which means that all incentives
and support mechanisms will be withdrawn over time as noted by the draft
National Energy Policy (NEP).

2. Total installed capacity
Indias total installed solar power generation capacity reached 15,611 MW on
June 30, 2017. Total project pipeline, where projects have been allocated to
developers, stands at 12,250 MW.
Figure 2.1: Total installed and pipeline capacity as on June 30, 2017
Source: BRIDGE TO INDIA research

Note: All figures are in MW
Performance of leading states for both utility scale solar and rooftop solar is
shown in the following charts.

Figure 2.2a.: Utility scale solar installed and pipeline capacity
Notes
1. The Jharkhand state tender for 1,200 MW, issued in March 2016, is not included as it is likely to be
cancelled.
2. All numbers and comments in this report apply to utility scale solar unless explicitly mentioned for
rooftop solar.

Figure 2.2b. Rooftop solar installed capacity
Top 20 developers account for 60% of total commissioned and pipeline capacity.
Greenko has commissioned the highest capacity so far (1,082 MW). Adani
(1,157 MW) and Acme (1,150 MW) have the largest capacities in pipeline.

Figure 2.3: Top 20 developers

Note: HPPPL- Hindustan Power Projects Private Limited

3. Capacity addition
3.1 Slowdown in capacity addition in Q2 2017
After a bumper Q1 2017 (end of FY17), pace of commissioning in Q2 2017 was
relatively slow. While anticipated capacity addition, based on PPA signing dates
and commissioning schedule, was around 3,300 MW, actual addition was only
1,437 MW. Out of this, 635 MW (44%) came from central policy projects and 802
MW (56%) from state policy projects.
1,047 MW (75%) of the commissioned capacity was in the open category while
the remaining was under domestic content requirement (DCR).
Figure 3.1 New capacity addition in Q2 2017
Telangana installed the highest capacity in Q2. The state is also likely to deploy
more capacity than any other state in the coming quarter.

Figure 3.2 State-wise capacity addition in Q2 2017
Key reasons for slippages in capacity addition
Telangana 2,000 MW tender: Around 1,680 MW of the 2,000 MW tender was due
to be commissioned in Q2 but only 640 MW came online bringing total capacity
commissioned so far to 920 MW. Several projects have faced delays due to
land related issues, delays in statutory approvals etc. Key developers who
commissioned capacities in Q2 are Shapoorji Pallonji (100 MW), ReNew (143
MW) and Acme (255 MW).
SECI Maharashtra 450 MW tender: The tender saw only 170 MW come online
by three developers - Orange renewables (100 MW), Bhageria Industries (30
MW) and Sepset constructions (40 MW). Another 180 MW capacity (Atha group,
Suzlon and SolarArise) is likely to be commissioned in Q3 2017.
The remaining 100 MW capacity allocated to Welspun is unlikely to be

commissioned during the next six months. When Welspun sold its project
portfolio to Tata Power in September 2016, it retained the 100 MW project
because of Solar Energy Corporation of India (SECI) stipulation that developers
cannot sell more than 49% stake until a year after commissioning. Welspun
has paid M 84 million in delay penalties and filed a petition in the Delhi High
Court to restrain SECI from cancelling the project.
NTPC Rajasthan 420 MW tender: Projects under this tender were due to be
commissioned in Q1 2017. 140 MW was commissioned by Fortum (70 MW) and
Rattan India (70 MW) in Q1 2017 while Solairedirect has partially commissioned
its 90 MW project in Q2 2017. Remaining 190 MW capacity (Rising Sun and
Solairedirect) is likely to be commissioned in Q3 2017.

Madhya Pradesh 300 MW tender: 150 MW of capacity awarded to SkyPower
was due to be commissioned in Q2 2017 but commissioning is likely to be
delayed beyond Q4 2017. Remaining 150 MW has already been commissioned
in previous quarters.
Punjab 500 MW tender: These projects were due for commissioning in Q4 2016
and there is still around 125 MW pending. Pending projects were awarded to
Today Group and there is a lack of clarity about their commissioning status.
Figure 3.3 Actual commissioning vs anticipated commissioning for

Q2 2017
Source: BRIDGE TO INDIA research, company interviews

Note: Anticipated commissioning estimates include slippages from previous quarters
Rooftop solar - Around 264 MW of capacity is estimated to have been added in

Q2 (137% increase over Q2 2016), which saw a rush for completion of projects
due to the impending GST implementation.

3.2 Capacity addition estimate for Q3 2017
Around 1,565 MW of new capacity is expected to come online in the current
quarter. Andhra Pradesh is likely to add 500 MW under the Andhra Pradesh
Power Generation Corporation Limited (APGENCO) tender and Telangana is
expected to add 420 MW under its 2,000 MW state tender.
Figure 3.4: Likely capacity addition in Q3 2017
Rooftop solar - Pace is expected to slow down in the current quarter and
around 200 MW is expected to be added in Q3 2017.

