China exceeds Japan’s Annual Solar installation target in Q1’16

China continues to surprise with the scale and speed of its renewable energy power generation capacity additions. The country added a whopping 7.1 GW of solar power capacity in the first quarter of 2016, which is a growth of over 48% year on year. This is astounding given that the world’s 3rd biggest solar market Japan will install 7 GW for the whole one year. China has been making new record in both solar and wind energy generation, as the country looks to lower its reliance on polluting thermal power generation. One of the key reasons behind the surge is the lower prices of solar power generation, as well as the impending cut in feed in tariff in June 2016. This is pushing developers to install most solar power capacity in the first half of 2016.

Read about China’s Solar Industry here.

solar farm

However, China has not increased its full year target which will be around 15 GW. This may mean that there would be a pressure on solar panel prices going into the second half. USA has also extended its ITC policy to 2020, which means there will be no huge rush to get solar projects finished in 2016. Japan is going to see lower installs in 2016 with lower feed in tariffs. Both China and Japan are also suffering from grid constraints, as their large utility scale solar projects have put strains on the electricity grids which are not built to handle large amounts of intermitted solar power electricity. China does not even have enough transmission capacity from the western parts of China to the major consumption centers on the eastern seaboard.

The solar panel prices remain subdued as new capacities are being added around the world with stability seen in the last couple of years. However a major drop in prices may not be feasible, given that solar panel makers are already operating at thin margins. A price war may lead to the winnowing of the weak players who are supplying equipment to the larger companies on an OEM basis.

India’s Solar Power capacity

India’s energy minister Piyush Goel said that the country is well on track to achieve solar power capacity increase of over 10,000 MW over the next one year. This is based on the successful implementation of over 20 GW of solar power tenders that were released over the past one year. Most analysts and consultants do not think that even half of the target can be achieved. The main concerns in reaching the target are:

  • There is not enough transmission capacity to move the power from the generation to the demand centers. Developing the grid in such a short time may not be possible.
  • Financial constrains as 10000 MW will require an investment of about $5 billion. (Personally, I don’t think this will be an issue, given the huge investor interest in India’s RE sector and low rates being seen).
  • Skepticism about the execution given that India has a spotty record in developing infrastructure be it road, railways, ports etc.
  • The low bidding prices seen in the tender may not give adequate returns to developers who may find it difficult to get debt financing, given the low equity returns which are expected.

solar panels india

On the other hand, Piyush Goel has been one of best ministers under the new government. In coal and power generation he has made impressive strides, with coal production increasing the fastest in recent times and an energy deficit India turning into an energy sufficient India in the last one year. Thermal power plants now have the happy problem of a coal surplus.  Piyush Goel has also made impressive efforts in the areas of renewable energy and energy efficiency. He has distributed around 100 million LED bulbs in the last one year, leading to a price drop of over 60%.

India has also achieved a record breaking 7 GW of renewable energy capacity addition in the last one year, exceeding the target which had been set earlier. If there is a good focus on execution and removal of process and regulatory impediments, then there is a good chance that India could get very near to that target making India the 3rd largest market in the world, after USA and China.

Nuclear energy industry has seen a massive blow after the Fukushima incident, which led to the shutting down of numerous reactors across Germany, Belgium, Switzerland and Japan. Many countries adopted policies to completely stop nuclear power generation after massive protests. Even though Japan is again restarting old nuclear plants, it is doing so gingerly and still facing huge protests from anti-nuclear campaigners.

Building new nuclear power plants has become a long tedious and costly process and given the rapid advancements being made by solar PV technology, we at Greenworldivnestor predict that nuclear power technology will slowly die a slow long death given that the cost curve for nuclear power is increasing. The risks are just too high from the failure of a nuclear power plant. In contract solar power has already become competitive with other fossil fuels and will decline at a low single digit percentage every year, putting additional pressure on competing energy sources. The problems of intermittency is also being solved by innovative methods and the falling costs of lithium batteries.

I don’t think that old nuclear power plants will be shut down soon, given that the costs of running these old depreciated plants is not too high but building on new nuclear power plants has become prohibitive and can only be done with strong government support. I don’t think governments will want to spend precious political capital in supporting this technology. Some countries like India which supporting nuclear power have seen little in terms of capacity addition. Compared to nuclear, solar power capacity additions has grown at an exponential pace.

Countries with a large nuclear power fleet will also find it hard to see old nuclear power plants getting extensions. USA will see almost a third of its nuclear power plants face the end of life by 2030. New nuclear power plant designs take a very long time to get approved. There has not been much improvement in nuclear power technology, with only a few companies like Westinghouse and Areva working on this technology. These companies are in a financially distressed state and not making too much money. China runs its own programs and now is developing its own technology.

Nuclear power technology is all set to become a niche technology like others such as geothermal and tidal power technology. Solar is set to dominate with wind a distant second. Others like coal and gas will still run, but more as support rather than as a mainstream energy source. Some companies in the USA such as NuPower are working on new technologies and processes such as module reactors but I don’t think that these concepts will work against the relentless onslaught of PV silicon power technology.

The Robinson reactor is one of the oldest still operating in the United States, but others are getting on in years. From 2029 to 2035, three dozen of the nation’s 99 reactors, representing more than a third of the industry’s generating capacity, will face closure as their operating licenses expire.

Any shutdowns would be another blow to nuclear energy, which provides 19 percent of the nation’s electricity but has struggled in recent years to compete against subsidized solar and wind power and plants that burn low-priced natural gas. Industry advocates say that by removing sources of clean electricity — a nuclear reaction produces no carbon dioxide or other greenhouse gases — the closings could affect the government’s ability to fulfill its pledge, made at the Paris climate talks last year, to reduce emissions.

Source – NY Times

Solar Growth in India – 2016 & 2017

Solar power in India is set to double to 4-5 GW in 2016, from around 2 GW in 2015 as the market heats up due to government’s strong intent to achieve the 100 GW solar target. Even as other infrastructure and power sectors remain moribund, the solar market is firing on all cylinders. The state governments and central power undertaking have tendered multi gigawatts of solar capacity, which has seen tremendous interest not only from domestic companies, but also global investors and solar players. This has resulted in extremely low tariffs, which has made the government more confident about its strategy. This will also lower the government’s subsidy burden, allowing it to tender even more solar capacity. Though there are doubts whether all the solar projects will get completed due to the super low tariffs bid by investors, I think that the capacity should easily double. ICRA has projected that 5.7 GW will be installed in FY’17, while Mercom is estimating 4 GW of installations in 2016. This would imply another year of 100% plus growth in 2016, after a doubling of the solar market in 2015.

Also read my article: Incremental solar growth expected in USA, China and India

solar panels india

The Indian solar market has become the fastest growing market in the world and I expect it to continue being so for a long time. The main reason is the improving economics and competitiveness of solar energy with other energy sources. This is on top of the green credentials that solar energy has, which gives it a huge advantage over fossil fuel sources such as coal and gas. If you add pollution and global warming changes on fossil fuels, then solar energy would win over other energy sources by a massive margin. Even without these changes, solar energy has become cheaper than gas and wind energy. Even with thermal power it has come close and should go below thermal power in the next 5 years. Also given that solar energy does not face any major land and environmental issues, makes it an ideal energy source where both these problems are much more acute than other places in the world.

The main drivers of solar energy growth in India are:

  • Decreasing prices of solar energy
  • Its green credentials
  • Government Support

 Nearly 5,700 MW of solar capacity is expected to be added during 2016-17, even as concerns over aggressive bidding and regulatory challenges persist, says rating agency Icra. According to an Icra study, the capacity addition, including PV and grid connected projects, in 2015-16 is expected to touch 2,700 MW, which will increase to up to 5700 MW next fiscal, going by the project awards and tenders floated in December last year


USA has doggedly fought a case against India solar procurement rules for the last one year and won the case in WTO. We have repeatedly highlighted the stupidity of the USA government in pursuing this case which will hardly benefit any major USA producers such as Sunpower or others. The Indian government did not impose anti-dumping duties on imports of solar cells and panels last year, which are allowed under WTO rules. They had made this decision, as they did not want to hamper the growth of the solar electricity generation market. Instead to help the local domestic manufacturers, the government had mandated that subsidized procurement would reserve some percentage for local producers of solar products. Even this was found objectionable by USA and it started a WTO case. Note USA has a domestic procurement preference under ARRA and also had imposed ADD and CVD on Chinese and Taiwanese solar panels and cells.

China has almost captured 70% of the Indian solar market due to its low costs and aggressive pricing in the Indian market. Indian solar panel prices is one of the lowest in the world, with prices ranging from 40-50 cents/watt. This is due to low transportation costs from China to India and intense competition. Most USA solar producers such as Sunpower are not able to compete in this market. First Solar is also struggling to win back it lost market share. By forcing India to dilute its rules for domestic preference, USA will benefit China as USA producers have little hope in winning the market. India will lose support for solar energy generation, if jobs are not created locally. It is imperative for the world that India reduces its thermal power dependence going forward and use more solar energy. Currently most Indian solar producers are in a distressed state, as they cannot compete with the scale and costs of large Chinese players. By not allowing Indian manufacturers to grow, USA is giving a strategic advantage to the Chinese companies. Even the big USA NGOs and environmental organization such as Greenpeace have supported the Indian stand. However, USA refuses to realize its stupidity.


