India has cancelled plans to build nearly 14GW of coal-fired power stations — equivalent to the total amount in the UK — with the price for solar electricity “free falling” to levels once considered impossible.

In January last year, the Finnish company Fortum agreed to generate electricity in Rajasthan with a record-low guaranteed price of 4.34 rupees per kW (about 5p).

Tim Buckley, director of energy-finance studies at the Institute for Energy Economics and Financial Analysis (IEEFA), pointed out that at the time analysts said this price was so low it would never be repeated.

However, 16 months later, an auction for a 500MW solar facility resulted in a tariff of just 2.44 rupees – compared to the wholesale price charged by a major coal-power utility of 3.2 rupees (about 31% higher).

He said: “For the first time, solar is cheaper than coal in India, and the implications this has for transforming global energy markets are profound.

“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.

“India’s solar tariffs have literally been free-falling in recent months.”