Two years ago, India's solar market was basically non-existent. According to the World Resources Institute, the country had 2.9 Gigawatts (GW) of solar installed at the end of 2015, about as much as the U.S. installs each quarter. 

But the country is in desperate need for new, cheap electricity and has found that solar energy is more cost-effective than coal or natural gas. And that's driving a boom that could help reshape the power centers of solar demand. 

Large utility scale project in the desert.

Image source: First Solar.

India's solar growth

From its tiny base, India installed 4.3 GW of solar power in 2016. Installations have surged to 4.76 GW in the first half of 2017, according to Mercom India Research. They predict that in 2017, 10.5 GW of solar will be installed in India. 

The surge in installation is part of India's plan to build 100 GW of solar by the end of 2022, which would likely make it a top three solar market along with China and the U.S. 

Solar auctions have been incredibly successful in India, recently getting low prices of 3.7 cents per kWh. And because of those auctions, the pipeline of projects under construction is 12.2 GW, with another 6.3 GW of auctions on the horizon. 

Everyone wants in on the action

Every major solar company has its eyes on getting a piece of India's solar market. First Solar (NASDAQ:FSLR) has supplied over 1 GW in the market and is positioning its Series 6 thin film product as an ideal option for the country's large desert regions. 

SunPower (NASDAQ:SPWR) has built 5 Megawatts (MW) in India, but its presence is small. That could change as the company begins selling P-Series and Oasis solutions in India. Management has said that they expect India to be a big market in the future, and the next few quarters could be key for future growth in the region. 

JinkoSolar (NYSE:JKS) was awarded Solar Module Company of the Year - International Manufacturer by Solar Quarter. And it recently supplied 65 MW of modules to Energon Solar for a project in Medak, Telangana, India. 

Canadian Solar (NASDAQ:CSIQ) has supplied over 300 MW to projects in India and sees the company as a key market. China is still the company's biggest market, but India could be No. 2 in coming years. 

What to watch in India

Given India's reliance on auctions, companies could win large amounts of business in a single day. Keep an eye on the named winners of auctions in coming months because it could drive sales and the utilization of manufacturing capacity higher for winners. India is becoming a key market that every major solar company has to play in, and given its massive potential, the news is good for the solar industry as a whole. 

Travis Hoium owns shares of First Solar and SunPower. The Motley Fool recommends First Solar. The Motley Fool has a disclosure policy.