Rajasthan currently stands as the Indian state with the most installed solar capacity as of Feb. 2016. Image: Mercom Capital
Global clean energy communications and research firm Mercom Capital Group released its quarterly update on the Indian PV market — announcing that it expects more than 4GW in total solar installations for the country during the 2016 calendar year.
This predicted total stands as nearly a 100% year-over-year growth from the 2015 total of 2,133MW.
Raj Prabhu, CEO and co-founder of Mercom Capital Group, said: “The Indian solar sector is finally coming out of hibernation. Solar installations in 2015 increased by 142 percent after three years of remaining flat, and we expect 2016 and 2017 to record strong growth.”
Currently, there are over 10GW of solar projects under development in India, with cumulative solar installations in the country reaching 5,632MW and about 8.4 GW slated to be auctioned off in the coming months.
Prabhu added: "There is cautious optimism in the solar industry as aggressive bidding remains a major concern throughout the sector.”
The latest auctions have reached new lows at Rs.4.34 ($0.064)/kWh, a drop of about 6% in the last three months. Projects with tariffs under Rs.5 (~$0.0735)/kWh — unless developed at a cost of Rs.5 crores (~$0.7 million) or below — are viewed as being risky and difficult to fund by most developers. However, most of these projects are expected to be commissioned in 2017, with developers hoping that the time between bidding and procurement, module and balance of system (BOS) costs will continue to dip along with interest rates in order to make these undertakings feasible.
The newly announced budget does not necessarily bode well for solar in India. Growing depreciation will be cut from 80% to 40% starting in FY 2017. This reduction will largely affect rooftop solar, some large-scale projects and the wind sector.