America isn't the land of solar opportunity anymore -- India is. With big plans and support, smart solar companies are scrambling to get a piece of Indian action. Here are three reasons why India is the greatest solar market in the world.
1. Sunny side up
It's not always sunny in Philadelphia -- but it is in India. According to the latest calculations from India's National Institute of Solar Energy, India's solar power potential clocks in at a whopping 750,000 MW. To put that in perspective, 750,000 MW is five times the current global solar capacity, four times the United States' solar power potential, and 47 times our nation's current solar capacity.
As large as that number is, it may still be conservative. Estimates assume that only 3% of India's wasteland will be used for solar projects, and that average solar module efficiency is 15%. First Solar's (NASDAQ:FSLR) thin-film modules already offer 17% efficiency at relatively cheap prices, while SunPower Corporation (NASDAQ:SPWR) boasts 21.5% efficiency for its commercial solar modules.
It makes sense, then, that India is set to build the world's largest 750 MW solar power plant. When World Bank co-financers visited the proposed site in the state of Madhya Pradesh, they "found the tract of barren land for commissioning the project most appropriate," according to Energy and Mining Minister Rajendra Shukla Shukla. "Barren land" is music to any solar power developer's ears, and India has plenty of it.
2. Easy money
It may be the beginning of the end for solar incentives in developed countries. As companies like SolarCity Corporation adapt to phase-out programs like New York's Megawatt Block, India will continue to benefit from government and development agency support. For example, the World Bank will provide 50% of the $1.3 billion needed to finance India's newly announced 750 MW solar plant -- and they'll be doing it at below market interest rates.
And it's not the only one. The world's largest solar plant is, remarkably, a rather small part of India's solar strategy. In December, the India cabinet announced its intentions to support 20,000 MW of solar projects across the country, and is plopping down $80 million in seed money to get around 25 projects off the ground, each boasting a capacity of 500 MW or more.
3. Booming energy demand
India has enjoyed annual GDP growth rates between 4.7% and 10.3% over the last decade (by comparison, the U.S. peaked at 2.3%). That's meant major electricity demand growth. From 1990 to 2011, India's energy consumption doubled. Coal currently accounts for around 44% of all energy consumption, and the country substantially increased its fossil fuel imports from 2011 to 2012 to keep up with growing domestic demand. By 2035, the BP Energy Outlook expects India to account for 64% of the world's coal consumption.
Coal is cheap. But solar photovoltaic system prices are just a third of what they were six years ago, and grid parity is already a reality in parts of California, Mexico, Chile, Argentina, Japan, China, Thailand, Australia, South Africa, Turkey, Israel, Germany, Italy, Spain, and Greece, according to a Deutsche Bank AG report. The same report notes that it expects India to "act as [a] strong growth contributor." While market prices will ultimately determine whether solar wins out in India, growing energy demand makes it easier than ever for the sun to shine on solar sales.
Move over, America
The United States has been a leader in solar power growth. But as more countries carve out space in energy policies for solar power, India's innate solar power potential puts it in a league of its own. Smart solar companies like SunEdison are already making arrangements with India, and other growth-oriented corporations should follow suit.