JSW Energy, a private sector power producer, has completed a ₹50 billion (~$600 million) qualified institutions placement (QIP), attracting strong interest from marquee global and domestic institutional investors.

The QIP, marking the first-ever equity raise by the company since its listing in 2010, was oversubscribed over 3.2 times, it said in a statement. It claimed it was also the largest primary equity raise in the Indian power sector in the last decade and among the top three largest ever in the history of the Indian power sector.

The proceeds from the QIP will enable JSW Energy to strengthen its balance sheet and provide greater financial flexibility to execute its growth plans.

The issue saw participation from global asset managers, including GQG Partners, Blackrock, Nomura, Wellington, UBS, and Abu Dhabi Investment Authority. Domestic mutual funds and insurance companies also participated in the QIP.

Funds managed by Goldman Sachs were allotted 27.12% of the total issue size and 10% to Nomura.

The company’s board approved the issuance and allotment of 103 million equity shares to 97 qualified institutional buyers at the issue price of ₹485 (~$5.82) per equity share, which includes a discount of ₹25.09 (~$0.30) per share against the floor price.

Post the allotment, the company’s paid-up equity share capital rose from ₹16.4 billion (~$197 million) to ₹17.5 billion (~$210 million), consisting of 1.7 billion equity shares each.

“The overwhelming investor interest is a testament to their confidence in our strategy of transforming into a leading diversified energy player, with a focus on renewable energy generation and energy storage,” said Sharad Mahendra, CEO of JSW Energy.

JSW Energy has a total locked-in generation capacity of 12.5 GW comprising 7.2 GW operational, 2.6 GW under-construction assets across wind, thermal, and hydro, and letters of award and intent for 2.7 GW capacity from SECI (Solar Tranche XIII and Wind Tranche XVI), SJVN and GUVNL. In addition, the company has 3.4 GWh of locked-in energy storage capacity through battery energy storage systems and pumped hydro storage projects.

A JSW Energy subsidiary recently expanded its renewable energy portfolio with the ₹1.32 billion (~$15.8 million) acquisition of the 45 MW Vashpet wind project from Reliance Power.

The company’s third-quarter profit jumped 29% from last year as strong performance in the renewables segment and lower fuel costs helped the bottom line.

The recent reimposition of the Approved List of Models and Manufacturers (ALMM) regulation has surprised industry stakeholders as the government withdrew exemptions for open access and unsubsidized rooftop solar projects.

The initial reimposition order in February was put in abeyance by the Ministry of New and Renewable Energy (MNRE) just days after it was notified.

The ALMM regulation, effective April 1, 2024, is now being reimposed in its original form from October 2022, with all categories of projects, including open access and rooftop solar, coming under its purview.

According to Mercom India Research, a pipeline of 14 GW solar open access projects as of December 2023 could be impacted by the reimposition of the ALMM mandate.

Module Prices May Surge

Solar open access project developers fear that module prices would rise without competition, affecting project costs and higher power tariffs in auctions.

With the ALMM regulation back in its entirety, only modules from the list can be used in the projects. The list still does not feature any international players or modules, which developers fear might lead to a price monopoly in the market in the absence of any competition.

An industry insider Mercom spoke to feels that the initial purpose of the ALMM order is now lost.

“ALMM was originally introduced to ensure that the quality of the imported or manufactured products in India meets a certain standard. It has become more of an artificial trade and technological barrier,” he said.

The recent ALMM update saw an addition of 3.5 GW of new capacity solar modules, taking the cumulative figure to 37.42 GW.

“Until recently, there was at least a threat of competition, so local manufacturers had to price their modules at competitive prices. We have always seen that if Chinese modules are priced at X, Indian modules will always be X plus one cent. There is no benchmark pricing in place, which will lead to a price monopoly in the market if left unchecked,” the industry insider said.

Price is not the only concern developers have. As one solar open-access developer said, domestic manufacturing capacities to meet the massive demand are as good as non-existent.

Developers Want Export Restrictions

According to a Solar Open Access Developer Mercom spoke to,” It will now be a module manufacturer faction that will decide the prices, whom to sell and whom not to sell. We blocked orders for some modules at certain pricing before the ALMM reimposition, and now they have clearly said that the earlier price will no longer apply but will go up. The  domestic manufacturers can easily say that the Chinese have increased cell prices and that they have no option to increase module prices.”

When the government decided to suspend the ALMM regulation for a year last year, it cited the low annual production capacity of high-rated (500Wp+) modules as the primary reason.

The capacity of modules rated at 500Wp+ continues to be low in the latest ALMM update.