4. Leading players

4.1 Leading developers based on capacity
commissioned in Q2 2017
Acme deployed the largest capacity amongst all developers, followed by NTPC,
ReNew, Adani and Azure Power.
Figure 4.1 Developer-wise capacity installed in Q2 2017

Note: The data does not include partly commissioned projects (177MW).
4.2 Solar modules

Talesun was the largest module supplier for projects commissioned in Q2 2017,
accounting for around 180 MW of capacity. It was followed by Hareon (143 MW)
and JA Solar (120 MW). The share of Indian module manufacturers was 31%
(390 MW), accounted almost entirely by DCR projects.

Figure 4.2: Market share of module suppliers in Q2 2017
Source: BRIDGE TO INDIA Research

Note: The data does not include partly commissioned projects (177MW).
4.3 Inverters
Four companies ABB, Hitachi, Sungrow and SMA supplied around 80% of
the inverters installed in Q2 2017.
Figure 4.3 Market share of inverter suppliers in Q2 2017

Note: The data does not include partly commissioned projects (177 MW) as well as projects
commissioned under the Andhra Pradesh 150 MW DCR tender.

5. Tender progress updates
5.1 Increase in tender issuance (and
cancellations)
After three slow quarters, there was an encouraging increase in new tender
announcements in Q2 2017. Capacity tendered in Q2 2017 3,150 MW was
higher than total capacity of 2,925 MW tendered in three previous quarters
taken together.
Figure 5.1 New tender announcements and allocations
Figure 5.2 Number of tenders announced in Q2 2017

The largest tender in Q2 2017 was issued by Tamil Nadu Generation and
Distribution Corporation Limited (TANGEDCO) for 1,500 MW. Other new notable
tender was issued by SECI (750 MW Bhadla solar park). Power output from this
project is expected to be sold to Uttar Pradesh.
Figure 5.3 Tenders announced in Q2 2017
Table 5.1: Key details for new tenders announced in Q2 2017
Tamil Nadu 1,500 MW

Tender issue date May 2017
Tendering authority/ offtaker TANGEDCO
Capacity 1,500 MW
Location Tamil Nadu
Tender scope Project development
Category Open
Allocation basis Tariff bidding
Solar park availability None
Benchmark tariff M 4.00/ kWh
Project size Up to 1,500 MW
Financial criteria Net worth equal to or greater than INR 1 million/ MW
Deposits and bank guarantees Earnest money deposit (EMD)- M 25,000/ MW (for project capacity less than 100
MW); M 50,000/ MW (for project capacity more than 100 MW)
Performance bank guarantee (PBG) - M 3,000,000/ MW

SECI Rajasthan 250 MW
Tender issue date June 2017
Tendering authority/ offtaker SECI
Capacity 250 MW
Location Rajasthan
Category Open
Allocation basis Tariff or Viability Gap Funding (VGF) bid
Solar park availability Bhadla solar park, phase IV
Benchmark tariff; VGF M 3.43/kWh; M 10,000,000/ MW
Project size 50-250 MW (in increments of 50 MW)
Financial criteria None
Deposits and bank guarantees EMD: M 1 million/ MW
PBG: M 2 million/ MW
SECI Rajasthan 500 MW

Tendering authority/ offtaker SECI
Capacity 500 MW
Location Rajasthan
Category Open
Allocation basis Tariff or VGF bid
Solar park availability Bhadla solar park, phase: III
Benchmark tariff ;VGF M 3.43/kWh; M 10,000,000/ MW
Project size 50-500 MW
Financial criteria None
Gujarat 500 MW
Tendering authority/ offtaker Gujarat Urja Vikas Nigam Ltd. (GUVNL)
Capacity 500 MW
Location Gujarat
Category Open
Allocation basis Tariff bid
Solar park availability None
Benchmark tariff ;VGF -
Project size 25-500MW
Financial criteria Net worth greater than M 15 million/ MW

Gujarat 150 MW
Tendering authority Gujarat State Electricity Corporation Limited (GSECL)
Offtaker GUVNL
Capacity 150 MW
Location Gujarat
Tender scope EPC
Category Open
Allocation basis EPC cost
Solar park availability Charanka solar park
Project size 50-150 MW
Financial criteria Combined turnover for last three financial years of at least M 5.4 billion
Technical criteria EPC experience of at least 100 MW, minimum 50 MW in India
Bank guarantee 10% of EPC contract price
Andhra Pradesh 100 MW

Tender issue date April 2017
Tendering authority APGENCO
Offtaker Andhra Pradesh Southern Power Distribution Company
Capacity 100 MW
Location Andhra Pradesh
Tender scope EPC
Category Open
Allocation basis EPC
Solar park availability Ananthapuramu solar park
Project size 100 MW
Financial criteria Average annual turnover of the bidder should not be less than M 2.03 billion
during the preceding three completed financial years
Technical criteria Minimum solar EPC of 40 MWp
Deposits EMD: M 50.7 million
Hindustan Salts 100 MW

