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PV Demand Analysis of The Belt and Road Initiative:India of Southeast Asia

1. Basic Information of  india

India is an emerging market that has attracted a lot of attention from the global PV industry recently. The nation has a population of about 1.39 billion. The annual GDP growth rate reached 6.624% in 2017. After PM Modi took office, the amount of India’s foreign direct investment (FDI) has increased from US$ 36 billion in 2013-2014 to US$ 61.9 billion in 2017-2018, with a growth rate of 71.9%.

India is located in Southern region of Asia. The climate is warm and the amount of sunlight is sufficient. The average daily solar radiation is 4-7kWh per square meter. After PM Modi took office, he has been actively promoting the development of renewable energy, especially in the development of PV. The cumulative PV installation has reached 24GW by September 30th 2018.

2. Development of Renewable Energy in the India

India is ambitious about the development of renewable energy. The nation plans to achieve 175GW of renewable energy installation by 2022, of which, 100GW will come from PV, the highest among all renewable energy projects. Next are 60GW of wind power, 10GW of biomass, and 5GW of small-scale hydro installation.

India’s total energy installation reached 346GW by September 2018. Coal fired is the most important energy with the amount of installation reaching 196GW, taking up 57% of India’s total energies. The runners-up are 72GW for renewable energy (21%), 45.48GW for large-scale hydro (13%), 24.9GW for natural gas (7%), 6.78GW for nuclear power (2%), and 0.837GW for diesel power (0.24%).

India's energy allocation

India’s total renewable energy installation has reached 72GW by September 2018, of which, 34.6GW came from wind power and 24GW from PV power. With PM Modi’s promotion, renewable energy still has a lot of potential in India. The nation’s PV goal of 175GW by 2022 means India has 20GW yet to install every year between 2018 and 2022. PV is likely to continue grow on a yearly basis with the annual demand reaching 12.5-30GW in 2019-2022.

3. PV Policy of  India

India attaches great importance to the development of PV and has announced policies specific to local supply/demand to stimulate industry development as well as demand.

DCR(Domestic Content Requirement)

DCR was launched in 2010 to protect local manufacturers. The policy asked PV projects that are applicable to DCR to use MADE-in-INDIA cells and modules.

Safeguard

India’s safeguard tariff is effective starting from July 30th 2018. PV cells from China, Malaysia, and other developed countries (regardless of whether the cell is assembled into a module) are imposed a 25% of safeguard tax. The policy will last two years. After the first year of 25%, the tax rate will be lowered to 20% in the first half of second year and 15% in the second half of second year.

Auction

PPA auction is a major policy to stimulate PV demand in India. Following the advanced PV technology, the lowest bidding price can reach Rs 2.44/kWh (about USD$ 0.0337/kWh) for ground-mounted projects and Rs 1.38/kWh (about USD$ 0.0191/kWh) for roof-top projects. (All currencies calculated from 1Rupee = 72.24USD)

Net-Metering

India’s Net-Metering is not planned by the central government. It’s planned by each state in India. Overall, most of the states limit roof-top capacity at below 1MW.

4. PV Development in the India

After PM Modi took office, India has become one of the top three PV markets in the world. India’s cumulative PV installation has reached 24GW by September 2018. Comparing the newly-added installation of 6.97GW in January to September 2018 with 5.76GW in the same period last year, the growth rate reached 21%.

India's Cumulative PV Capacity

The degree of PV development varies from state to state in India. Most of the PV plants are concentrated in specific regions. By the end of 2017, India has accumulated a total of 17GW installation in 37 administrative districts.  Among all, the top ten states are Telangana, Rajasthan, Andhra Pradesh, Tamil Nadu, Karnataka, Gujarat, Madhya Pradesh, Punjab, Maharashtra, and Uttar Pradesh. The cumulative installation of the ten states reached 15.8GW, taking up over 90% of the total installation.

India Top 10 PV accumulative installation quantity region

Demand is divided into three types for the 100GW goal: roof-top (target of 10GW), 1MW-50MW systems (target of 30GW), and 50MW-125MW projects (target of 60GW). Between September 2017 and 2018, the newly-added installation reached 1,538MW for roof-top projects, a 75% growth compared to September 2016 and 2017. Currently, the cumulative roof-top installation has reached 3.399MW. The top five states are Maharashtra (473MW), Tamil Nadu (312MW), Karnataka (272MW), Rajasthan (270MW), and Uttar Pradesh (223MW).  For other types of installation, industrial/commercial roof top represented 70% of the total installation, while residential/public sector roof-top accounted for 15%, respectively.

5. Export/Import Analysis of the India

According to PV InfoLink’s customs data analysis, judging from the period of between 2017 and September 2018, module demand grew significantly in both 1Q17 and 1Q18. Demand growth slowed down substantially in 2Q17 and 2Q18, which shows that Q1 is the peak season in the Indian market.

Demand hit a peak again in 4Q17; however, module demand in 4Q18 won’t grow as significantly as in 4Q17. The module market will continue to witness weak demand because India’s safeguard tariff is put into practice after July 30th. Due to the safeguard tax, demand plummeted in August 2018, reflecting the impact from the safeguard policy. Yet, demand is expecting to rebound in 1Q19.

2018 China Export to India Shipment

6. Conclusion

India’s safeguard tariff has brought tremendous impact on the market. Module demand slowly dropped. The amount of installation also declined in 3Q18. However, as the safeguard tariff rate is lowered on a yearly basis and will eventually come to an end, demand is likely to gradually rebound.

The 2019 Election is just around the corner, the election result will bring tremendous impact to India where the policy environment is relatively diverse and changeable. Therefore, the 2019 election is expecting to affect the development of the PV industry. If Modi is successfully re-elected, he is likely to stick to the current goal. However, if Modi is not re-elected, PV demand will certainly be affected. As a result, it’s worth pay attention to the election result.

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