India to install more than 9 GW of solar in 2017, forecasts Mercom Capital

The agreement will bring 100 MW of solar PV capacity to Tamil Nadu, and 300 MW in cell production capacity to Jharkhand.

The Indian solar sector is likely to add more than 9 GW of new capacity in 2017 according to a forecast by market analysts Mercom Capital Group.

Published today, the latest Mercom quarterly report on the Indian solar sector finds that the nation will have installed more than 4 GW of solar capacity in 2016, bringing India’s cumulative capacity for large-scale and rooftop solar to 9.6 GW.

In growing a further 9 GW in 2017, India will entrench itself firmly at the top table of solar markets, joining the likes of China, the U.S. and Japan. Indeed, some forecasts see India edging out Japan to become the world’s third-largest market this ear.

However, despite a solar development pipeline of more than 14.2 GW, and some 6.3 GW of PV projects tendered and pending auction, headwinds up ahead could disturb India’s plain solar sailing. “There are significant headwinds in terms of transmission and evacuation issues that could threaten the pace of growth,” warned Mercom Capital Group CEO Raj Prabhu.

Auction activity, for example, has slowed in the last three months, with just 1,311 MW of the 3,781 MW tendered between September and December last year auctioned off. Despite the average selling prices (ASPs) of Chinese solar modules declining 10% since August and around 30% over the past year – delivering a timely pricing boost for developers that won projects at low bids and had been struggling with the economics – there are growing concerns relating to transmission, evacuation, curtailment, timely payments and the outcome of the goods and services tax (GST), Prabhu says.

“Solar park development is experiencing some setbacks due to incomplete infrastructure,” said 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 negative effect on project costs and profitability.”

Solar accounted for 16.7% of new power generating capacity added in 2016 (up to November), and between April-October (FY 2016-2017) solar met close to 1% of India’s total electricity output. This may sound small, but represents a 50% increase in the space of a year.

The bulk of this solar growth has been centered on just 10 states, which currently account for 90% of PV output, the report said.