Positive Indicators For Solar Market In India, Says Mercom Report

A new study forecasts 2,150 MW in solar installations for the 2015 calendar year and expects installations in 2016 to reach approximately 3,645 MW in India.

The report which is a quarterly update on the Indian solar market had been released by global clean energy communications and research firm, Mercom Capital.

Speaking about the same, Raj Prabhu, CEO and co-founder of Mercom said, “There have been a number of important energy-related policy announcements recently, with increased activity on the ground with tenders and auctions beginning to occur more frequently”.

Year-to-date, solar installations in India stand at 1,652 MW, with cumulative solar installations in the country totalling 4,816 MW.

“Bids are falling faster than component costs and there is a concern that this is a race to the bottom for solar bids in India,” commented Prabhu. “The pent-up demand due to auction delays is leading to aggressive bidding in an effort to capture market share with an assumption that component costs will continue to fall no matter what. This is a risky strategy considering the global market trends over the next 12 months.”

After several delays, The National Thermal Power Corporation (NTPC) has begun calling for tenders under the 3,000 MW Phase II Batch 2 JNNSM program. The first auction under this batch closed with SunEdison placing the winning bid of ₹4.63/kWh for a 500 MW solar project in Andhra Pradesh. This bid is the lowest in India to date.

There is about 5,500 MW worth of projects due to be auctioned off over the next several months between the NTPC and the Solar Energy Corporation of India (SECI).

The report further states that a positive indication for India’s solar sector is the fall in Interest rates for solar projects after the RBI cut rates with rates in the 11-12 per cent range compared to 13-14 per cent a year ago.

Merck says that latest updates indicate that 21 states have so far agreed to set up a total of 27 solar parks with a combined capacity of 18,418 MW. These projects are part of MNRE’s plan to set up multiple solar parks with individual capacities of 500 MW or greater. Developers are concerned that solar park fees are much more expensive than originally envisioned and are confident that they can execute at much lower costs if the government sticks to facilitating land.