Tender description Hindustan Salts, a government owned company has invited EPC bids for this
project. The bidder offering highest share of revenue to Hindustan Salts will be
the winner.
Tender issued May 2017
Tendering authority Hindustan Salts
Capacity 100 MW
Tender scope EPC

Neyveli Lignite Corporation 20 MW
Tender description NLC has invited bids for 2 x10 MW projects integrated with 28 MWhr battery
storage at Port Blair, South Andaman.
Tendering authority Neyveli Lignite Corporation (NLC)
Capacity 20 MW
Tender scope EPC and O&M
Puducherry 30 MW
Tender description Government of Puducherry has issued an expression of interest for buying 30
MW of solar power. The rate of purchase of power will be determined by the
Joint Electricity Regulatory Commission (JERC).
Tendering authority Government of Puducherry
Capacity 30 MW
Tender scope EPC
In a big setback to the sector, eight tenders with an aggregate capacity of

2,130 MW have been cancelled. Out of this, 325 MW of project capacity was
cancelled post allocation (EPC tenders by Coal India and NTPC). Primary
reason for cancellation is steep reduction in tariffs seen in recent tenders
(SECI Rajasthan, Bhadla solar park - M 2.44/ kWh project), which is creating
uncertainty in DISCOM power purchasing plans.
Table 5.2: Cancelled tenders
Tendering authority Capacity (MW) Date of tender Location Tender scope

issuance
SECI 500 Q2 2016 Andhra Pradesh Project development
200 Q3 2016 Karnataka Project development
150 Q2 2016 Andhra Pradesh Project development
100 Q3 2016 Andhra Pradesh Project development
NTPC 750 Q1 2016 Andhra Pradesh EPC
Sambhar Salts 100 Q4 2016 Rajasthan EPC
NLC 130 Q1 2016 Rajasthan EPC
Coal India Limited 200 Q1 2016 Madhya Pradesh EPC
5.2 Tender result announcements

Tenders results were announced for a total capacity of 2,500 MW in Q2 2017.
The quarter saw the lowest ever bid for solar tariffs at M 2.44/ kWh.

Figure 5.4: Auction results

Note
1. Tariffs shown for Madhya Pradesh 750 MW (Rewa) tender are levelized tariffs.
2. We have shown levelized tariffs for projects with VGF availability.
NTPC Andhra Pradesh 250 MW (Kadapa solar park)
The tender was oversubscribed with aggregate bids received for 1,250 MW.
Lowest bid of M 3.15/ kWh was submitted by Engie-owned Solairedirect. We
understand that Andhra Pradesh is now reluctant to buy this power.
Figure 5.5 Bid results of NTPC Andhra Pradesh 250 MW tender

SECI Rajasthan 750 MW (Bhadla solar park)
Two separate auctions were conducted for capacities of 250 MW and 500 MW
respectively by SECI in Bhadla, Rajasthan. The tenders were highly over-
subscribed (~x12) and intense competition led to record new lows in solar
tariffs (Competition in the Indian solar market intensifies further ). Winning
bidders include Acme (M 2.44/ kWh, 200 MW), Softbank (M 2.45, 300 MW),
Phelan (M 2.62, 50 MW), Avaada (M 2.62, 100 MW) and SB Energy (M 2.63, 100
MW).
Figure 5.6 Bid results of SECI Rajasthan 250 MW (Bhadla solar park)
tender
Figure 5.7 Bid results of SECI Rajasthan 500 MW (Bhadla solar park)
tender

Tamil Nadu 500 MW
Unlike other tenders, this tender was under-subscribed because of poor

tender design (for example, requirement for developers to own land before
bidding). TANGEDCO received bids from 22 developers for a total capacity of
only 300 MW. The lowest tariff submitted was M 4.40/ kWh. However, after
TANGEDCO received bids for another 1,500 MW tender (see below) with lowest
tariff of M 3.47/ kWh, it cancelled this tender.
Tamil Nadu 1,500 MW
This tender was over-subscribed despite TANGEDCOs poor rating and dismal
record in previous tenders. Bids were received from 39 companies for a
total capacity of 3,774 MW. State-owned NLC, which bid for entire 1,500 MW
capacity, was awarded the highest capacity of 709 MW. Raasi Green Earth
Energy quoted the lowest tariff of M 3.47/ kWh, the lowest tariff in the state so
far, and matched by all other winning bidders.
Figure 5.8 Bid results of Tamil Nadu 1,500 MW tender
As of June 30, 2017, allocation of projects aggregating to 1,360 MW capacity for

utility scale and 500 MW for rooftop solar is pending.

