Indian solar power prices hit record low, undercutting fossil fuels

The tumbling price of solar energy also increases the likelihood that India will meet -- and by its own predictions, exceed -- the renewable energy targets it set at the Paris climate accords in December 2015.

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At a reverse auction in Rajasthan on Tuesday, power companies Phelan Energy and Avaada Power each offered to charge 2.62 rupees per kilowatt-hour (kWh) of electricity generated from solar panels they hope to build at an energy park in the desert state. Last year's previous record lowest bid was 4.34 rupees per kWh .

Analysts called the 40% price drop "world historic" and said it was driven by cheaper finance and growing investor confidence in India's pledge to dramatically increase its renewable energy capacity.

It reduces the market price of solar tariffs well past the average charged by India's largest thermal coal conglomerate, currently around 3.20 rupees per kWh . Wholesale price bids for wind energy also reached a record low of 3.46 rupees in February.