Falling costs and competition among developers are sending solar power prices plummeting around the world, but solar’s success in 2017 could depend heavily on one nation: India.
As the second most populous nation and one of fastest growing economies in the world, India is set to invest heavily in electricity generation — something that will conflict with its air pollution reduction goals unless it uses more non-coal fuel sources. To solve the issue, India adopted auctions in 2010 to help achieve Prime Minister Narendra Modi’s solar target of 100 GW of capacity by 2022.
In 2016, both Chile and the United Arab Emirates used auctions to develop solar projects for less than half the 6 cents a kilowatt-hour average global cost of coal power. Fortunately, the price paid for solar power at auction in India is following the same trend, according to Bloomberg data.
India is also expected to add nearly twice as much new solar as last year, according to forecasts by Bloomberg New Energy Finance.
The most conservative estimate from the forecasts put India’s solar additions at about 8.9 GW of new capacity in 2017, nearly twice the 4.5 GW last year.
The rapidly falling prices are made possible by the consistent decline in costs associated with manufacturing. Silicon modules used in solar panels are were 30% cheaper in 2016 than the year before, and prices are expected to fall another 20% in 2017, according to London-based BNEF. With the expectation of further cost declines, developers have been willing to cut prices below costs for the sake of securing contracts.