Table 5.3 Tenders pending allocation
Tendering authority Capacity (MW) Date of tender Location Tender scope

issuance
NTPC 750 Q1 2017 Karnataka EPC
17 Q4 2016 Andaman and Nicobar Islands EPC
8 Q4 2016 Andaman and Nicobar Islands EPC
NLC 500 Q4 2016 Tamil Nadu EPC
SECI 50 Q2 2016 Himachal Pradesh Project development
35 Q2 2016 Puducherry Project development
SECI (Rooftop solar) 500 Q4 2016 Pan India 50 MW EPC and

450 MW Project
development
5.3 Anticipated tenders

There is usually very little visibility on upcoming tenders but we believe that
SECI is likely to announce tenders of 680 MW capacity in the coming months.
State EPC tenders from Karnataka and Maharashtra are also likely to be
announced in Q3 2017. We do not expect any new tenders from NTPC in this
quarter.
Table 5.4 Tenders likely to be announced shortly
Tendering authority Capacity (MW) Location Solar park Tender scope

availability
SECI 200 Karnataka Yes Project development
250 Chhattisgarh Yes Project development
230 Odisha No Project development
- Bihar - Project development
- Delhi - Project development
- Uttar Pradesh No Project development
Karnataka Renewable Energy 200 Karnataka Yes EPC

Development Ltd.
Maharashtra State Power 150 Maharashtra No EPC

Generation Corporation Ltd

6. Pricing updates
6.1 EPC costs
EPC costs dropped by 6% to M 33/ W in Q2 2017 but increase in module prices
coupled with GST implementation is expected to lead to a 11% increase in Q3
2017.
Figure 6.1: BTI India Solar EPC Price Index
6.2 Solar modules

Module prices for delivery in Q2 were around USD 0.30 / Wp. The slower rate
of decrease in prices in Q2 was owing to high demand in China with its annual
June 30 commissioning deadline under the FIT scheme. With announcement of
FIT extension by some provinces in China and imposition of 5% GST, Q3 prices
are expected to be higher by USD 2-3 cents.
Figure 6.2: BTI India Solar Module Price Index

6.3 Inverters
Most players have reported a stabilization in prices for 1,000 V central inverters
at around M 1.80/ W. Many inverter suppliers have also recently launched 1,500
V products and built an order pipeline of about 1 GW. This is a premium market
but we understand that there is no material price differential.
Figure 6.3: BTI India Solar Inverter Price Index

7. Financing
7.1 Equity funding
Private equity (PE)
Q2 2017 continued to see sustained flow of PE money in the sector with total
funding of USD 514 million (+ 6% over Q1 2017). The highlight was Actis
committing USD 500 million to SPRNG, a new India-centric solar power
platform.
Figure 7.1: PE fund inflow in the Indian solar sector
Source: BRIDGE TO INDIA research, news reports
Table 7.1: Key PE transactions in 2016-2017

No Company Investor Amount (USD MN) Quarter
1 Greenko Abu Dhabi Investment Authority 150 Q2 2016
GIC, Singapore 80
2 Ezon Energy Solutions Natori Nohisa, Japan 20 Q4 2016
3 Hero Future Energies IFC 125 Q1 2017
4 ReNew Power JERA, Japan 200 Q1 2017
5 IgrenEnergi BB Tower, Japan NA Q1 2017
6 Greenko GIC, Singapore 124 Q1 2017

Abu Dhabi Investment Authority 31
7 Oriano Solar SIDBI (Smridhi Fund) 3 Q1 2017
8 SPRNG Actis 500 Q2 2017
9 Mera Gaon Power Engie Impact Fund, ElectriFI 3 Q2 2017
10 Azure Power Hareon Solar 11 Q2 2017

Capital markets
The three main listed renewable IPP stocks Azure, Mytrah and Orient
continued to display high volatility and traded in line with or below respective
indices. ReNew Powers and Acmes planned IPOs are believed to be about 12
months away.
Figure 7.2: Renewable stocks trading pattern vs indices
7.2 Debt funding

Indian bank lending rates continue their downward trajectory. State Bank of
Indias Marginal Cost of fund based Lending Rate (MCLR) was 8% in Q2 2017
(down from 10%, 3 years ago). Solar projects are able to raise up to 20-year
Rupee denominated project financing debt at a cost of around 9.25-10.00% per
annum.
Table 7.2: State Bank of India MCLR - (1 year)

June 2014 10.00%
June 2015 9.70%
June 2016 9.15%
June 2017 8.00%
Source: State Bank of India website
Offshore debt raising
Offshore debt market continues to be an important source of funds for the

Indian solar market. Tata Cleantech raised USD 40 million in the form of green
bonds from IFC..

