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The Solar PV industry has seen dynamic changes in the last twelve months. Module prices have seen precipitous fall thereby encouraging forecasts of early grid parity; while at the same time, this has raised concerns about the health of the manufacturing
sector and sustainability of the cost reductions. In our last report released in May 2011, we anticipated utility-scale grid parity in the timeframe of 2017-2019 for India. We now believe it is likely to occur at the earlier end of that range and therefore solar power
presents a potential disruptive change in our energy scenario.

This could help India leapfrog the energy technology space, and enable solar power to make a meaningful and substantive contribution to our energy scene by the end of this decade. Policy makers need to take a serious note of this potential.

The National Solar Mission has triggered the development of solar ecosystem capacity in India in the last two years. India’s solar capacity has grown from less than 20 MW to more than 1,000 MW in the last two years. The seeds have been sown and the investments in capability building have been made. What is now needed is that the ‘green shoots’ have to be nurtured; else, we could see them die away, putting significant national resources to waste. We believe that the Government should keep the momentum going by providing sufficient clarity on the market, announcing the next phase of the NSM quickly and
addressing some regulatory issues which can open up the private contracts market.

This year, our report focuses on the solar cost trends and looks at segments of the market which are most suitable for adoption of solar power within the coming few years. Given the
financial position of the power utilities, we believe that rooftop market for customer segments that already see parity with utility power tariffs has the potential to be a game changer in the coming five years. Within rooftop, the solar lease model is becoming attractive in the Indian market. Given the fuel, land and environment challenges that the country is facing in setting up new power capacity, we feel that the state governments,
utilities and regulators should encourage this market to realize its potential by providing critical enablers such as net metering infrastructure, banking facility and developing an ecosystem for rooftop market installations.

Arvind Mahajan
Partner and Head
Energy and Natural Resources
KPMG in India

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