According to Mercom India’s State of Solar PV Manufacturing in India 2024 report, the country’s cumulative solar module manufacturing capacity reached 64.5 GW at the end of December 2023. Yet, only 37.42 GW is listed in the ALMM.

The industry insider said the government cannot support high-growth industries in adopting affordable and sustainable green power solutions unless it directs domestic module manufacturers to supply within India first and then export the excess quantity only.

Developers have often raised concerns about domestic manufacturers choosing exports for better returns rather than meeting local demand.

The solar open access developer called for export restrictions on solar modules from India, mandating that they prioritize local demand against exports.

Higher Tariffs

With ALMM back in play, the industry fears module costs are expected to increase by 15-20%, necessitating reworking power purchase agreements.

Sharad Pungalia, MD & CEO at Amplus Solar, said, “Imposition of ALMM requirement on open access projects may cause disruptions and adjustments to the installation pipeline in the immediate future. Considering the demand-supply mismatch for the ALMM-compliant modules, we foresee price escalations, especially for the higher-efficiency modules, directly impacting the economics for the planned projects.”

An increase in PPA prices would upset C&I consumers, who were looking to transition to renewables to save on power costs.

The industry insider said, “With the ALMM reimposed, we have no choice but to revise our tariffs. If the customers are annoyed, we must explain the reality to them.”

Technology and Quality

The challenges are not expected to be limited to cost but also to the technology and quality of these modules.

According to Pungalia, the efficiency differences might lead to readjustments to future planned project designs and capacities, eventually impacting the installation timelines.

As India works toward climbing the module technology ladder, most solar manufacturers continue to produce P-type modules, whereas China has opted for N-type and advanced technologies.

According to the industry insider, only 20% of the manufacturers in the country today have module lines for N-type technologies, while the rest still manufacture P-type technologies. He feels that in the process of helping the domestic industry, the ministry is ‘depriving’ the country of the latest technologies.

Developers claim that Indian modules generate 1 to 2% less energy than their Chinese counterparts, primarily due to the semi-automated supply lines.

The industry insider suggested that the ministry allow four to five reputable Chinese manufacturers on the list to keep the competition alive. This would encourage other manufacturers to establish better manufacturing lines and supply high-quality products. Otherwise, the pricing would never be clear and competitive, and technology would become obsolete.

A few open-access developers hope the government will allow private projects to import modules, at least for C&I segment projects, which form a smaller segment compared with utility-scale projects.

They feel this would allow time for sufficient manufacturing capacity to be established and then phase out the exemption over the next six months.

Awaiting Clarity

Pungalia claimed that Amplus had informed the ministry about the planned projects where modules are procured and stored at the site but are yet to be commissioned due to factors beyond its control. He said he hopes to receive the exemption mentioned by the MNRE in the order.

However, a few other project developers are waiting for the MNRE to clarify which agency would handle the inspection part of the ‘procured modules at project site’ clause.

The industry insider raised doubts about whether all the states would take cognizance of the ALMM mandate. States could demand exemptions for their projects.

Some open access developers also have concerns about approvals from state agencies for projects where modules are in transit unless MNRE categorically allows them.

India needs to install about 26 GW of solar capacity annually to meet its 280 GW target set for 2032, so adequate module supply will be imperative. Domestic manufacturing must meet the demand and offer prices and technology on par with international players.

The European Commission has launched two in-depth investigations into Chinese solar component manufacturers who may have benefited from state subsidies to win a bid to design, construct, and operate a 110 MW solar photovoltaic park in Romania.

The investigations relate to the potentially market distortive role of foreign subsidies given to Chinese companies — LONGi Solar Technologie GmbH and two subsidiaries of Chinese state-owned firm Shanghai Electric — in a public procurement procedure. The Commission will assess whether the companies benefited from an unfair advantage in winning public contracts in the EU.

LONGi and its subsidiary in Germany develop, manufacture, and service solar wafers, cells, and modules.

Shanghai Electric provides services for wind, solar, and hydrogen storage and an integrated process of generation, grid, load, and storage.

The EU Modernization Fund partially finances the project in Romania.

According to the Foreign Subsidies Regulation, companies are obliged to notify their public procurement tenders in the EU when the estimated value of the contract exceeds €250 million (~$271.4 million) and when the company was granted at least €4 million (~$4.3 million) in foreign financial contributions from at least one-third country in the three years before notification.

The European Commission will further assess the alleged foreign subsidies and obtain all the information required to establish whether they may have allowed the companies to submit an unduly advantageous offer in reply to a tender. Such an offer could cause other companies participating in the public procurement procedure to lose sales opportunities.

