Solar Power Likely To Attain Grid Parity By 2017-18

In a major boost to the government’s clean energy initiatives, the prices of solar power in India are likely to equal those of conventional terminal energy sources or become even cheaper touching an average per unit price of INR 4-4.5 by 2017-18, states an analysis conducted by India Ratings and Research in July this year.

This is in line with similar findings of the International Renewable Energy Agency which stated that the prices of solar photovoltaic panels in the country has fallen by approx 80% from their 2008 levels, while the efficiency of solar modules had registered an annual increase to the tune of about 3.5-4.5%.

The India Rating analysis further adds that the decline in prices will be driven by declining capital costs, increased efficiency and a gradual shift towards larger solar energy projects (to 10 MW and above) in the country which are likely to result in economies of scale in the procurement of key components and improved absorption of fixed costs, complemented by lower return expectations by project developers as the market develops.

India Ratings has further predicted a strong resurgence in solar power generation installations over the next 4-5 years – based on the government’s ongoing initiative to secure 100 GW of solar power by 2022, which includes about 60 GW via grid-connected solar energy projects and the expected decline in the generation costs for solar power.

According to the agency, these key growth drivers for the sector are expected to make solar power more affordable for distribution companies making it easier for them to meet their renewable purchase obligations while simultaneously eliminating the need for government sops like subsidies or viability gap funding.

The findings of the agency are borne out by the significant decline in solar power tariffs in recent years with the feed-in-tariffs (FITs) which are based on a cost-plus return on equity model as defined by various state regulatory commissions also witnessing a substantial decline.

A case in point is the 2014-15 FIT for solar energy of approx INR 8.03/per unit in the state of Gujarat, as compared to about INR 12.54/per unit in 2010. Similarly, the FIT in the neighbouring state of Rajasthan has also reduced to approx INR 6.74/per unit in 2015-16 vis-avis INR 15.32 in 2010-11.

Welspun Renewables is a company guided by its vision to power a Green India and is working towards becoming a fully-integrated power company by setting up renewable energy based power plants to help meet this goal.

Solar power generation and energy storage can contribute to India’s long term energy security and help achieve its climate change objectives.