"By 2013, we expect 13 Indian states to achieve commercial parity"

What is your background, current position and for how long have you already been active in PV?

"We have already seen a capacity addition of around 500 MW till May and we expect another 680 MW solar PV to be installed by the end of this year"

I founded BRIDGE TO INDIA in 2007, as a strategic environmental consulting company, based in New Delhi. Since then, my focus has been on developing strategic business models for international companies looking to enter the Indian solar market. I was awarded a doctorate in political science from the South Asia Institute of the University of Heidelberg, Germany for my thesis on the relationship between identity and strategy in Indian politics. Prior to my doctorate, I worked for a leading strategic management consultancy. During that time, I advised large European utilities on how to engage with the fast-rising market for renewable energies.
 
What are your expectations for the Indian market development in 2013? How many MegaWatts do you expect to be installed? And how many MW do you envision for 2014 and 2015? 
We have already seen a capacity addition of around 500 MW till May and we expect another 680 MW solar PV to be installed by the end of this year.
Capacity addition in the Indian market is likely to be dominated by policy allocations this year. States like Madhya Pradesh, Karnataka, Rajasthan, Tamil Nadu, Uttar Pradesh and Tamil Nadu will see the most activity. A capacity of 750 MW is expected to be allocated under the National Solar Mission between June and August.

We are is seeing a lot of activity in the commercial parity segment. Project developers are building up pipelines in this segment and we expect to see the first few projects getting commissioned this year and significant volumes from this segment are expected in 2014 and 2015.
Overall, our market model predicts a capacity addition of 2.5 GW in 2014 and 3.4 GW in 2015.
 
Can you estimate the market shares for respectively power plants, commercial and residential application? Is this likely to change in the coming years?

"The residential market is still in its infancy in India"

Power plants are expected to continue providing demand in the market as policy targets have been defined under various national and state policies. However, their share in percentage terms of the overall capacity addition is likely to decrease going forward. Commercial parity driven projects is expected to become the fastest growing segment in the market.
The residential market is still in its infancy in India and even though there is a lot of enthusiasm, it will remain a small segment in terms of megawatts installed. So, I would say 90%-7%-3%.
 
How 'open' is the market in India for foreign companies? How are 'local' content requirements impacting the market development?

"The impact of local content requirement is exaggerated by the media"

The impact of local content requirement is exaggerated by the media and overestimated by many industry players. Consider that close to 3 GW will be installed between May 2013 and December 2014. If this, only 300 MW under the NSM will have a domestic content requirement. This is just 10% of the total demand. The Indian market is completely open to foreign companies in terms of the regulations. India allows 100% direct investment by any international company that wants to set up solar related business entity in the country.
 
Which segments show the biggest growth potential (geographically and by type of customer)? And what will be the most important drivers for further market growth?

"By 2013, we expect 13 Indian states to achieve commercial parity"

The commercial parity segment will see the highest growth. By 2013, we expect 13 Indian states to achieve commercial parity. This will account for a 2.3 GW demand from this segment alone.
The most important drivers for the growth of this segment will be regulations for interconnection of these systems. Currently, the regulations are based on a traditional, centralised power infrastructure. Regulations for de-centralized power production using solar need a relook. Some states are already working on net-metering and regulations for captive consumption and we expect many others to follow.
 
What is the position of the energy utilities? How do they incorporate solar in their business? 
Energy utilities are in principle ok with solar in terms of technical viability but do not want to pay for this - on the generation side still more expensive - power. If a mechanism can be found to fund solar power, energy utilities will not be averse to having more solar in the energy mix.
 
What is the best figure you heard with respect to the investment cost of a megawatt pv power plant development in India? And how does that work out in LCOE (cost per kWh)?
In CAPEX terms, the lowest project cost in the market is around USD 1.2m/MW and the lowest tariff that has been achieved through reverse bidding has come out to around USD 0.12/kWh.
 
What do you currently see as the major trends and trending topics for PV in the India? And which topic is heavily underestimated by the solar industry?

"One of the most underestimated topics is the government’s subtle shift from large plants to encouraging local, de-centralized generation"

In addition to parity-driven solar power, there is an increasing activity in household level PV solutions - often integrated with back-up power sources and storage.
One of the most underestimated topics is the government’s subtle shift from large plants incentivised by FiTs and Renewable Purchase Obligations to encouraging local, de-centralized generation. While most stakeholders are not expecting the government to move fast enough with the regulatory changes for net-metering, open access, etc., we do see a lot of serious conversations in policy circles that seem to suggest otherwise.
 
What developments do you see with respect to competitive PV solutions replacing existing Diesel generators? Is (Solar) energy storage already serious business in India?
Yes. Solar power (without battery) is already much more competitive than diesel. The only reason the market is not picking up is because of the lack of technical expertise that can provide a reliable augmentation of solar without compromising on energy security for the consumer.
 
To your opinion, which PV development in India will surprise us in the coming years?
There is a silent revolution happening in the telecom tower space. A large number of telecom towers in remote locations have already gone solar and many more are expected to follow. India has over 400,000 telecom towers! However, this is a difficult market and solar has to compete with and augment other energy sources in this space.
 
Look into your crystal ball: how will the Indian market for PV look like in 2020?

"With falling solar costs, it will become an enormous market"

By the year 2020, solar power is not only expected to be a cheaper source of power at the consumption end but also at the generation end. Unlike mature markets, India will still need a lot of new powers generation capacity in 2020. Huge demand for solar can be expected on both the distributed generation end and the centralized generation end (>100 MW).
The rural market in India will benefit the most from falling costs of solar. New business models such as ‘pay-as-you-go’ in the rural segment will help bring reliable access of power to a large number of people. There are still around 400 million people without access to electricity. This is currently an unserviced need. With falling solar costs, it will become an enormous market.

 

 

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Tobias Engelmeier will be one of the expert speakers of the 'Global Demand Conference VII', hosted on the 18th of June in Munich. For more information on the conference, please go to:http://www.globaldemandconference.com/