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Commentary: Grid parity in India may happen sooner than expected
Jackie Chang, DIGITIMES, Taipei [Friday 27 April 2012]

India has been seen as one of the markets with most potential for the solar industry as demand in Europe weakens. A recent article from The Economist, "Solar Power In India: Waiting for the Sun", has stated that the India market might just boom.

The article indicated that power firms in India that produce electricity by burning coal have been forced to buy pricier coal because "the state local monopoly is unable to dig up enough of the black stuff [coal]". This can become an incentive for power companies to turn to solar power. The cost of solar PV systems has been falling since third-quarter 2010, and compared to the pricier coal, it is possible that the price of solar in India will be similar to conventional energy by 2016.

Furthermore, according to financial institutions, the government has vowed to install 20GW by 2022. Current installations in India are about 1GW.

According to PV 2012-Expectations for the global solar market, a new report from Digitimes Research, India's installations in 2012 are likely to reach 1.4GW because both subsidies from the federal government and the Gujarat state government will increase. In addition, new installations will be added in states such as Rajasthan and Karnataka. These states have been providing lucrative subsidies for solar PV installations, according to Digitimes Research.

Nevertheless, there are some concerns about the solar market in India. According to The Economist, grid connections and shortages of water to wash panels are two of the most common concerns. Also, despite lucrative subsidies provided by state governments, the federal government uses "reverse auctions" to promote solar PV installations. Reverse auctions mean giving operating rights to the solar firms that can produce power at the lowest cost. Many people doubt that this mechanism will help the firms to make money.

Digitimes Research noted that the solar market in India is quite different from other emerging solar markets such as the US and Japan. The solar market in India is highly price-competitive, and hence has been filled with low-price products, similar to in the China market.

This cause a backlash for solar firms, but may also mean that grid parity can be achieved in India sooner than expected.

solar panels

India government vows to have 20GW of solar installations by 2022
Photo: Digitimes file photo

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