In line with the provisions of the Foreign Subsidies Regulation, at the end of its in-depth investigation, the Commission may (i) accept commitments proposed by the company if they fully and effectively remedy the distortion, (ii) prohibit the award of the contract, or (iii) issue a no-objection decision.

The regulation enables the Commission to address distortions caused by foreign subsidies, allowing the EU to ensure a level playing field for all companies operating in the internal market while remaining open to trade and investment.

The EU and China have accused each other of being overly protectionist about their renewable energy interests.

Last year, the EU opened an investigation against cheaper Chinese electric vehicle imports, which the bloc alleges have benefited from state subsidies.

In March 2023, China introduced a proposal at the World Trade Organization to deepen multilateral discussions on the trade aspects and implications of environmental measures like the EU’s Carbon Border Adjustment Mechanism, which seeks to put a price on the emissions generated in the manufacture of imported products like steel and cement.

The EU believes foreign subsidies have distorted the bloc’s internal market, including providing their recipients with an unfair advantage to acquire companies or obtain public procurement contracts to the detriment of fair competition.

India added 3.2 GW of new solar open access capacity in 2023, the most in any calendar year to date, with the top five states accounting for 84.2% of the new installed capacity.

The installations surged 5.7% YoY from 3 GW in 2022, according to the recently released 2023 Q4 and Annual Mercom India Solar Open Access Market Report.

The Approved List of Models and Manufacturers (ALMM) order suspension and the fall in module prices helped significantly reduce project costs during the year.

Lower costs allowed developers to offer open access solar power at significantly lower tariffs, leading to higher capacity additions. Most of the installations during the year were executed under the captive and group captive models across the top states.

Here is a look at the top states for open access.

Karnataka

Karnataka led the solar open access installations in CY 2023 as well cumulatively, accounting for 27.9% and 33.1%, respectively, of the total capacity.

Solar Open access represented 99.8% of the large-scale solar projects installed in the state during the year and 42.1% of the cumulative large-scale solar capacity.

Solar-wind hybrid projects accounted for 14.3% of the cumulative solar open access installed capacity.

According to Mercom India Research, in 2023, the cement, metallurgical, automobile and auto parts, dairy, electronic hardware, and pharmaceutical industries were the main off-takers of open access power.

Gujarat

Gujarat had the second-highest solar open access installations, accounting for 16.4% of the new capacity added in 2023. The state ranked fourth with respect to cumulative installations, accounting for 7.6% of the total solar open access capacity.

In 2023, 42% of large-scale solar installations in Gujarat were under the open access model, and cumulatively, the model accounted for ~13.3% of the state’s total large-scale solar capacity.

In 2023, the main off-takers of open access power were the jewelry, textiles, metallurgy, silk, steel, healthcare, printing, petrochemical, engineering services, chemical, and steel industries.

Gujarat’s renewable-based hybrid power policy and favorable weather conditions have been highly conducive for solar-wind hybrid open access projects.

Solar-wind hybrid projects accounted for 77.7% of the solar open access capacity commissioned in 2023 and 55.6% of the cumulative capacity.

The state has favorable banking regulations for solar-wind hybrid projects, permitting monthly energy banking while requiring daily banking for solar open-access projects.

It has also announced an amendment allowing captive customers to hold a minimum equity stake of 26% cumulatively in a group captive project per electricity rules, as opposed to the previous 100% requirement for captive approvals.

Maharashtra

Maharashtra came in at a close third in terms of new solar open access capacity added in 2023, accounting for 16.2%. The state ranks second for cumulative solar open access installations at 13.5%.

Solar open access in the state accounted for 38.6% of the cumulative large-scale capacity and 79.5% of the large-scale projects installed in CY 2023.

All the installations in the state were standalone solar projects. Even with a good potential for solar-wind hybrid projects, the growth is stalled in the absence of distinct hybrid policies.

The energy tariff in Maharashtra remained unchanged from the previous quarter and is the highest among C&I customers. The primary incentives to opt for solar open access were high retail tariffs and potential savings.

The state saw a significant decline in project commissioning in Q4 2023. Several projects scheduled for commissioning during the quarter were pushed to the next quarter as consumers anticipated lower PPA prices.

During the quarter, the state also hiked the banking charges for open access projects from 2% to 8%. The higher banking charges are expected to cut the financial benefits of open access for C&I consumers.

