In 2017, solar energy auctions in India registered the lowest bid ever of Rs.2.44 per kilowatt hour. Riding on the back of lower solar panel prices and the government’s enthusiasm for adopting renewable sources of power, the solar energy industry has grown tremendously.
According to a report by Mercom Capital Group, in the first three quarters of this year, new solar energy installed capacity additions accounted for 39% of power capacity additions in India. In absolute terms, the installations totaled 7,100 MW, compared to 4,313MW in the year of 2016. Thus, year on year growth of new installed solar energy capacity will be at least 64%.
States Responsible for Growth in Solar Energy Capacity
- More than 1GW of installations have taken place in Telangana and Karnataka this year. With 612MW of new installed capacity, Telangana has won the accolade of being the state with most solar installations and a cumulative of almost 2.5GW of solar power.
- Andhra Pradesh and Rajasthan are not far behind, with a little more than 2GW total capacity for each state.
- This year, modest installations have also taken place in Maharashtra, Uttar Pradesh and Gujarat
Obstacles in the Path of Future Solar Energy Expansion
Over the last couple of months though, solar energy growth has slowed down. There are several factors that have contributed to this fall in momentum in installations and tender and auction activity.
- Delays caused by government agencies have prevented approximately 1 GW of large-scale projects with completed construction from being officially commissioned
- Spikes in Chinese module prices driven by expectations of an anti-dumping tariff have brought up the overall cost of installations
- Renegotiation of PPAs in some states because of the lower bids quoted earlier this year
- Issues surrounding incomplete infrastructure and evacuation
- Confusion about the Goods and Services Taxes (GST)
Overall though, India is undertaking several steps to make the target of having 100GW installed solar capacity by 2022 achievable. According to Mercom, “if the government regulators focus on the long-term picture and handle the current challenges diligently there is no reason why solar shouldn’t continue to be the most attractive market within the power industry for years to come.”
For a deeper analysis of the obstacles standing in the path of faster solar energy expansion refer to this.