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Report Projects Massive Solar Growth in India

As the American and European solar industries face continued uncertainty, India is aggressively ramping up its solar ambitions behind falling prices and growing energy needs.

According to a new report by GTM Research and Bridge to India, the nation is facing a perfect storm of factors that will drive solar photovoltaic (PV) adoption at a furious pace over the next five years and beyond. The falling prices of PV panels, mostly from China but also from the U.S., has coincided with the growing cost of grid power. Government support and ample solar resources have also helped push the adoption along, but perhaps the biggest factor has been need. India, as a growing economy with a surging middle class, is now facing a severe electricity deficit that often runs between 10 and 13 percent of daily need.

Now the nation is increasingly seeing solar as a way to invest in its infrastructure quickly. Surprising to some extent has been how fast solar has becoming cost-effective. In December, a National Solar Mission auction awarded 27 PV projects totaling 350 MW to developers large and small. Bids came in as low as $0.18/kWh and the average price awarded was $0.21/kWh, down 9 cents from a similar auction 13 months ago. The low prices have stoked hopes that a major installation boom is inevitable.

In 2010, the country had big hopes for solar, but only 54 megawatts (MW) in installed capacity. Now, a year later, it is expected to install six times as much capacity by year’s end, and there is well over 1,600 MW of projects with signed power purchase agreements in the pipeline. By 2016, the report projects that India could be installing more than 3,000 MW annually in PV projects. The biggest winner in this transformation could be large-scale developments that are built instead of traditional diesel plants.

The nation also hopes that its solar project growth will support a stable domestic manufacturing supply chain. Currently, Indian solar PV makers have an annual manufacturing capacity of 1,500 MW, and 70 percent of the modules are exported. In cell manufacturing, India has a 600 MW annual capacity, but it exports 80 percent of its product.

Other items of note from the report:

  • According to report author Dr. Tobias Englemeier of Bridge to India, it is not a market that will subsidize over long periods of time. Creating price stability early will be key to its sustained growth.
  • The country needs to improve its irradation data, which is seen by some as needing new analysis. The biggest risk factor would be if irridation levels are lower than expected. Regardless, it appears that states in the western part of the nation have the best resources.
  • The nation’s top state-based incentive program is in Gujarat, which could help add between 200 MW and 350 MW of new capacity each year through 2016. The National Solar Program, which does not function in areas that have state programs, is expected to ramp up from 40 MW this year to 890 MW by 2016.
  • Concentrating solar power was not part of the report. Concentrating photovoltaics were included in the report, though the technology remains a very small segment of the Indian market.
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