Mercom Capital Group, a global clean energy communication and research firm, forecasts a near 100 per cent growth in solar installations in India for the 2016 calendar year to over 4 GW from a total of 2,133 MW in the previous year.
In their quarterly update on Indian solar market released today, Raj Prabhu, CEO and co-founder of Mercom Capital said the Indian solar sector was finally coming out of hibernation: "Solar installations in 2015 increased by 142 per cent after three years of remaining flat, and we expect 2016 and 2017 to record a strong growth."
There are currently just over 10 GW of solar projects under development, with cumulative solar installations in the country totaling 5,632 mw and about 8.5 GW expected to be auctioned off over the next few months. Close to 70 per cent of the total installed solar power capacity is located in four states-Rajasthan, Gujarat, Madhya Pradesh and Tamil Nadu, according to the report.
There is a cautious optimism in the solar industry as aggressive bidding remains a major concern throughout the sector, it says. The latest auctions have hit new lows at Rs 4.34 per kWh, a drop of about six percent in the last three months. The projects with tariffs under Rs 5 per kWh unless built at a cost of Rs 5 crore or below, are considered extremely risky and difficult to finance by lenders and most developers, according to Prabhu.
In January, the Union Cabinet approved amendments to the revised tariff policy. One of the significant revisions is a Renewable Power Obligation (RPO) which would require that eight percent of electricity consumption be procured from solar energy by March 2022. This is an important step towards achieving the 100 GW goal, but the RPO will remain just a number without strict enforcement, the report said.