Swing in Share

Comparative analysis of trends in upcoming solar capacity

The Indian solar power segment has emerged as one of the most dynamic markets in the country with increased capacity additions and an inevitable redistribution of market shares among companies. Multiple factors are contributing to the evolving market dynamics, including a continuous fall in equipment prices, capital costs, and solar power tariffs; ease of access to competitive capital, and the huge market opportunity presented by the 100 GW by 2022 solar power target.

To achieve the targets, the government has developed a number of schemes, including the 40 GW solar park scheme led by the Solar Energy Corporation of India (SECI), and the 20 GW rooftop solar power programme. The remaining capacity is expected to come up as part of different initiatives such as the viability gap funding (VGF) scheme, the NTPC-National Solar Mission (NSM) bundling scheme, as well as projects tendered by NTPC, to be developed on engineering, procurement and construction (EPC) basis.

Renewable Watch analyses the swing in the market share of key players, based on the installed capacity and project pipeline as of September 2016…

Targets and allocations

The Ministry of New and Renewable Energy (MNRE) has specified a target of 12,000 MW for the solar segment for 2016-17. Of this, only 2,472.39 MW had been installed as of January 2017, while the rest is yet to come online. It seems unlikely that the target will be met by the end of the current financial year because of delays in the commissioning of under-construction capacity. This is due in part to demonetisation, grid integration issues, tendering delays as well as delays in signing power purchase agreements (PPAs) by discoms.

That said, about 7,990 MW of projects are currently under development across various schemes. Therefore, capacity addition is expected to pick up pace in the second half of 2017. This will be in addition to about 8,340 MW of solar capacity installed as of September 2016.

As of December 2016, of the 20,465 MW of capacity auctioned, about 7,990 MW has been awarded to various companies under various schemes introduced by the government since April 2015. As part of the NTPC-NSM bundling scheme, 3,000 MW was tendered under Phase II of the NSM. This capacity will be developed with NTPC Vidyut Vyapar Nigam (NVVN) as the implementing agency, and the power generated will be bundled with coal-based power (two parts of solar and one part of thermal power). Under another scheme, NTPC floated tenders for auctioning 1,785 MW of capacity for projects to be developed on an EPC basis at non-solar park locations. Under the VGF scheme being implemented by SECI, 5,410 MW of solar capacity has been tendered, while 9,779 MW has been auctioned under state policy schemes.

Market share analysis

Of the upcoming capacity, the Adani Group has the largest share of 13.3 per cent (1,060 MW), including the capacity won by its subsidiaries Prayatna (100 MW), Adani Green (20 MW) and Parampujya (690 MW). This reflects a doubling of its installed capacity of 503.51 MW or 6.04 per cent of the total market as of September 2016.

It is followed by Tata Power with 720 MW or 9 per cent share of the upcoming capacity. The company’s portfolio includes projects won by Welspun before it was acquired by Tata Power. As of September 2016, Tata Power and Welspun had installed 416.34 MW or 4.99 per cent of the solar projects installed. SunEdison has been able to maintain its market share. While it has installed 471.53 MW or 5.65 per cent of the total capacity, it has 500 MW or 6.3 per cent of solar projects in the pipeline.

With 500 MW, Saurya Urja Company of Rajasthan Limited, a joint venture (JV) of the Rajasthan government and Infrastructure Leasing & Financial Services, is a new entrant in the market. It has about 6.3 per cent of the total upcoming capacity. The Essel Group follows with about 460 MW or 5.1 per cent. This is a significant increase from the 177.58 MW or 2.13 per cent market share it has so far. Meanwhile, ACME’s market share has decreased slightly, from 6.92 per cent installed as of September 2016 to 5.1 per cent in the upcoming projects. Against an installed capacity of 576.92 MW it has 410 MW in the project pipeline.

Another company to have recently entered the Indian solar market is SBG Cleantech, a three-way JV of Softbank (Japan), Bharti Enterprises (India) and Foxconn Technology (Taiwan). The company has won 350 MW under the NTPC-NSM bundling scheme, taking its market share to 4.4 per cent of the upcoming capacity.

Azure Power’s share has shown a marginal decrease, from 4.7 per cent of the installed capacity to 4.3 per cent of the upcoming capacity. Against an installed capacity of 391.77 MW, it has 340 MW in the pipeline. Mahindra Susten’s share has increased by about 10 times, from 0.35 per cent to 3.9 per cent, and its capacity has increased nearly as much, from 29.3 MW to 310 MW.

Vikram Solar (305 MW), RattanIndia (290 MW) and Sterling Wilson (275 MW) have all increased their market shares from less than 1 per cent of the total capacity installed as of September 2016 to 3.8 per cent, 3.6 per cent and 3.4 per cent respectively of the total upcoming capacity. Solairedirect has improved its share from 1.32 per cent to 2.7 per cent. The company has won tenders for about 215 MW of capacity against 110.05 MW installed so far. Meanwhile, ReNew Power has lost significant share, from 3.43 per cent in 2014-16 to 1.9 per cent of the upcoming capacity. As opposed to 284.83 MW developed by the company earlier, it has won projects worth only 150 MW. Other notable participants in the capacity auctioned under the various schemes include Hero Solar, Jakson, Fortum, Lanco Solar, Rising Sun and Suzlon.

State/UT-wise share

The largest capacity auctioned under the various schemes was in Andhra Pradesh with 4,196 MW or 20.7 per cent, followed by Karnataka with 4,060 MW or 20 per cent. About 3,008 MW or 14.8 per cent was auctioned for solar projects located in Telangana, while almost half of this was auctioned in Rajasthan with 1,675 MW or 8.2 per cent. The smallest capacities were tendered in West Bengal (2 MW), Andaman & Nicobar Islands (25 MW), Puducherry (35 MW), Kerala (50 MW), and Himachal Pradesh (52.5 MW).

Conclusion

In the constantly evolving Indian solar power market, it is proving to be difficult for companies to maintain their market shares. With low entry and exit barriers, the threat of new entrants is high. Falling prices and tariffs have turned this into a buyer’s market, with the bargaining power no longer being with the incumbent participants. As a result, large companies such as Welspun and First Solar have been acquired, while others have lost market share to newer companies such as SBG Cleantech. As the segment witnesses new capacity additions, the dynamics of the market are expected to evolve further.

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