New Delhi, India, 17 December 2019: Today, the World Business Council for Sustainable Development (WBCSD) released a new report – Corporate Renewable PPAs in India: a market & policy update (December 2019) – to inform companies of market and policy changes in 2019 and share an outlook for 2020.
India was the second-largest growth market for corporate renewable Power Purchase Agreements (PPAs) after the US in 2018, with an addition of 1.6 GW of capacity (BloombergNEF, 2019). Despite retaining second place, estimates suggest that annual corporate PPA renewable additions in the country in 2019 will be about 30-35% lower than installations in 2018, due to changes to policy and regulation at the state-level.
The report finds that several key market trends have positively contributed to growth over the past six months, including:
- Two northern states – Haryana and Uttar Pradesh – have emerged as important markets, with more than 1GW of group captive solar projects approved.
- The Indian corporate renewable PPA market has transitioned from predominantly third-party PPA models to group captive PPA models, led by the withdrawal of open access waivers for new third-party PPAs in most states.
- Specialized national developers have increasingly acquired key corporate contracts as regional players cede ground.
- Growth in the rooftop solar market for PPA projects in India continues to dominate growth in projects based on captive installations.
However, changes to policy and regulation at the state-level has led to a decline in capacity additions for corporate renewable PPAs compared to 2018.
Over the past six months, the Indian government has withdrawn several exemptions for open access charges and banking provisions. While some of these changes may negatively impact financial viability for new installations in affected states, these changes do bring open access renewable power up to par with regulations for traditional sources, removing uncertainty arising from short-term support mechanisms, thereby making cash-flow projections for renewable contracts more predictable and stable. In addition, the increased viability of solar projects due to continued cost reductions should help counteract part of the negative impact of these policy and regulatory changes.
For 2020, the report predicts a bounce-back for capacity additions in India – the country has a development pipeline of almost 2 GW for corporate renewable PPAs, with a significant proportion expected to be installed in the next financial year.
The Indian government is also considering several new policy initiatives that may positively impact the corporate renewable PPA market, including Green Term Ahead Market (GTAM) and new power tariff policy and amendments to the Electricity Act.
To find out more, download the report: Corporate Renewable PPAs in India: a market & policy update (December 2019).
Jasmeet Khurana, Manager, Mobility and WBCSD Lead for the India Corporate Renewable PPA Forum commented: “We see the Indian corporate renewable PPA market beginning to learn to procure off-site renewable power without depending on state incentives and waivers. The give and take equation between states and consumers of renewable power is turning around as state-owned power distribution companies benefit by finding regulatory mechanisms to use private adoption of renewable power to meet their own renewable purchase obligations. State-owned power utilities are in this discovery phase, exploring how they can use business-led demand for renewable power to create a viable business models for themselves.
He added “We hope that in 2020, utilities and businesses will be able to find a fair business and regulatory settlement that creates multiple options for forward-looking businesses to meet their increased demand for renewable power, while protecting state and utility interests.”
The report is the latest in a series of WBCSD publications on corporate renewable sourcing in India. View previous publications in the series: