New solar capacity addition in India is expected at over 10 GW during the calendar year 2017, according to Mercom Capital Group, a global clean energy communications and consulting firm.

In the beginning of the year, it had projected a capacity addition of 9 GW for 2017. Now, it has revised guidance upwards to 10 GW.

“The Indian solar sector is witnessing a strong growth with cumulative installations reaching approximately 12.8 GW at the end of Q1 2017. Utility-scale projects account for about 12 GW, while rooftop installations accounted for almost 850 MW of the installed capacity,'' said Mercom report.

It forecasts 2017 installations to reach about 10 GW, about 130 percent increase year-over-year compared with 4.3 GW installed last year as India becomes one of the top solar markets in the world after China and the United States.

The pipeline of Indian utility-scale projects is currently about 12.6 GW and there are about 6.1 GW of tenders pending auction.

“Solar in India has come a long way and 2017 is expected to be the best year by far. Rapidly falling tariffs have resulted in solar closing in on parity with coal in recent auctions, which is expected to increase demand in the future,” said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.

Solar tariffs have declined by about 75 per cent since 2010. Chinese module prices have now fallen by about 33 per cent in the last 12 months, enabling low bids in the recent auctions.

But, tender activity, however, has slowed recently and the government needs to address transmission bottlenecks, finances of distribution companies and slowing demand for continued growth, he added.

Extremely competitive reverse auctions fuelled by pent-up demand from slowing tenders and auction activity are continuing to drive bids to record low levels.

Only about 1.9 GW of solar was tendered in Q1 2017 (1 GW of this was retendered) compared with 3.4 GW in Q4 last year. There were 1.3 GW of solar projects auctioned in Q1 2017 compared with 255 MW in Q4 2016.

The slowdown in activity has been disconcerting to developers and manufacturers who have been positioning for much higher levels of activity based on India’s solar installation goal of 100 GW by 2022.

Rooftop installations in India have totalled nearly 850 MW as of Q1 2017. The government is targeting 40 GW by 2022 through rooftop installations, but policy support currently is minimal. Over 20 states have some net-metering policy, but few have a functioning net-metering programme, it said.

Other issues affecting rooftop installations include lower accelerated depreciation and the removal of the 10-year income tax holiday.

“Even with some of the challenges, we expect the Indian solar sector to remain one of the most important markets in the world over the next five years.” said Priya Sanjay, Managing Director of Mercom Communications India.

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