India has witnessed a remarkable increase in solar open access installations during the first quarter of 2023, with a surge of more than 68% compared to the previous quarter. The recently published Q1 2023 Mercom India Solar Open Access Market Report sheds light on this encouraging trend.
So, what exactly is the “solar open access market”? Well, it refers to the ability of consumers, particularly those in the commercial and industrial sectors, to directly access clean solar energy. It allows them to source electricity from solar power plants other than their local utility grid, providing them with an alternative and potentially cost-saving energy option.
The rise in open access solar installations can be attributed to several factors. Firstly, commercial and industrial consumers are increasingly seeking ways to reduce costs amidst the rising retail electricity tariffs. Open access offers a lucrative opportunity for these customers to save on energy expenses while aligning with their environmental and corporate social responsibility goals.
Moreover, the demand for open access has been driven by the increasing capacity requirements of big data centers. These centers are now showing a greater interest in open access, contributing to the overall growth of solar installations.
As of March 2023, India’s solar open access project development pipeline has reached approximately 6.4 GW. Andhra Pradesh, Rajasthan, Maharashtra, Karnataka, and Gujarat are leading the way, accounting for more than 68% of the pipeline. Karnataka remains at the forefront, contributing over 55% of the total capacity added in India during Q1 2023. Maharashtra and Tamil Nadu also made significant contributions of 14% and 8% respectively.
Looking at the cumulative installed solar open access capacity, Karnataka leads the pack with more than 37%, followed by Maharashtra with over 12% of the total installations.
During Q1 2023, the cost of open access solar projects experienced a decline, following the trend seen in large-scale projects and rooftop solar. This drop can be attributed to lower module prices and increased imports facilitated by the government’s relaxation of the Approved List of Models and Manufacturers order. Lower project costs led to more attractive power purchase agreement prices, driving the capacity additions during the quarter.
Despite regulatory challenges in some states, the demand for open access solar remains strong among commercial and industrial units seeking long-term energy cost reductions. With the retail tariffs on the rise and solar project costs decreasing, this growth trend is expected to continue in the coming quarters.
Furthermore, the introduction of the interstate transmission system waiver is likely to further boost open access installations in the near future.
The Mercom India Solar Open Access Market Report also highlights other interesting insights, such as the dominant market share of Karnataka in the Green Day-Ahead Market and the significant growth of Renewable Energy Certificate (REC) trading on the Indian Energy Exchange (IEX).
In conclusion, the surge in solar open access installations in Q1 2023 indicates a growing trend among commercial and industrial consumers to embrace clean energy alternatives. With more states supporting open access and favorable market conditions, the solar open access market in India is poised for further expansion in the coming years.