India hopes to reach a mutual understanding with the US on the contentious issue of domestic sourcing conditions in New Delhi’s solar energy programme by February 24, when the third extension given by the World Trade Organisation (WTO) to both to settle the matter expires.

Failing a settlement or another extension request by the US, which is the aggrieved party, the WTO may publicise a dispute panel’s ruling on the matter which favoured Washington. However, if no extension is given New Delhi has the option of going in for appeal.

US Trade Representative Michael Froman had told the media last week that the two countries were still engaged in conversations. “It’s too early to tell whether we’re going to have an agreement or not,” he said.

India Solar Booming – 2016

We have been closely following the solar energy boom in India, with numerous grid sized tenders being floated by the government. The solar rooftop segment which had been lagging behind the ground mounted solar plans is also seeing a resurgence, with the government allocating almost $700 million to install 5 GW of rooftop solar using subsidies. India has already reached a capacity of 5000 MW of solar energy in January 2016. Based on the completion of the projects and tender awards, the government expects a doubling of capacity to 9000 MW over the next 3 months. This capacity will again double over the next 12 months with another 11 GW being installed.

Also read about Integrated Solar Storage Tenders in India.

This will easily make India as the 3rd largest country in terms of solar energy capacity addition, after China and USA. Japan which is the current No.3 is expected to see a tapering to a decline in annual solar capacity addition, as the country faces a reduced feed in tariff regime, a general slowing down of the economy, restart of nuclear reactors and weakening interest from large Japanese solar companies which are closing plants. India has managed to complete an astounding 15 GW of solar tenders in the last 9 months, as all major government agencies and organizations have put out large tenders. NTPC, SECI and state government distribution companies have come out with large tenders. The bidding has been very aggressive, as a lot of capital around the world has been attracted to the fast growing solar sector in the country.

The biggest risk in my view is project delays, given the infrastructure and red tape systematic problems that exist in India. As per a BTI report, almost 50% of the tendered projects in the past have got delayed. There is another huge risk to the number. The risk is that if the Indian rupee depreciates or interest rates rise, then many of the projects might fail due to the aggressive bids made by most bidders. The IRRs are very thin at 8-12% and based on assumptions like fall in solar panel prices and weak interest rates. These projects could simply not be built, if the economics fail. It might be cheaper for the bidders to renege on their contract and pay the BG penalties, rather that losing more money by building the plant. The bidding of the ultra large thermal power plants in the past has failed miserably.


Commissioned in 2015-16 as on 31/01/2016 Commissioning Status of Grid Connected Solar Power Projects under JNNSM in 2015-16
Sr. No. State/UT Total MNRE Projects MW State Policy MW RPO MW REC Scheme MW Pvt. Initiative (Roof top) MW CPSUs MW Total commissioned capacity till 31-01-16 (MW)
1 Andhra Pradesh 0 227.28 0 4.4 1.2 0 232.88
2 Arunachal Pradesh 0.24 0 0 0 0 0 0.24
3 Chhattisgarh 0 64.08 0 1.5 0 0 65.58
4 Gujarat 20 4.1 0 0 0 0 24.1
5 Haryana 0 0 0 0 0 0 0
6 Jharkhand 0 0 0 0 0 0 0
7 Karnataka 10 16 0 0 1 0 27
8 Kerala 12 0 0 0 0 12
9 Madhya Pradesh 40 75 0 5 0 0 120
10 Maharashtra 15 0 0 2 0.95 0 17.95
11 Odisha 10 25 0 0 0.16 0 35.16
12 Punjab 0 15.05 0 0 0 0 15.05
13 Rajasthan 260 42.65 0 19.6 0 0 322.25
14 Tamil Nadu 10 164.075 0 92.7 9.59 0 276.365
15 Telangana 0 279.64 0 1.5 0 0 281.14
16 Tripura 0 0 0 0 0 0 0
17 Uttar Pradesh 0 68.74 0 0 0 0 68.74
18 Uttarakhand 0 0 0 0 0 0 0
19 West Bengal 0 0 0 0 0 0 0
20 Andaman & Nicobar 0 0 0 0 0 0 0
21 Delhi 0 0 0 0 1.247 0 1.247
22 Lakshadweep 0 0 0 0 0 0 0
23 Puducherry 0 0 0 0 0 0 0
24 Chandigarh 0.541 0 0 0 0 0 0.541
25 Daman & Diu 0 4 0 0 0 4
TOTAL 365.781 997.615 0 126.7 14.147 0 1504.243