India almost made a record by attracting low prices for solar power

India almost made a record by attracting low prices for solar power in an auction of permits as Solairedirect SA, France’s second-largest solar power producer, bid to sell electricity from a photovoltaic plant at Rs 7.49 (15 US cents) a kilowatt-hourto build about $700 million of plants as a supply glut in the industry drives down equipment costs.

That was the lowest bid, said Mohit Anand, senior consultant at Bridge to India Pvt.Ltd, who was present at the closed-door session in New Delhi where the results were revealed.

Manufacturers are keen to offer discounts because things are so competitive right now.“Costs are going down and that’s really reflected in these bids.” The biggest contracts were won by Indian developers, including Welspun Group, Kiran Energy Solar Power Pvt, Azure Power, and the solar unit of Mahindra & Mahindra Ltd, Anand said.

If prices continue to fall at the rate seen in India over the past 12 months, solar power may equal the cost of electricity generated by fossil fuels that’s sold to commercial businesses earlier than expected. KPMG LLP predicted solar power would be as cheap as coal by 2017 in a May report.

The auction was the second under India’s national Solar Mission program that’s positioning the country to become one of the world’s fastest-growing solar markets by installing 20,000 megawatts, equivalent to about 18 nuclear plants, of sun-powered capacity by 2022.