India Likely To Add 10.5 Gigawatts Of Solar Power Capacity This Year, Says Mercom
Mercom Capital Group has once again revised its estimates for solar power capacity addition in India for the calendar year 2017. The research group had earlier estimated that more than 9 gigawatts of solar power capacity would be added this year.
According to the latest revision, India will likely see an addition of 10.5 gigawatts of solar power capacity in 2017. The jump in installation forecast, Mercom says, is the strong project pipeline that exists at present. This optimistic picture is likely to change next year, in which the company expects only 8 gigawatts of capacity addition.
The 24% decline estimated by Mercom would likely be due to the uncertainty around the implementation of a 5% Goods & Services Tax (GST) on the solar power market, and efforts by many state power utilities to renegotiate the tariffs of solar power projects.
India has already seen 4,102 megawatts of solar power capacity during the first six months of 2017, compared to 3,459 megawatts during the same period last year.
Mercom, however, warns that if market conditions and policy directions change, it may have to revise its projections downward for the current year. Continued lack of clarity on taxation matters under GST regime could jeopardize current and planned construction of power plants.
Cheap Chinese solar modules form an overwhelming part of India’s solar imports, and any negative impact on these imports will have direct consequence on the finances of solar power projects. A 2013 government study had proposed a levy of $0.11 to $0.81 per watt on Chinese modules imported into India. This levy was never implemented though.
States like Uttar Pradesh, Tamil Nadu and Jharkhand are pushing project developers to reduce tariffs for their power projects.
A similar attempt has been made in Tamil Nadu, where lawmakers are pushing Adani Green Energy to revise down its tariff of Rs 7.01/kWh (11.00¢/kWh). Adani Green Energy operates 648 megawatt solar power project in Tamil Nadu, the largest solar project in India.