Month in a Minute: Top Headlines from Indian Renewable Sector in January 2023

Indian Solar Module Manufacturing Capacity to Reach ~95 GW by 2025


Here is a recap of important headlines from January 2023:

India’s solar photovoltaic (PV) module manufacturing capacity exceeded 39 GW at the end of September 2022 and is expected to reach ~95 GW by the end of the CY 2025. The findings are a part of Mercom India Research’s newly released report, ‘State of Solar PV Manufacturing in India.’ India’s solar cell manufacturing capacity of approximately 4.7 GW as of September 2022. This is expected to increase sevenfold by the end of CY 2024. Gujarat housed the majority of solar module and cell manufacturers. The state will likely remain the major producer of PV products for the next 2-3 years.

MNRE issued an updated list of models and module manufacturers under the Approved List of Models and Manufacturers (ALMM) order to include 83 module manufacturers with 20.98 GW of listed module capacity. The 14 new entrants are Abhishek Solar Industries, Aatmanirbhar Solar, Ameya Solar and Semiconductor, Agrawal Renewable Energy, Sunify Solar, Unique Sun Power, Ankur Traders and Engineers, Bharat Heavy Electricals, Credence Solar Panels, Ganesh Electrical, HR Solar Solution, Innovative Solar Solutions, Plaza Power and Infrastructure, and Urjastrot Enterprise.

Total wind capacity installations in India increased year-over-year by 8%, with 229 MW added in the fourth quarter (Q4) of 2022 against 212 MW installed during Q4 2021. However, installations fell by 74% quarter-over-quarter from 878 MW in Q3 2022. The country’s cumulative wind installations by the end of Q4 stood at 42 GW compared to 40 GW during the same period last year.

Solar tenders floated by various agencies in India declined 32% quarter-over-quarter (QoQ) to 9.7 GW in the fourth quarter (Q4) of 2022 from 14 GW, according to Mercom India Research. Tender announcements were, however, up by 56% year-over-year (YoY). The QoQ decline in the overall tendered capacity can be attributed to the low number of RTC tenders of 1.5 GW capacity issued in Q4 compared to the 3.25 GW issued in Q3 2022.

The Union Cabinet approved the National Green Hydrogen Mission to facilitate demand creation, production, utilization, and export of green hydrogen with an initial outlay of ₹197.44 billion (~$2.3 billion). Nearly ₹174.9 billion (~$2.1 billion) is earmarked for the Strategic Interventions for Green Hydrogen Transition Program. The rest of the outlay has been divided among other initiatives, including pilot projects, research and development, and other mission components.

Electric vehicle (EV) sales in India reached a record one million units in 2022, a jump of over 300% against the 322,877 units sold in 2021. EVs accounted for 4.7% of overall automobile sales, according to data released by the Ministry of Road Transport and Highways. Monthly EV sales exceeded 100,000 units in October for the first time, with the trend following in November and December. India had over 1.88 million registered EVs at the end of December.

The Ministry of New and Renewable Energy (MNRE) scrapped the e-reverse bidding mechanism for wind projects to ensure faster capacity addition. After initial success, the reverse bidding process has been almost unanimously acknowledged as the primary reason for dwindling wind capacity, as falling tariffs across bids proved unsustainable for developers. After peaking at about 4 GW of capacity addition in 2017, wind projects have progressively declined over the last five years.

Global corporate funding for solar companies, including from venture capital, private equity, debt financing, and public markets, amounted to $24.1 billion in 2022, a decrease of 13% year-over-year (YoY). However, the solar sector also saw a 20% YoY increase in the number of deals in 2022, according to Mercom Capital’s 2022 Solar Funding and M&A Report. The solar sector received $7 billion in venture capital and private equity funding in 2022, a jump of 56% YoY. This is the highest annual funding for the solar sector since 2010. Additionally, there were 21 deals of $100 million or more in the sector this year.

Global corporate funding for energy storage, smart grid, and energy efficiency companies increased 63% in 2022 with $31.7 billion compared to $19.5 billion in 2021, according to Mercom’s Annual and Q4 2022 Funding and M&A Report for Storage, Grid, and Efficiency. According to the data revealed in the report, corporate funding for energy storage companies rose 55% to $26.4 billion in 2022 — the highest ever — compared to $17 billion in 2021. VC funding for energy storage companies fell 34% to $5.8 billion in 2022 compared to $8.8 billion in 2021. Lithium-ion-based battery technology companies received the most funding, followed by battery recycling, iron-air, and solid-state battery companies.

At the end of the calendar year 2022, India’s renewable energy capacity, including large hydroelectric projects, made up 40.75% of the country’s cumulative power capacity, with 166.9 GW, according to data from the Central Electricity Authority, MNRE, and Mercom’s India Solar Project Tracker. The total renewable energy share in the power mix increased marginally from 163.7 GW, 40.3% of the overall power capacity mix in the previous quarter. According to the data, solar power accounted for a significant portion of the total power capacity and renewables. It comprised 15% of the total installed power capacity and 37% of the total installed renewable capacity.

The Economic Survey 2022-23, which was tabled in the Parliament ahead of the budget sessions, said that India has become a popular investment destination for renewables over the last few years. It said that between 2014 and 2021, the country attracted a total investment of $78.1 billion in the renewable energy sector. Investment in renewables remained close to or exceeded $10 billion annually since 2016, except for a dip in 2020 due to the COVID-19 pandemic.

The World Bank signed agreements with the Government of India and the Solar Energy Corporation of India (SECI) for loans and grants worth $200 million to deploy renewable energy technologies and accelerate the country’s progress towards the 500 GW renewable energy target set for 2030. The agreements include a $150 million International Bank for Reconstruction and Development (IBRD) loan, a $28 million Clean Technology Fund (CTF) loan, and a $22 million CTF grant.

The Reserve Bank of India (RBI) commenced the sale of Sovereign Green Bonds (SGrBs) worth ₹40 billion (~$488.34 million) on January 25th. The Bank will conduct two auctions, each worth ₹40 billion (~$488.34 million), with the first part for a 5-year tenure SGrB 2028 and the second part for a 10-year tenure SGrB 2033. The bonds will be sold through a yield-based uniform price method, and the proceeds will be used for public sector projects to reduce the economy’s carbon intensity. The government can retain additional subscriptions of up to ₹20 billion (~$244.17 million) against each of the two securities. The first tranche of SGrBs was fully subscribed. A second offering is scheduled for February 9th. SGrB 2028, maturing in 2028, will have a coupon rate of 7.10%, while SGrB 2033, maturing in 2033, will carry a rate of 7.29%.