Are you an investor looking to invest in the C&I solar market in India? Read the article to understand why C&I solar is going to be an attractive option for investors.

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Commercial and industrial market to
remain an attractive niche for investors
Corporate procurement of Renewables has a long ramp-up potential in India owing to the high
demand for captive power use and favorable economic and environmental profile. Indian
commercial and industrial (C&I) establishments consume almost 50% of the country’s power
generation. Out of which, nearly 40% is coming from the captive use of power plants. Within the
captive power plants, renewables account for only 9% of the total installed base.
The C&I (Commercial and Industrial) setup of RE plants in India initiated rather strongly during 2005-
2012 when states provided tax benefits to corporates for the installation of wind turbines. This lasted
until the technology got stable and started to find aggressive deployment in PPA based schemes and
utility-scale projects. The market for wind C&I PPA is expected to be 0.3 to 0.5 GW per year over the
next three years.
The corporate PPA market got its real headwind – with the decline in prices of solar technology since
2015. This was also followed by the introduction of incentive policy, targets for net metering and
open access during FY 15-FY 17. The market for solar C&I PPA increased 5X from 0.4 GW of annual
installations to 2 GW in FY 18 and FY 19. This was driven by the easing of restrictions in one state
after another on open access and after the introduction of net metering. During this time, as many
as 100+ companies started to compete in the market doing everything from EPC to the development
of PPA, to selling power to an end customer. This was also the time during which first investments
started to come in the market and the firms raised capital from Private Equity firms and Oil majors.
The installation rush seen during this period caught the regulators and licensed distribution
companies by surprise. The regulators then moved in to remove the waive-offs to protect the
business of DISCOMS and introduced charges on the evacuation of power which limited the amount
of power that could be evacuated.
Going forward, even after the removal of waive-offs and adjustive for earning decline due to COVID,
a robust volume of 1.5 GW is expected to be installed during the FY 21 to FY 23 as compared to the
installation of 2 GW in FY 20. This is still a fraction of the overall annual 12 GW volume of DG sets
sold in 2019. This volume is only going to increase as the costs of solar decline further and become
competitive to purchasing power from DISCOM even after incorporating maximum charges that the
DISCOM can apply for evacuating it. This is expected to happen during the next 2 years.
In parallel, the large renewable energy firms are also getting very strong and competing on their
ability to raise finance which allows them to offer PPA to customers. Nearly, 10 firms in the market
have raised finance to offer PPA and are spearheading the transition of the market from CAPEX and
EPC to OPEX and PPA. The more financing they can raise, the higher are the amounts of PPA that can
be signed which lower the cost of renewable PPA and provides them a higher volume and longer
contracts. Hence, large players will continue to remain busy and grow while the market concentrates
leading to robust PPA prices.

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About MEC Intelligence
MEC Intelligence is a market advisory and consulting firm with vast experience in the wind energy
sector. In power sector services, we have worked with leading utilities, energy retailers, industrial
companies, turbine OEMs and private equity firms on projects like strategy support, opportunity
scanning in regional markets and business model assessment. MEC Intelligence has conducted an
analysis of ~15 countries on nearly 10 attributes to determine the renewables’ impact on the power
mix.
To know more, please visit www.mecintelligence.com
For more information/ feedback:
Write to us at info@mecintelligence.com or contact us at +91-124-480-2700
www.mecintelligence.com
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www.mecintelligence.com
DENMARK
Nordre Fasanvej 113, 2
2000 Frederiksberg
Copenhagen, Denmark
T: +45-3543-3277
INDIA
510, Suncity Business Tower
Sector 54, Golf Course road
Gurgaon, Haryana
T: +91-124-480-2700