Solar now India's fastest-growing new energy source, says Mercom


India’s bold solar ambitions – to reach 100 GW of installed PV capacity by 2022 – may still seem a little far-fetched, but recent market analysis by Mercom Capital Group has revealed that the country is giving it its best shot at reaching those goals.

According to the latest Mercom India update, the country has so far installed 2.2 GW of new solar capacity this year to date, putting it on course to reach 5 GW for the calendar year and, in the process, making solar India’s fastest-growing new energy source.

Mercom also calculates that in May this year the country’s cumulative solar capacity surpassed 7.5 GW, while a further 22 GW is in the pipeline – around 13 GW of which is under construction, with the remaining 9 GW going through the Request for Proposal (RfP) process.

Projections for next year are even more bullish, with Mercom expecting India to install more than 9 GW of new PV capacity in 2017, reaching close to 20 GW of cumulative installations in the process. This acceleration is borne out by the figures – in the fiscal year 2015-16, solar represented 2.5% of India’s net installed capacity, which was a 1.4% increase in the space of one year, making it the country’ fastest-growing energy source.

Renewables in general account for 14% of India’s installed power capacity mix. Wind remains the dominant renewable source, but solar – at 17% of the country’s installed renewable capacity – is closing that gap rapidly.

"The Indian solar market is growing in size, but the question is: is it too much, too fast?" Asked Mercom Capital CEO Raj Prabhu. With infrastructure and systems unable to keep pace with auction announcements, and the market shifting rapidly from a 2 GW-a-year one to a 10 GW-a-year one, there is still much work to be done, Prabhu says.

The issue is low bidding levels through reverse auctions. Currently, 19 developers have bid for 2.9 GW of solar projects below Rs. 5 (approximately $0.0735/kWh), and of this total around 1-2 GW have signed power purchase agreements (PPAs). With India’s banking sector facing difficulties, some developers could find it tough to finance projects at this rate.

Prabhu adds, however, that the lowest tariff set at auction – $0.0638/kWh – appears to be an outlier, with all subsequent auctions coming in at $0.0685/kWh or above.

"There is no set rule which says tariffs below Rs.5 (~$0.0735) cannot be financed. Some banks are seriously looking at projects in the Rs.4.5-5 (~$0.0662-0.0735) tariff range, but financing depends on sound project economics, borrower credibility, a strong balance sheet and the developer's ability to service debt," he said.

Popular content

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact:


Related content

Elsewhere on pv magazine...

Leave a Reply

Please be mindful of our community standards.

Your email address will not be published. Required fields are marked *

By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.

Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.

You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.

Further information on data privacy can be found in our Data Protection Policy.