India is expected to see record solar growth in the country in the next three years, thus launching it into the top five solar countries in the world.
At last weeks Intersolar Europe event, held in Munich, Germany, Bridge to India released its 2015 India Solar handbook, which detailed both the central and state governments new, ambitious solar plans to 2022.
Under proposed amendments to the National Tariff Policy 2005, Indias central government is looking to generate 8% of its electricity from solar by 2019, and 10.8% by 2022. This, says Bridge to India, would require a cumulative capacity of 69 GW and 100 GW in 2019 and 2022, respectively. To date, capacity is around 4.7 GW, comprising 4.1 GW of utility-scale solar and around 350 MW of rooftop.
"The increase in RPO target from 3% by 2022 to 8% by 2019 implies an aggregate solar capacity of 69 GW by that time. This is equivalent to solar capacity growth of 87% per annum, which is largely consistent with the 2022 target of 100 GW but is nonetheless extremely ambitious in our view," commented the consultancy firm.
It expects the country to instead install a cumulative solar capacity of just 31 GW by 2019, comprising 27 GW of utility-scale projects and 4 GW of rooftop projects.
Despite this, the consultancy firm says " the market will still grow at an impressive pace and provide immense opportunity for businesses to flourish." Overall, it expects cumulative solar capacity to double this year, while the market is expected to grow at a compounded annual growth rate of 58%.
Several challenges will continue to dog the Indian solar sector, and hinder the governments ambitious plans, including land acquisition, current grid infrastructure capabilities and financing.
Up to 2022, around $40 billion worth of debt would be required for 60 GW of utility-scale solar projects, said Bridge to India, adding that the government is planning for the bulk of this to come from international sources. It says domestic lenders will have to fork out.
"The biggest challenge," however, wrote the consultancy, "will be the enforcement of RPOs and the poor bankability of Indias distribution companies (DISCOMs)." This is because state governments are entitled to ignore the central governments directives.
Of the 4 GW of rooftop solar PV expected by Bridge to India by 2019, it sees 50% of demand coming from industrial consumers, 30% from residential consumers and 20% from commercial consumers.
While the government has, "belatedly", encouraged financing initiatives and net metering policies, for instance, the consultancy does not believe they will be "anywhere near sufficient" to achieve the governments 2022 40 GW rooftop solar target.
Rooftop solar is said to be becoming increasingly competitive, however, with grid parity for commercial and industrial consumers already having been reached in 12 states. To date, grid parity has not been reached anywhere in India for residential consumers.