Table 7.3: Offshore debt funding deals
Company Facility Amount (USD million) Quarter
Greenko Green bonds 500 Q3 2016
State Bank of India World Bank line of credit 625 Q3 2016
ACME Piramal Finance mezzanine facility 74 Q3 2016
Yes Bank Green bonds issued to FMO 50 Q3 2016
ReNew Power ADB (LEAP) 390 Q1 2017
ReNew Power Masala bond 450 Q1 2017
State Bank of India EIB line of credit 200 Q1 2017
Tata Cleantech Green bonds issued to IFC 40 Q2 2017
7.3 Mergers and acquisitions

M&A market remained highly active although no new deals closed in Q2.
Many PE funds and developers (Ostro, Orange and Equis, amongst others) are
understood to be looking to sell part or whole of their project portfolios. Buyer
interest remains high at a time when the primary project pipeline is relatively
slow.
Figure 7.3: M&A activity in the Indian renewable sector

Table 7.4: M&A transactions in the sector
Buyer Seller Capacity Stake Deal Value Quarter

acquired (USD MN)
Greenko SunEdison 587 MW 100% 42 Q1 2016
CLP India Suzlon 100 MW 49% 11 Q2 2016
Amplus Energy SunEdison (rooftop) 7 MW 100% - Q2 2016
Tata Power Welspun 1140 MW 100% 545 Q3 2016
Canadian Solar Suzlon 30 MW 49% 4 Q4 2016
Unisun Suzlon 15 MW 49% 2 Q4 2016
IDFC Punj Lloyd 45 MW 100% 15 Q4 2016
Ostro Energy Suzlon 50 MW 49% 7 Q4 2016
DPSC Punj Lloyd 30 MW 49% - Q4 2016
Hinduja Group Fonroche 22 MW 100% - Q4 2016
AMP Solar Suzlon 15 MW 49% 2 Q4 2016

8. Policy and regulatory updates
8.1 Central government
GST rate of 5% for solar equipment
The new GST regime became applicable from July 1, 2017. Solar power
generating system, equipment and parts have been placed under the lowest
rate slab of 5%. However, there is still confusion on GST rate on equipment
other than modules (GST launched but clarity still missing for the solar
sector ). We understand that many companies are selling equipment with a
GST rate of 5% but seeking an undertaking from the buyer that the latter will
bear extra cost if applicable GST rate is eventually determined to be 18%.
Prior to implementation of GST, various tax incentives including zero or

concessional value added tax (VAT) and excise duty exemptions were available
for the industry. The sector will cease to enjoy all these sundry exemptions
except customs duty concessions.
http://pibphoto.nic.in/documents/rlink/2017/may/p201751905.pdf
Draft NEP recommends exposing renewable energy to

market discipline
NITI Aayog has issued draft NEP to chart the way forward for Indian
government to meet its commitments on energy access, climate change
and renewable energy capacity addition. It proposes four national energy
objectives access at affordable prices, improved security and independence,
greater sustainability and economic growth. Key recommendations relating to
renewables include:
1. Gradual removal of various financial and non-financial incentives given

to renewable energy including capital subsidies, waivers on inter-state
transmission charges and the must run status;
2. Significant investment in renewable energy integration into the grid and

building the cost of grid balancing into final price of renewable energy;
3. Separation of content and carriage to promote competition in the power

distribution segment and ensure DISCOM commercial viability;
4. Replacement of cross-subsidy surcharge with a new tax on purchase of

electricity;
http://niti.gov.in/writereaddata/files/new_initiatives/NEP-ID_27.06.2017.
pdf

Extension of inter-state transmission charges waiver to
facilitate further capacity addition in resource rich states
The Ministry of Power has extended the waiver for inter-state transmission
charges and losses for solar projects until end-December 2019. The waiver is
only applicable to projects selling power to the DISCOMs under a competitive
bidding process. The waiver will help in supporting sector growth in resource
rich regions such as Rajasthan, Gujarat and Madhya Pradesh.
http://powermin.nic.in/sites/default/files/webform/notices/amendment_
order_of_30th_Sep_2016_waiver_of_inter_state_0.pdf
SECI reduces benchmark tariff for utility and rooftop

solar projects
SECI reduced benchmark tariff to M 3.43/ kWh in its Rajasthan 750 MW (Bhadla
solar park) tender, announced in Q2 2017, down from M 3.93/ kWh for a similar
750 MW Rajasthan tender issued in Q4 2016. The reduction comes after steep
fall in tariffs to M 2.44/ kWh in recent Rajasthan auction.
SECI also reduced the benchmark tariff for grid-connected solar rooftop
projects in its 500 MW rooftop tender from M 7/ kWh and M 4.82/ kWh to M
5.97/ kWh and M 4.42/ kWh for general category and special category states,
respectively.
The reduction in benchmark tariffs is meant to be consistent with falling cost of

solar equipment and is expected to increase offtaker interest in solar power.
http://www.seci.gov.in/upload/uploadfiles/files/RfS%20500%20MW%20
ILFS(Bhadla%20III)%20NSM%20Ph-II%20B-IV%20T-XI_Final%20Uploaded.
pdf
8.2 State governments

