Installed solar capacity in India is set to reach 33.4GW by 2022, according to consulting firm Bridge to India. Much of this growth is forecasted to come from the off-grid sector, which Bridge to India highlights as having enormous potential in its recently released India Solar Handbook.

Present capacity in India has almost exclusively been driven by government subsidies and by the end of 2011 it will be close to 250MW. Twelve months ago, capacity stood at a mere 22MW, but the preferential tariff rates offered by the National Solar Mission and Gujarat Solar Policy have resulted in the jump in capacity size.

This jump has primarily been inspired by grid-connected PV plants, a trend that is expected to continue over the next three years due to a lack of incentives outside the policies, and because solar power is not yet commercially viable on a large scale.

However, Bridge to India believes that the off-grid sector has the potential to also play a major role in the country’s solar expansion and could account for as much as 15GW. How much of a role could depend on the solar REC market in the short term. The capital cost for solar power has come down by about 16% to 20% in the last two years, and this downward trend is expected to continue for the next three years as the manufacturing scale increases and the technology matures.

While solar matures, the cost for fossil fuels are expected to rise and subsidies in the power sector to fall, consequently driving up grid power prices. In light of India’s high irradiation levels, solar power will become a viable alternative to traditional energy sources sooner rather than later; analysis in Bridge to India’s handbook suggests that grid parity will be achieved by 2018, with an installed capacity of just over 14GW.

The India Solar Handbook was launched at last week’s Intersolar Conference & Exhibition in Mumbai and is now available for download at Bridge to India’s website.