India is trying to bring electricity to hundreds of millions of its citizens who live off the grid. And it's trying to ensure that the power comes from clean and renewable sources.

The research and consulting firm Mercom Capital Group expects 4.8 GW of solar deployment in 2016 and 9.3 GW in 2017. The table below shows annual installation figures between 2011 and 2017 as presented by Mercom.

Year Annual solar installs
2011 172 MW
2012 986 MW
2013 1,004 MW
2014 883 MW
2015 2,133 MW
2016F 4,832 MW
2017F 9,261 MW

“Solar installation capacity is growing in India but distribution companies (discoms) continue to be a drag on the sector and are showing reluctance to purchase solar in light of low power demand and cheap power availability,” said Mercom’s CEO Raj Prabhu.

india solar capacity 2016

Mr. Prabhu added that the central government needs to take immediate measures and restore confidence among developers and investors.

Some discoms have been curtailing solar generation in Rajasthan and Tamil Nadu as cheaper power is available on power exchanges. Other challenges such as grid congestion etc don’t help.

The research report adds that Chinese modules can currently be purchased in India at around USD 0.39 (INR 26) per watt which is “the cheapest average selling price currently anywhere in the world”.

Prices are expected to decrease further in the short-term because of Chinese oversupply, which is welcome news for Indian project developers, especially with the aggressive bidding on government tenders.

In June, Tata Power Co Ltd agreed to take over Welspun Renewables Energy Pvt Ltd in a deal worth INR 92.5 billion (USD 1.4bn/EUR 1.25bn). Mercom says there are several other such deals in the pipeline.

“Companies overcome with debt are finding it difficult to grow in this highly competitive environment and we expect to see a lot more M&A activity on the project side,” said Prabhu.

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