India’s solar capacity projected at 3, 645 MW in 2015: Mercom

Clean energy consultant Mercom Capital Group said today that in line with the centre's aim to boost generation of renewable energy, India is likely to see its solar power capacity increase by 3,645 MW in 2016.

India has set a target of 175 GW of renewable energy capacity by 2022.

"Mercom forecasts about 2,150 MW in solar installations for the 2015 calendar year and expects installations in 2016 to reach approximately 3,645 MW, a significant year-over-year growth," it said in a statement.

"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," Mercom Capital Group CEO and co-founder Raj Prabhu said.

Year-to-date, solar installations in India stood at 1,652 MW, with cumulative solar installations in the country totalling 4,816 MW, Mercom said. NTPC had started calling for tenders under the 3,000 MW Phase II Batch 2 Jawaharlal Nehru National Solar Mission programme, after several delays, it said.

The first auction under this batch closed after SunEdison placed the winning bid of Rs4.63 kWh for a 500 MW solar project in Andhra Pradesh, which was the lowest in India to date.

In addition to tariffs that were dropping in the solar power arena, even interest rates for solar projects seemed to be declining to the 11-12 per cent range from 13-14 per cent a year ago.

According to the report, offtake risk due to the weak financial health of utilities was adding at least a percentage point in interest rates, which made it more expensive to develop solar projects in some states, Mercom said in its quarterly update on Indian green energy market released today.

"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," Prabhu said.