(Reuters) - India’s renewable energy cost is the lowest in the Asia Pacific, consultancy Wood Mackenzie said on Monday.

India’s levelised cost of electricity (LCOE) using solar photovoltaic has fallen to $38 per megawatt hour (MWh) this year, 14% cheaper than coal-fired power that has traditionally been the cheapest source of power generation, WoodMac said.

LCOE comprises the cost of generating a megawatt-hour (MWh) of electricity, the upfront capital and development cost and the cost of equity and debt finance and operating and maintenance fees.

“India is the second-largest power market in Asia Pacific with installed power capacity of 421 gigawatts (GW). Solar capacity is expected to reach 38 GW this year,” WoodMac research director Alex Whitworth said.

“High-quality solar resources, market scale and competition have pushed solar costs down to half the level seen in many other Asia Pacific countries.”

India wants to have 175 GW of renewable-based installed power capacity by 2022.

Australia, which ranks second in terms of low renewable costs, will see solar power to be cost-competitive against coal next year, the consultancy said.

Solar LCOE has fallen 42% in the past three years and will reach $48/MWh in 2020, beating out all fossil fuel competitors, WoodMac added.