India’s solar market expected to grow by 90% in 2017

Overall, 2017 will prove to be a bumper year for the solar power sector in India. Total installed capacity is expected to reach 18 GW by the end of the year.

India’s solar market expected to grow by 90% in 2017

With a pipeline of around 14 GW of utility scale projects, about 7.7 GW is expected to be commissioned in the year—a growth of around 90% over 2016.

Combined with 1.1 GW of expected rooftop solar capacity, India should add a total of 8.8 GW in 2017, ranking it amongst the top three global markets after China and the USA, a Bridge to India report said..

On the policy front, impact of central government policies related to manufacturing, power distribution (UDAY) and implementation of GST is awaited keenly.

As the Indian market ramps up, it will become a key pillar for demand growth when demand in other leading countries including China, Japan and even possibly the USA is expected to slow down.

Despite concerns about weak power demand growth and growing incidence of grid curtailment, solar power outlook in India remains very strong and 2017 will be a bumper year for the sector in India with total installed capacity reaching around 18 GW by the end of the year;

The report noted that there has been some concern about weak power demand growth in India and growing incidence of grid curtailment and what it means for growth of solar power. It further added that demonetization may also impact power demand negatively.

But the report added that continuing reduction in module prices and downward trend in domestic interest rates will provide strong ongoing demand impetus to the market.

Solar tariffs are expected to fall below the critical INR 4.00 (USD 0.06)/ kWh mark making solar power the cheapest new source of power. At the same time, improving financial health of power distribution companies due to UDAY implementation will also help in sustaining renewable energy demand in particular. We expect sustainable demand of 6-8 GW for utility scale solar in the coming years.

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“We already see leading international equipment suppliers paying more attention to this market and developing specific pricing and product strategies for India. However, we are still unsure if improving domestic demand will lead to large-scale investments in greenfield manufacturing capacity. Notwithstanding the Indian government’s keenness to support domestic manufacturing as part of ‘Make in India’ campaign, the competitive dynamics are stacked against this sector.”

Implementation of Goods and Services Tax (GST) during the year will lead to marginal cost increases and may create uncertainty for developers and contractors although there is a widespread expectation that any adverse impact will be passed through to the distribution companies.

Rooftop solar will also continue its spectacular growth trajectory in 2017. We expect around 1.1 GW of rooftop solar capacity to be added in 2017, up 75% from 2016, driven by capital subsidies and substantial demand from
public sector.

Overall, 2017 will prove to be a bumper year for the solar power sector in India. Total installed capacity is expected to reach 18 GW by the end of the year.

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