PV Analysis of the Belt and Road Initiative

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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 is highly anticipated by 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. Since Prime Minister Narendra 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%.

Located in southern region of Asia, India's climate is warm and the amount of sunlight is sufficient. The average daily solar radiation is 4-7kWh per square meter. Since Prime Minister Modi took office, he has been actively promoting renewable energy, among which, the growth of solar energy is significant. By September 30 2018, the cumulative PV installation has reached 24GW.

2. Development of Renewable Energy in India

India has ambitious goals for renewable energy. The nation aims to achieve 175GW of renewable energy installation by 2022, of which, 100GW will come from solar energy, the highest among all renewable energy projects. The next is 60GW of wind power, 10GW of biomass, and 5GW of small hydro installation.

India’s total energy installation has reached 346GW by September 2018. Among all, coal-fired power is the main energy with installation reaching 196GW, taking up 57% of India’s energy mix. 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 solar 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 be installed annually between 2018 and 2022. PV sector is likely to continue growing on a yearly basis with the annual demand reaching 12.5-30GW in 2019-2022.

3. India's PV Policy

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

DCR(Domestic Content Requirement)

DCR was launched in 2010 to protect local manufacturers. The policy requires PV projects applicable for DCR to use India-made cells and modules.

Safeguard Duty

India’s safeguard duty took effect on July 30, 2018. PV cells from China, Malaysia, and other developed countries (regardless of whether the cell is assembled into a module) are imposed a 25% safeguard duty. The policy will last two years. After imposing 25% duty in the first year, 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; instead, it's planned by each state in India. Overall, most of the states limit roof-top capacity at below 1MW.

4. India's PV Development

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

India's Cumulative PV Capacity

The status 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 combined installation of 17GW in 37 administrative districts. Among all, the top ten states include 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 (targeted 10GW), 1MW-50MW systems (targeted 30GW), and 50MW-125MW projects (targeted 60GW). During September 2017 to September 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 and commercial roof top represented 70% of the total installation, while residential and public sector roof-top each accounted for 15%.

5. India's Export & Import Analysis

According to PV InfoLink’s customs data analysis, compared 2017 to January-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 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 under the impact of India’s safeguard duty, which is took effect on July 30. Due to the safeguard duty, demand plummeted in August 2018, reflecting the influence of such policy. Yet, demand is expecting to rebound in 1Q19.

2018 China Export to India Shipment

6. Conclusion

India’s safeguard duty has brought tremendous impact on the market. Module demand slowly dropped. The amount of installation also declined in 3Q18. However, as the safeguard duty 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 again affect India, where the policy environment is relatively diverse and changeable. Therefore, the 2019 election is expected to affect the development of the PV industry. If Modi was successfully re-elected, he is likely to stick to the current goal. However, if Modi lost the election, PV demand will certainly be affected. As a result, it’s worth paying attention to the election result.

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