Solar – India adds 453 MW in Q4 of FY 2013-14; Total addition in FY 2013-14 : 948 MW

MNRE today released the total solar installed capacity in the country – the number stood at 2631.9 MW as of 31 March 2013. That represents an increase of 948 MW from the previous financial year(FY).

The growth trajectory for the past years can be seen below.

 Earlier in January 2014, when MNRE had previously published the data, the total installed capacity stood at 2206.75 MW(read more here). An astonishing, 425.2 MW of solar PV capacity has been added in the last two months of the financial year ending in March 2014. In all likelihood, the 3 GW barrier will be breached this year as a result of the various state solar initiatives.

The quarterly capacity additions are given below. The capacity addition has been the highest in the last quarter, and the numbers suggest that the additions could be by companies who developed the projects to claim the Accelerated Depreciation(AD) benefits by the end of March 2014. These projects would be mainly under the REC mechanism (Since AD is no longer available for wind projects, many of them turned to solar to claim the AD benefits).

In terms of installed capacity by state, it should come as no surprise that Gujarat tops the list with an installed capacity of 916.4 MW followed by Rajasthan (730.1 MW), Madhya Pradesh (347.2 MW) and Maharashtra (249.3 MW). It may be recalled that in the numbers released in January 2014, Maharasthra was ahead of Madhya Pradesh, but Madhya Pradesh is likely to retain its position in the Top 3 states for the foreseeable  future. (Madhya Pradesh bagged one third of the projects under the JNNSM Phase 2, Batch 1).

It is interesting to note that the capacity addition in each state has been driven by different measure. The mammoth total in Gujarat has been driven by the state’s (then) innovative solar policy while those in Rajasthan has been a result of the National Solar Mission. Madhya Pradesh has leapfrogged Maharashtra in the standings to take the third place through capacity additions under both state schemes as well as the REC mechanism.

REC which has long been neglected has seen a resurgence this financial year. About 200 MW of REC based projects have come up in the last two months alone with REC projects accounting for about 19% of the total installed capacity in the country. REC based projects have been the driving force behind capacity addition in various states such as Tamil Nadu, Madhya Pradesh and Maharashtra where REC projects account for about 80%, 48% and 20% of the total installed capacity.

The impact of REC based projects is most evident in Tamil Nadu where the state’s solar policy has been in limbo for the past year and developers eager to setup projects in the state have moved on to the REC mechanism to ensure that projects take off. Another reason could be the fact that REC projects can take advantage of the accelerated depreciation (AD) benefit. The profitability of REC based projects however still remains uncertain due the uncertain nature of the REC market itself where the solar RECs have been trading at the floor price for a long time with inventories piling up due to lack of buyers.

Future capacity additions in the country are very likely to be driven as always by the state specific solar policies complemented by the National Solar Mission. Should the various projects under the state policies come up on schedule, the 3 GW mark could very well be breached this year.

The details can be downloaded from the MNRE website here.