New Delhi: With expected new capacity addition of 5.4 gigawatt (GW) in 2016, India will become the fourth largest solar market globally this year, overtaking the UK, Germany and France, a report released by Bridge to India (BTI), a renewable energy consulting firm, said on Friday.
A rapid reduction in costs and increased demand for solar installation has fanned tremendous growth over the past 12 months in the country’s solar energy sector, said the ‘India Solar Handbook’ released by BTI.
About 65 GW of solar capacity is expected to be added globally in 2016, with Asian countries in the lead, the report said. India has already installed 6.6GW of utility-scale solar capacity and 740 megawatt (MW) of rooftop capacity.
“Indian solar market appears in full bloom right now. 25GW of projects are under different stages of development. The market is growing at an exponential rate, about 35 new tenders with a cumulative capacity of 15.5GW were announced last year and an additional 5GW of new tenders are to be announced in the coming months," it added.
The report said solar tariffs have fallen by almost 33% in India in last two years.
“The Indian government has truly galvanised the sector in the last 18 months. But now, the emphasis must move from policy formulation to execution. Our estimates show that unless challenges like transmission and financing are addressed urgently, the industry will miss the targets by big margins," said Vinay Rustagi, managing director, BTI.
In June 2015, Prime Minister Narendra Modi increased India’s target for solar power by five times from 20,000MW to 100,000MW (100GW) by 2022.
The union ministry of new and renewable energy is targeting 12GW of utility-scale solar projects for 2016-17, but BTI estimates the actual capacity addition at only about 5-6GW.
The report noted that southern states are taking the lead in solar energy, but the highest power consuming states like Maharashtra and Uttar Pradesh have been relative laggards.
It also outlined “ensuring grid robustness and investment/lending appetite at aggressive tariff levels" as the two main challenges confronting the Indian solar market.
“Policy interventions to address these challenges together with demand growth measures will be key to sustainable growth of the sector," it added.
The solar handbook also called the solar rooftop market in the country a major disappointment.
“One major disappointment continues to be the solar rooftop market where the 40GW target for 2022 seems like a very remote prospect. This market needs more focused policy support," the report stressed.