India has completed the auctioning of 620MW of solar projects to 37 firms to boost the country's solar programme, which aims to develop a 20GW solar capacity by 2022.
India will have a feed-in tariff scheme for solar power that allows renewable energy generators to charge more for their output because it is more expensive than traditional electricity production.
However, aggressive bidding by project developers has resulted in government-set tariffs of Rs12.16 per kilowatt hour for solar photovoltaic power and Rs11.48 per kWh for solar thermal power.
Energy Alternatives India co-founder Narasimhan Santhanam told The Wall Street Journal that at current capital costs of Rs150m-Rs160m for each megawatt, solar projects are only profitable if tariffs are at least 14 rupees per kWh.
To build viable projects at these low tariffs developers would need to cut corners and squeeze vendors, which has resulted in dulled enthusiasm for solar developers.
The US will have 17GW of solar capacity by 2020, according to International Energy Agency predictions.