Solar power prices in India hit the record low, becoming cheaper than conventional power generation prices. During the auction in Rajasthan, India, Indian power companies, Phelan Energy and Avaada Power, have made an offer to set a price of solar energy to 2.62 rupees per kWh which is a 40% decrease compared to the bid of 4.34 rupees per kWh in 2016. This number is 18% lower than the price of energy generated by coal-fired power plants. Moreover, the price of wind energy has also hit the record low of 3.46 rupees per kWh in February 2017. Meanwhile, the average energy price generated at thermal power plants is at 3.20 rupees per kWh (Safi, 2017).
Solar energy capacity has been rapidly developing in recent years. For instance, in China, solar energy capacity increased from 43 GW to 77 GW in 2016. Besides, in 2010, solar energy capacity of the entire world was as low as 50 GW. The number increased up to 305 GW in 2016 (Belton, 2017). Moreover, the price of solar panels and modules has decreased by 29% in the past year (Farand, 2017). In addition, when it comes to India, it appears that the development of the solar energy sector in the country has caused the growth of investor confidence in the renewable energy sector. Another reason for increased interest for investments in the solar energy sector of the country is that the Solar Energy Corporation of India acts as a guarantor between investors and power distribution companies (Safi, 2017).
The renewable energy initiatives in India are caused by the position of the Prime Minister of the country, Narendra Modi, and the targets announced at the Paris Climate Conference in 2015. During the Paris Conference, Narendra Modi has made an announcement regarding India’s plans to add 175 GW of the wind and solar energy by 2022 and also have made a commitment to generate 40% of electricity using renewables by 2030. However, it is expected that these target numbers will be met earlier as India expects to meet and even exceed the renewable energy targets under the Paris Agreement (Farand, 2017). Narendra Modi’s goal to transition towards green energy has caused a rapid development of the renewable energy sector in the last three years. So, renewable energy capacity increased four times in the past three years up to 12 GW (Belton, 2017).
In November 2016, the largest solar energy power plant in the world with 2.5 million solar modules was built in the south of India at Kamuthi, in Tamil Nadu. In 2017, India is planning to increase the renewable energy capacity by another 10 GW (Belton, 2017). According to the solar consultancy firm Bridge, India is to increase the solar energy capacity by 79% and become the third largest solar market by the end of 2017 (Farand, 2017).
According to the commitments under the Paris Agreement, by 2022, India plans to increase the electricity generation capacity to 175 GW, 100 GW of which is expected to be met by solar energy. The solar energy capacity is set to reach 175 GW by 2030 (Farand, 2017). Also, according to the draft report of the electricity agency of India, the renewable energy capacity of the country is to increase to 275 GW by 2027 (Safi, 2017). The government is also considering to completely switch to electric vehicles by 2030 (Leahy, 2017).
India is the third largest polluter in the world. So far, India has been mainly producing electricity using coal powered plants. However, due to the new developments, the country holds high hopes of overcoming a number of issues, including air pollution. 770 million lights are being replaced by LED lighting which is to reduce electricity demand by 20 thousand MW and carbon dioxide emissions by 80 million tons. The replacement of all the lights in the country is expected to be accomplished by 2019, which is three years earlier than the target of 2022 (Leahy, 2017). Nowadays, India has added about 50% more solar and wind energy production compared to the United States (Leahy, 2017). At this rate, it seems that no more new coal power plant projects will be needed in the future.
The main reason of India’s zeal to develop green energy is economic development, the creation of new jobs, improving the quality of life and last but not least, to achieve better environmental conditions and tackle climate change. However, despite the rapid development of solar power sector in India, the country is facing some issues. For instance, 85% of solar modules in India were manufactured in China. The main reason for this is the cheap cost of Chinese products, while India manufacturers depend on import of materials for solar cells and do not always have an opportunity to obtain cheap loans. Therefore, local manufacturers cannot keep up with Chinese producers (Economic Times, 2017)
There are also some technical issues associated with solar energy production. The efficiency of solar panels is yet to be improved, as solar cells convert only 16-20% of solar energy into electricity. Moreover, 35% of sunlight gets reflected rather than absorbed. In this light, research on detecting how solar energy absorption works in nature studying leaf structures is underway across the world. So far, in laboratory conditions, scientists were able to reduce light loss from 35% to 12%. (Belton, 2017).
Nevertheless, despite the difficulties, India is taking one of the leading global positions in the renewable energy sector. Here, the example of India is demonstrating to the world society that a relatively quick and easy transition to green energy is possible regardless of the economic situation of the country.
References:
Belton, P. (2017). Seeing the light: How India is embracing solar power. BBC. Retrieved from http://www.bbc.com/news/business-39844446.
Economic Times (2017). Solar energy boom turns to bust for Indian manufacturers. The Economic Times. Retrieved from http://economictimes.indiatimes.com/industry/energy/power/solar-energy-b….
Farand, C. (2017). Solar energy prices in India tumbles to new record low making it cheaper than fossil-fuel generated power. Independent. Retrieved from http://www.independent.co.uk/environment/solar-energy-prices-india-drop-….
Leahy, S. (2017). India launches massive push for clean power, lighting, and cars. National Geographic. Retrieved from http://news.nationalgeographic.com/2017/05/india-solar-wind-renewable-po….
Safi, M. (2017). Indian solar power prices hit record low, undercutting fossil fuels. The Guardian. Retrieved from https://www.theguardian.com/environment/2017/may/10/indian-solar-power-p….
Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.