India could see 10GW of solar installations in 2017, says report
This year could be a record one for the Indian solar energy market, with new solar power installations in 2017 to reach around 10 gigawatts (GW) this year, said a new report released on Thursday.
In a quarterly update, Mercom Communications India, a subsidiary of Mercom Capital Group (a global clean energy consulting firm), said the Indian solar sector is witnessing strong growth with cumulative installations reaching around 12.8GW at the end of the first quarter.
“Utility-scale projects account for about 12GW while rooftop installations accounted for almost 850MW (megawatts) of the installed capacity,” said the report.
The forecast 10GW increase this year would mean a 130% increase year-on-year compared to the 4.3GW installed last year, as India becomes one of the top solar markets in the world after China and the US.
“The pipeline of Indian utility-scale projects is currently 12.6GW and there are approximately 6.1GW of tenders pending auction,” it emphasized.
Six Indian states now have installed capacity of over 1GW.
“Solar in India has come a long way and 2017 is forecast to be the best year by far. Rapidly falling tariffs have resulted in solar closing in on parity with coal in recent auctions, which is expected to increase demand in the future,” Raj Prabhu, chief executive and co-founder of the Mercom Capital Group.
“However, tender activity has slowed recently and the government needs to address transmission bottlenecks, finances of distribution companies and slowing demand for continued growth,” Prabhu said.
The report could be good news for the Indian solar sector, which has not been able to achieve the desired numbers. According to the official data of the Union ministry of new and renewable energy, against the targeted 12,000MW (10,500MW ground-mounted and 1,500MW rooftop solar) for grid-connected solar projects in 2016-17 (till 31 March 2017), only 2,803.77MW was achieved till February 2017.
In 2015, Prime Minister Narendra Modi led-NDA government had increased India’s solar power target from 20,000MW to 100,000MW by 2022.
The report said that “extremely competitive reverse auctions fueled by pent-up demand from slowing tender and auction activity are continuing to drive bids to record low levels”.
Solar tariffs have declined by 75% since 2010.
In the recently conducted 250MW Kadapa solar park auction in Andhra Pradesh bids reached a new record low of Rs3.15 per unit , following the Rewa solar park auction in Madhya Pradesh, where bids had reached Rs3.30 per unit which is over a rupee lower than the previous low tariff of Rs4.34 per unit recorded in Rajasthan in January 2016.
The report also stressed that the tender and auction activity has been slowing down over the last couple of quarters in the solar power sector.
“The slowdown in activity has been disconcerting to developers and manufacturers that have been positioning for much higher levels of activity based on India’s solar installation goal of 100GW by 2022,” it added.
It also highlighted that the Chinese module prices have now fallen by about 33% in the last 12 months, enabling the recent low bids in Rewa and in Kadapa.
The report also observed that though the government is targeting 40GW by 2022 through rooftop installations policy support currently is minimal.
“Over 20 states have some net-metering policy, but few have a functioning net-metering program. Other issues affecting rooftop installations include lower accelerated depreciation and the removal of the 10-year income tax holiday,” it added.
“Even with some of the challenges, we expect the Indian solar sector to remain one of the most important markets in the world over the next five years.” said Priyadarshini Sanjay, who is the managing director of Mercom Communications India.