Andhra Pradesh lays a time bound mechanism for power
evacuation from solar power plants
The regulation lays down a mechanism for interconnection and power

evacuation from all renewable energy power plants in the state. DISCOMs
and state transmission company are held responsible for augmentation of
transformer capacity within a time bound manner. They are also mandated
to sign off on technical feasibility proposal for evacuation within 14 days.
While the regulation provides respite to developers by fixing responsibilities
of various authorities for evacuation of power, it doesnt include any penalty
mechanism for non-compliance.
http://www.aperc.gov.in/aperc1/assets/uploads/files/8d9e9-power-evac_
reg_-3of2017.pdf

Maharashtra and Karnataka reduce benchmark tariff for
2017-18
In view of declining capital cost of solar projects, Maharashtra Electricity

Regulatory Commission (MERC) has reduced benchmark tariffs by about 15%
to M 5.13/ kWh and M 4.74/ kWh (without and with accelerated depreciation
respectively) for solar projects commissioned in 2017-18. This tariff is
determined for a period of 13 years.
http://www.mercindia.org.in/pdf/Order%2058%2042/Order-33%20of%20
2017-28042017.pdf
Karnataka Electricity Regulatory Commission (KERC) has also revised

benchmark tariff for solar projects from M 6.51/ kWh to M 4.36/ kWh.
http://www.karnataka.gov.in/kerc/Documents/Revision%20of%20tariff%20
for%20Grid%20Interactive%20Megawatt%20scale%20Solar%20Power%20
Plants%20for%20FY18.pdf
8.3 Other updates

1. Ministry of New and Renewable Energy (MNRE) has mandated solar
equipment manufacturers, sellers and distributors to abide by Indian
standards under the draft quality control solar PV systems, devices and
components goods order 2017.
http://mnre.gov.in/file-manager/UserFiles/Draft-Quality-Control-SPV-
Systems_%20Devices_&_Components-goods-order.pdf
2. MNRE has amended guidelines for disbursal of national clean energy fund
(NCEF) grant towards green energy corridor projects.
http://mnre.gov.in/file-manager/UserFiles/Revised_guidelines_for_
GEC_27062017.pdf
3. SECI has amended guidelines for 5,000 MW of grid-connected solar

projects under batch IV of phase II of NSM to allow for states other than
the host state to buy entire or part project capacity.
http://mnre.gov.in/file-manager/UserFiles/Amendment-Scheme-for-
over-5000MW-Grid-Connected-SPV-Power-Projects-with-VGF-under-
JNNSM-22062017.pdf
4. Government of Gujarat has amended its solar policy to remove 50% cap of
sanctioned load for solar rooftop installations.
http://geda.gujarat.gov.in/media/Amendment_in_the_Provisions.pdf
5. Gujarat Energy Regulatory Commission has levied an additional surcharge

of M 0.49/ kWh on open access consumers for Apr-Sep, 2017.
http://gercin.org/uploaded/document/82940f17-740a-432a-ace6-
4fc3faa65398.pdf

6. Telangana State Electricity Regulatory Commission has approved
transmission charges of M 56.30/ kW/ month and M 73.12/ kW/ month for
FY 18 and FY19, respectively.
http://www.tserc.gov.in/file_upload/uploads/Tariff%20Orders/
Current%20Year%20Orders/Transmission%20Tariff%20Order%20
3rd%20CP%20BP.pdf
7. Telangana DISCOM, Telangana State Southern Power Distribution

Company Limited, has mandated advance payment for wheeling charges
for open access consumers.
https://www.tssouthernpower.com/ShowProperty/CP_CM_REPO/
Pages/Hotlinks/HotlinksHome/Open%20Access%20Consumers
8. Madhya Pradesh Electricity Regulatory Commission has proposed a

penalty for more than 15% deviation in scheduled power desptach under
draft regulation on deviation settlement mechanism.
http://www.mperc.nic.in/260517-Model-DSM-Regulations-State.pdf
9. Bihar plans to add 2,969 MW of solar energy capacity as per its new
renewable energy policy.
http://energy.bih.nic.in/docs/Renewable-Energy-Sources-2017.pdf

9. Key market insights
9.1 GST implementation to result in temporary
hiccups
GST implementation is not expected to have any material long-term impact
on solar sector in India. We expect project costs to increase by 3-8% post GST
implementation depending on GST rate for other equipment, which should
be negated by ongoing fall in equipment costs and interest rate. However, we
expect some short-term challenges in developers and EPC players claiming
the concessional rate of 5% on all equipment while processes are being
streamlined and clarified. The following table assesses the likely impact of GST
implementation on price of major equipment.
Table 9.1: Likely impact of GST implementation on solar projects

