BRIDGE TO INDIA has released its latest edition of the India Solar Rooftop Map report. As per the report, India added 678 MW of rooftop solar capacity in FY 2016-17, growing at 81% Y-o-Y. Total installed rooftop solar capacity reached 1.4 GW as of March 2017. Strong market fundamentals including falling costs and improving debt financing mean that the market will continue strong growth trajectory for many years to come.
• Commercial and industrial customers (C&I) remains the biggest market segment as economic viability is most pronounced for such customers;
• OPEX model has been gaining market share, doubling from 12% in FY 2014-15 to 24% last year and large public sector procurement programs will drive further growth in this market in the next few years;
• Yearly capacity addition is expected to scale up to over 2 GW by 2019 and over 3 GW by 2020 presenting attractive growth opportunities for all market participants;
With 65% of total installed capacity, C&I remains the biggest market segment. These consumers account for more than 50% of India’s total power demand and make savings of up to 50% through rooftop solar systems as their grid tariffs are typically between INR 7-10 (US₵ 11-16)/ kWh. Public sector segment is also expected to show robust growth in the coming years because of a strong government push combined with 25-30% capital subsidy. In contrast, the residential segment is expected to grow relatively slowly because of poor economic viability and lack of financing solutions.
OPEX (or BOOT) business model, where a third-party investor owns and builds the system under a long-term PPA with the site occupant, saw new capacity addition of 162 MW in FY 2016-17, accounting for 24% of total market (up from 12% in FY 2014-15 and 19% in FY 2015-16). This market is fairly consolidated as access to capital remains tight and on-the-ground execution is challenging. Top five developers account for over 60% market share - CleanMax Solar (24%), Cleantech Solar (12%), Azure Power (11%), Amplus Solar (8%) and Rattan India (5%). Going forward, we believe that this model will continue to grow but will be increasingly driven by tender-based public sector projects.
As seen previously, EPC for rooftop solar continues to be highly fragmented with over 1,000 registered installers and 35 largest players accounting for less than 35% market share. Only three companies have more than 2% market share - Tata Power Solar (6.4%), Sure Energy (2.5%) and Fourth Partner (2.2%).
In the inverter market, just two companies account for over 60% market share - Delta Electronics (36%) and SMA (including Zever Solar, 25%). ABB, KACO and Fronius are other noteworthy suppliers with about 5-6% market share each. An increasing market share for ABB and entry of companies such as SolarEdge and Huawei may result in minor changes in the leaderboard in future.
Overall, we believe that rooftop solar market in India is beginning to realize its potential. Annual market size greater than 1 GW in the current year will be an important milestone for the market. We expect India to build a total rooftop solar capacity of 13.2 GW by 2021.