New solar capacity addition in India is expected at over 9 GW during the current calendar year 2017, according to Mercom Capital Group, a global clean energy communications and consulting firm.
The calendar year 2016 saw solar installations at about 4 GW against 2.3 GW installed in 2015.
“We are forecasting installations to reach over 9 GW in 2017 which would put the Indian solar sector in the big leagues along with China, the United States, and Japan. However, there are significant headwinds in terms of transmission and evacuation issues that could threaten the pace of growth,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group.
Share of solar generation continues to grow with 16.7 per cent of new power generating capacity added in 2016 (as of November 2016). Cumulative solar capacity, including large-scale and rooftop projects in the country, reached 9.6 GW.
The top 10 states — Tamil Nadu, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Madhya Pradesh, Punjab, Karnataka, Maharashtra, and Uttar Pradesh — account for about 90 per cent of all solar installations and pipeline.
Indian government agencies have announced solar tenders of about 3,781 MW during September-December 2016 period and auctioned about 1,311 MW. However, auction activity has slowed over the last three months.
The project development landscape has changed significantly over the last quarter largely due to Chinese module price declines.
The average selling prices (ASPs) of Chinese modules in India have declined approximately 10 per cent since August and by about 30 per cent over the last 12 months. This decline in prices has provided a much-needed boost to developers who won projects at lower bids and were struggling to make project economics work, it said.
Currently, the major concerns for the industry are related to transmission, evacuation, curtailment, timely payments and the outcome of the goods and services tax (GST).
“Solar park development is experiencing some setbacks due to incomplete infrastructure,” felt Prabhu.
“In some cases, developers are incurring expenses to clean the land, build roads, and are waiting for power to be evacuated after commissioning. All of this is having a negative effect on project costs and profitability,” he added.
Mercom pointed out that demonetisation had caused some temporary setbacks to the industry.