Components Taxes under previous tax regime Taxes under GST Resultant change in cost
Cells and Exempted from all duties; VAT 5% by 5% in states with
modules applicable as per state-specific (For domestic manufacturers and zero VAT
rates importers alike)
Solar Total customs and excise duty BCD of 10% + IGST of 5%; by 2-3% (with
inverters of 28.44% (effective 5.15% after Concession on customs duty is customs duty
availing concessions) expected to continue; concessions)
Exemption on excise duty has been
discontinued
All services Service tax of 15% 18% by 3%
Total EPC by 3-8%
9.2 Low tariffs to halt solar tracker market

The market for solar trackers in India has grown rapidly to reach an installed
capacity of 1.6 GW by March 2017. We estimate Q2 tracker installations at 450
MW and expect another 800 MW installation in Q3. Overall, we estimate that
12-15% of new projects in 2017 will use trackers.
Figure 9.1: Solar tracker installations in India

The Indian tracker market is dominated by foreign players like USA-based
NEXTracker and China-based Arctech Solar, with domestic suppliers including
Mahindra Susten and Scorpius holding a relatively small share. NEXTracker
is setting up a manufacturing facility in India, which is expected to commence
production in Q3 2017. Meanwhile, Mahindra, which currently sells more than
95% of its solar trackers in India, plans to expand its international reach and
expects India to account for only 20-30% of its total installations in 2018.
More than 20% of the ground mounted solar projects globally are installed with
trackers. This number stands at 70% in the USA, global leader in this market,
but only 12.5% in India. Trackers have been gaining market share in India but
are expected to lose their value proposition with sharp fall in module prices.
As against additional power output of 9-14%, additional capital expenditure
for trackers is estimated to be M 3.50-4.50/ Wp (10-13% of total capital
expenditure) in India.
9.3 India begins transition from 1,000V to

1,500V systems
With tariffs falling dramatically in the last year, developers are looking to
further optimize project capital expenditure. Transition to 1,500V architecture
can help by reducing costs due to i) reduction in number of inverters by
approximately 30%; ii) reduction in number of combiner boxes by 50%; iii)
consolidation of peripheral electrical equipment such as cables due to larger
block sizes; iv) reduction in labour costs; and v) reduced losses at higher
voltages. Savings can amount up to USD 0.05/W (around 9% of total capital
expenditure)though there can be large variations across different sites. 1,500V
systems accounted for around 9% of total world-wide capacity installed in
2016.
Based on our discussions with developers, a few projects are already being
implemented using 1,500V systems and there is substantial new capacity in
pipeline. Amongst module suppliers, First Solar is implementing two projects
(60MW and 40MW) in Andhra Pradesh and Karnataka. The company, which now
produces only 1,500V compatible modules is strategically pushing for adoption
in the market by opting to implement all future projects as 1,500V systems.
The Indian supply chain is still not geared fully for compatible BOS equipment
meaning that there are pricing and availability challenges. But we expect a
near-complete transition to 1,500V systems within two years.

10. International developments
10.1 Extension of Chinas FIT deadline to delay
cycle of module price reduction
Given that China accounts for more than 40% of global PV demand and more
than 60% of global solar module supply, a change in demand-supply dynamics
in China has major repercussions for international module prices.
Q2 typically see a surge in solar project installations in China because of the

annual FIT deadline in at the end of June month. In 2016, around 15 GW of
the annual installed capacity of 34 GW was commissioned in Q2. Q2 2017 has
also seen considerable new capacity addition of 17.2 GW. This Q2 rush usually
results in stabilization or firming up of solar module prices during middle of
the year. As evidence, module price in India fell by only 5% during H1 2016 but
by nearly 15% in H2 2016.
For 2017, a few provinces in China have extended their FIT 2016 deadline
until September 2017 while most others have extended the same until July
2017. Moreover, the 9 GW Top Runner programme deadline will run until
September 2017. Spillover of module demand to Q3 means that module prices
in India have been firming up in the last few months posing problems for Indian
developers banking on steep price falls in Q3.
Figure 10.1: Quarterly solar installation capacity in China

10.2 Sunivas safeguard petition to add to
increased global Q3 and Q4 demand
The US based solar cell and module manufacturer, Suniva, filed a petition with
the US International Trade Commission (ITC) in April 2017 for levying a tariff
on imports of solar cells and a minimum price for module imports. ITC will
reach a decision September 22, and a recommendation for action will be sent
to President Trump by November 13. A potential levy of USD 0.40/W on cells
and a floor price of USD 0.78/W on modules could more than double the cost of
imported c-Si modules, resulting in a US demand shock.
A decline in US demand would leave cell and module manufacturers across

the world with excess capacity, with negative consequences on future
pricing. Meanwhile, the uncertainty regarding this decision is resulting in
an installation rush in Q3, increasing the pressure on module supply in this
quarter globally.
10.3 US withdrawal from Paris accord not to