In 2023, the primary off-takers of solar open access were the chemical, metallurgical, paper, plastic, pharmaceutical and cosmeceutical, data centers, telecommunications, seaports, automobile and auto component, dairy, and IT industries.

Tamil Nadu

Tamil Nadu stood fourth on the list for installations in CY 2023, accounting for 15.6% of the total capacity. The state accounted for 11.4% of the cumulative solar open access capacity.

Solar open access projects in Tamil Nadu account for 25.8% of the large-scale installations in the state and 94.6% of such additions in CY 2023.

Solar-wind hybrid projects accounted for 12.7% of the cumulative installed solar open access capacity.

Tamil Nadu released an annual tariff update in July 2023, increasing its retail supply costs by 2.2%-2.5% for C&I consumers, driving them to adopt solar open access to save on energy costs. The updated tariff order also exempted additional surcharges for open access projects, which helped boost installations under the state’s third-party open access model.

A well-structured regulatory framework and Tamil Nadu Generation and Distribution Corporation’s (TANGEDCO) accelerated approvals for captive and group captive projects have helped in the addition of new solar open access capacity.

In 2023, the main off-takers of open access power were cement, sugar, leather, metallurgy, automobile and auto parts, dairy, electronic hardware, petroleum and gas, glass, and other small-scale local industries.

Rajasthan

Rajasthan was fifth on the list, accounting for 8.1% of the new capacity added in 2023. The state accounted for 6.1% of India’s cumulative solar open access capacity.

Solar open access projects in Rajasthan account for 4.4% of the large-scale installations and 19% of the large-scale capacity additions in CY 2023.

In 2023, the state’s main off-takers of open access power were the petroleum and gas, bioenergy, IT, and other C&I industries.

Rajasthan’s solar open access installations have been slow over the years due to high surcharges and difficulties executing projects. Stakeholders have witnessed a lag from DISCOMs in approving captive projects, with demands of increasing the equity shareholding to 100% instead of the standard 26%.

Rajasthan has one of the country’s largest solar open access solar project pipelines, but most of these projects have been unable to obtain DISCOM approvals, stalling development in the segment.

Mercom recently reported on the state’s challenges in harnessing its full solar open access potential.

Recently, the Ministry of Power instructed state electricity regulatory commissions (SERCs) to comply with the Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules and align their states’ Open Access Regulations with the notified rules and all the amendments.

The “Q4 2023 Mercom India Solar Open Access Market Report” report is 85 pages long and covers vital information and data on the market. For the complete report, visit: https://www.mercomindia.com/product/q4-2023-mercom-india-solar-open-access-market-report.

SJVN Green Energy, a wholly-owned subsidiary of SJVN, has invited bids to commission a 100 MW solar power project in the Didwana-Kuchaman District of Rajasthan. Bidders must also oversee the project’s operation and maintenance for three years. The last day to submit the bids is April 26, 2024. Bids will be opened on the same day. Bidders must furnish an earnest money deposit of ₹122 million (~$1.46 million).

State distribution companies owed power generators ₹778.57 billion (~$9.34 billion) in total dues for the monthly billing cycle in March 2024, according to the Ministry of Power’s payment ratification and analysis portal PRAAPTI. For the February billing cycle, the dues amounted to ₹920.88 billion (~$11.12 billion). The current outstanding dues, excluding the latest monthly dues, are ₹273.15 billion (~$3.27 billion).

The Telangana State Electricity Regulatory Commission has refused to impose  Grid Support Charges (GSC) on rooftop solar installations, whether operating under net-metering or gross-metering arrangements. It held that GSC should only be applied to captive power plants and solely for the power utilized by the co-located load. Moreover, considering that retail supply tariffs have already been set for the fiscal year (FY) 2023-24 and the year is coming to a close, the Commission decided not to determine GSC for FY 2023-24.

The M. Chinnaswamy stadium in Bengaluru boasts a 400 kWp rooftop solar capacity on top of its eastern side stands. The photovoltaic modules installed on the roof by the Karnataka State Cricket Association in 2015 generate approximately 40,000 units every month, powering the daily operations at the stadium. On average, the stadium utilizes ~100,000 units a month, of which 60,000 units are supplied by Bangalore Electricity Supply Company through the grid.

The solar industry faced a notable increase in underperformance from faults and issues with photovoltaic equipment, rising to 4.47% in 2023 from 3.13% in 2022. This resulted in an annual revenue loss of up to $4.6 billion or $4,696 per MW. Larger projects exceeding 100 MW experienced even higher average annual revenue losses, averaging around $5,000 per MW, according to Raptor Maps‘ Global Solar Report.