India has canceled plans to construct nearly 14 gigawatts of coal-fired power stations in the country as prices for solar electricity “free fall” to levels once considered impossible, The Independent reports. Experts expect a profound shift in global energy markets as the cost of solar has dropped by 25 percent in some regions.

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Tim Buckley, the director of energy finance studies at the IEEFA, explains that 13.7GW of coal power projects have been canceled just this month. He added that the dip in solar prices is so low, it will never be repeated.

A few factors have contributed to the decline in solar prices. Reportedly, the price of photovoltaic panels — which account for a major percentage of solar power plant’s costs — have dropped by a staggering 30 percent in the past year. This has helped lower prices. Additionally, the Narendra Modi government is working hard to “assure private renewables developers by backing a payment security mechanism,” according to Scroll. For instance, the Solar Energy Corporation of India, the country’s largest solar power purchases, was included in an agreement last year between the Central government, the Reserve Bank of India and the state government. This safeguards it against payment defaults — which is important, as power distribution compares are reportedly notorious for delayed payment to renewable energy producers.

Overaggressive bidding is also resulting in a decline in prices, according to The Independent. An auction for a 500-megawatt solar facility, for example, resulted in a tariff of just 2.44 rupees compared to a wholesale price charged by a major coal power utility of 3.2 rupees. That’s a 31 percent difference.

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Related: Chile’s solar price hits record global low – at half the price of coal

“For the first time solar is cheaper than coal in India and the implications this has for transforming global energy markets is profound,” said Buckley. “Measures taken by the Indian Government to improve energy efficiency coupled with ambitious renewable energy targets and the plummeting cost of solar has had an impact on existing as well as proposed coal-fired power plants, rendering an increasing number as financially unviable.”

What India is witnessing, says the analyst, is a further indication of the “rise of stranded assets across the Indian power generation sector.” He added, “The caliber of the global financial institutions who are bidding into India’s solar power infrastructure tenders is a strong endorsement of India’s leadership in this energy transformation and will have significant ripple effects into other transforming markets, as is already seen in the UAE, South Africa, Australia, Chile, and Mexico.”

In 2017, India’s solar-generation capacity is expected to reach 8.8 gigawatts – a 76 percent increase from 2016. According to renewable energy consultancy Bridge To India, that will make the country the third-largest solar market in the world.

Via The Independent

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