have any long-term impact on India
The US withdrawal from Paris treaty is not expected to have any long-term
impact on the growth of solar market in the USA or the world (Renewable
sector to trump Trump ). The global solar market, which was given an
initial push by political commitments and national policies is now increasingly
driven by economic rationale. This was made evident when various states
within the USA including California, Washington, New York and Massachusetts
as well as most other nations including Germany, France, Italy, China and India
reaffirmed their commitment to mitigate climate change even after the Federal
government announcement.
One potential short-term impact on developing countries including India may

be a reduction in flow of aid funds from the USA. US government agencies
such as Overseas Private Investment Corporation and United States Agency
for International Development have been very active in promoting the growth
of solar sector through various financial support and technical advisory
initiatives. Suspension of such initiatives may impact the Indian market in
the short-term but with declining costs of solar power generation and high
investor interest in the market, we believe that India would be able to mitigate
any negative impact easily by suitable planning and recalibration of its various
programmes.

10.4 Increasing adoption of mono c-Si and
PERC technology
The crystalline silicon (c-Si) technology, continues to dominate the global
market, comprising more than 90% of the total photovoltaic module shipments
in 2016 with the rest being accounted for by thin film technology. Within c-Si
modules, poly-crystalline modules accounted for a dominant share of around
70% in 2016. However, the annual market share in wafer production of mono-
crystalline modules, which are around 2 percentage points more efficient than
poly-crystalline modules, has gradually increased from 20% in 2012 to 29% in
2016, and is expected to further increase to 37% by 2020. The increasing uptake
of mono c-Si is mainly because of the narrowing price differential between the
mono and poly technologies from 20% in 2014 to 8% in June 2017.
China has already taken policy steps towards increasing adoption of mono c-Si
and passivated emitted rear cell (PERC) modules. Through its Top Runner
programme, it is incentivizing investment in high efficiency cells, modules and
inverters. By September 2017, it is expected to have a cumulative installed
capacity of 14-16 GW under higher efficiency modules programme. It is mainly
due to this push that leading manufacturers of like LONGi have witnessed an
annual growth of 98% in shipment of mono c-Si cells and modules in 2016.
LONGi plans to add a 5 GW dedicated mono ingot facility and another 5 GW
ingot and wafer plant to cater to the increased demand for mono c-Si modules.
Other major companies including GCL, SunPower, JA Solar and Jinko Solar
have similar expansion plans. Global share of mono c-Si and mono PERC
technologies is expected to continue to increase as economies of scale in
production further reduce their costs but adoption in India is expected to take
longer given the extreme price sensitivity of the market.

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INDIA SOLAR

I am delighted to present to you our new, more comprehensive India Solar

BRIDGE TO INDIA, 2017 3

BRIDGE TO INDIA, 2017 4

Key highlights of the quarter:

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Source: BRIDGE TO INDIA research

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Source: BRIDGE TO INDIA research

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Source: BRIDGE TO INDIA research

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Source: BRIDGE TO INDIA research

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Figure 3.1 New capacity addition in Q2 2017

Source: BRIDGE TO INDIA research

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Source: BRIDGE TO INDIA research

Key reasons for slippages in capacity addition

The remaining 100 MW capacity allocated to Welspun is unlikely to be

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Figure 3.3 Actual commissioning vs anticipated commissioning for

Source: BRIDGE TO INDIA research, company interviews

Rooftop solar - Around 264 MW of capacity is estimated to have been added in

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Figure 3.4: Likely capacity addition in Q3 2017

Source: BRIDGE TO INDIA research

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Figure 4.1 Developer-wise capacity installed in Q2 2017

Source: BRIDGE TO INDIA research

4.2 Solar modules

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Source: BRIDGE TO INDIA Research

Figure 4.3 Market share of inverter suppliers in Q2 2017

Source: BRIDGE TO INDIA research

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Figure 5.1 New tender announcements and allocations

Source: BRIDGE TO INDIA research

Figure 5.2 Number of tenders announced in Q2 2017

Source: BRIDGE TO INDIA Research

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Figure 5.3 Tenders announced in Q2 2017

Source: BRIDGE TO INDIA Research

Table 5.1: Key details for new tenders announced in Q2 2017

Tamil Nadu 1,500 MW

Performance bank guarantee (PBG) - M 3,000,000/ MW

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SECI Rajasthan 500 MW

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Andhra Pradesh 100 MW

Hindustan Salts 100 MW

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In a big setback to the sector, eight tenders with an aggregate capacity of

Table 5.2: Cancelled tenders

Tendering authority Capacity (MW) Date of tender Location Tender scope

NTPC 750 Q1 2016 Andhra Pradesh EPC

Sambhar Salts 100 Q4 2016 Rajasthan EPC

NLC 130 Q1 2016 Rajasthan EPC

Coal India Limited 200 Q1 2016 Madhya Pradesh EPC

5.2 Tender result announcements

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Source: BRIDGE TO INDIA research

NTPC Andhra Pradesh 250 MW (Kadapa solar park)