Solar Growth in India – 2016 & 2017

Solar power in India is set to double to 4-5 GW in 2016, from around 2 GW in 2015 as the market heats up due to government’s strong intent to achieve the 100 GW solar target. Even as other infrastructure and power sectors remain moribund, the solar market is firing on all cylinders. The state governments and central power undertaking have tendered multi gigawatts of solar capacity, which has seen tremendous interest not only from domestic companies, but also global investors and solar players. This has resulted in extremely low tariffs, which has made the government more confident about its strategy. This will also lower the government’s subsidy burden, allowing it to tender even more solar capacity. Though there are doubts whether all the solar projects will get completed due to the super low tariffs bid by investors, I think that the capacity should easily double. ICRA has projected that 5.7 GW will be installed in FY’17, while Mercom is estimating 4 GW of installations in 2016. This would imply another year of 100% plus growth in 2016, after a doubling of the solar market in 2015.

Also read my article: Incremental solar growth expected in USA, China and India

The Indian solar market has become the fastest growing market in the world and I expect it to continue being so for a long time. The main reason is the improving economics and competitiveness of solar energy with other energy sources. This is on top of the green credentials that solar energy has, which gives it a huge advantage over fossil fuel sources such as coal and gas. If you add pollution and global warming changes on fossil fuels, then solar energy would win over other energy sources by a massive margin. Even without these changes, solar energy has become cheaper than gas and wind energy. Even with thermal power it has come close and should go below thermal power in the next 5 years. Also given that solar energy does not face any major land and environmental issues, makes it an ideal energy source where both these problems are much more acute than other places in the world.

The main drivers of solar energy growth in India are:

• Decreasing prices of solar energy
• Its green credentials
• Government Support

 Nearly 5,700 MW of solar capacity is expected to be added during 2016-17, even as concerns over aggressive bidding and regulatory challenges persist, says rating agency Icra. According to an Icra study, the capacity addition, including PV and grid connected projects, in 2015-16 is expected to touch 2,700 MW, which will increase to up to 5700 MW next fiscal, going by the project awards and tenders floated in December last year

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