Solar in India accounted for ~13.5 billion units of electricity produced in the country during the financial year (FY) 2016-17, up from ~7.4 billion units in FY2015-16, according to the Central Electricity Authority (CEA). Electricity from solar energy jumped 81 percent year-over-year (YoY), making it the fastest growing new power generation source added in the country last year.
Even with impressive YoY growth and all the hype around the impact of solar installations and its disruption on the Indian power markets, solar accounted for only 1.09 percent of the total power generated in the country and still has a long way to go. Solar’s share of the electricity generated by renewable energy sources came to 16.5 percent.
During the financial year, ~6,050 million more units of solar was generated compared to FY2015-16.
Wind was the second fastest growing electricity generation source behind solar with 39 percent YoY growth, making up 3.7 percent of electricity generated. Wind installations picked up last as tariffs have fallen significantly due to the introduction of reverse auctions. Biomass was third with 12.6 percent YoY growth accounting for only 0.32 percent of electricity generation. Electricity generated from thermal energy (mostly coal, also includes gas and diesel) grew by 5.3 percent YoY.
In terms of electricity generation make up, fossil fuels accounted for a whopping 80 percent in FY2016-17 and shows the amount of work still left to transition to cleaner renewable energy sources. New coal power plant installations have slowed and many projects have been cancelled. According to a study by the Institute of Energy Economics and Financial Analysis (IEEFA), coal power projects with over 13 GW capacity have been cancelled due to the falling solar tariffs rendering an increasing number of them financially unviable. The 13 GW of cancelled coal projects include, Uttar Pradesh cancelling bids for 3.8 GW of coal-fired power priced at Rs.4.16 (~$0.064)/kWh due to surplus power supply, the state of Gujarat shelving plans for a 4 GW import coal fired power project on the Kathiawar peninsula and Odisha cancelling 7 GW of coal based power projects. Five major cancellations were announced just in the month of May.
Though solar is being installed at a rapid pace, due to a lower capacity factor, the actual electricity generation tends to be much lower compared to a coal power plant.
According to Mercom’s Q1 India Solar Quarterly Update, cumulative installations reached approximately 12.8 GW at the end of Q1 2017. Mercom is forecasting 2017 installations to reach approximately 10 GW. Lack of clarity surrounding the recently announced Goods and Services Tax (GST) has virtually frozen development activity and could lead to lower than anticipated installation levels.
Wendy is a co-founder of Mercom Capital Group, the parent company of Mercom India. Wendy is a contributing editor at MercomIndia.com and is responsible for content quality across the company and products. She has over 15 years of business and finance experience in the energy and technology markets. In addition to Mercom, Wendy has written for many other clean energy-focused blogs and publications. More articles from Wendy Prabhu.