Solar installations in the country declined 14 percent to 1,510 megawatts (MW) in the second quarter of 2019, compared to 1,761 MW in the previous quarter, according to a report by Mercom India Research on Thursday.
The solar installations were also lower on a year-on-year (y-o-y) basis and had stood at 1,665 MW in the corresponding April-June 2018 quarter, a Mercom India Research statement said.
In the first half of this calendar year, the installations reached 3.2 gigawatts (GW), a decline of 35 per cent as compared with 5.1 GW of capacity added in the first half of 2018.
In the April-June period, large-scale installations totalled 1,218 MW as compared to 1,498 MW in Q1 2019 (January-March) and 1,250 MW installed in Q2 2018 (April-June). The large-scale solar project development pipeline has increased to 22 GW. About 34 GW of solar has been tendered and was pending to be auctioned at the end of the June 2019 quarter, it added.
On a quarter-on-quarter (q-o-q) basis, it said rooftop solar installations grew just 11 per cent in April-June 2019 to 292 MW, compared to 263 MW installed in January-March.
The rooftop market picked up slightly after elections but nowhere close to the pace installed last year. Rooftop installations fell 30 per cent, compared to 415 MW in the second quarter of 2018, it noted.
“It has been a rough couple of quarters for the Indian solar market, exacerbated by tough lending conditions. After elections, we expect the second half of the year to be slightly better, but the liquidity issues need to be resolved for market momentum to return,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group.
The report attributed the drop in solar installations in the second quarter of this year to a slowdown in rooftop solar installations and partial-commissioning of solar projects.
Total power capacity additions in the first half of 2019 was 8 GW in India from all power generation sources. Of this, renewable energy sources accounted for nearly 58 per cent of installations, with solar representing 41 per cent of new capacity and wind with 15 per cent. Coal accounted for almost 42 per cent of new capacity added.
Mercom India Research expects India to install over eight GW of solar capacity in the calendar year 2019. The report estimates solar installations in India to reach about 70 GW by the end of 2022 based on the current market dynamics.
Tariff caps imposed by government agencies have slowed down the solar auction activity in the country. Developers are reluctant to bid at the levels prescribed by state agencies, instead of a market-based auction in which the lowest bid wins, it said.
Land acquisition, transmission and acquiring approvals remain a challenge to commission large-scale projects on time. Developers have also raised concerns about charges for forecasting and scheduling power during drastic changes in weather conditions, it said.
But one of the biggest concerns, which is close to being addressed through the courts, is the attempted renegotiation of power purchase agreements (PPAs), it added.
“The Andhra Pradesh government’s move to renegotiate and revisit solar and wind PPAs has rattled the industry and dampened investor sentiment. The industry is waiting for a ruling from the courts that sets a precedent for future cases and makes it difficult for government agencies to cancel or renegotiate signed contracts,” added Prabhu.