India’s solar power generation capacity will reach 68,000 megawatts (MW) by 2021-22, triple the government’s target and accounting for around 7% of the country’s total power generation capacity by that year, audit and consulting firm KPMG India said in its latest report on the sector. The cost of generating solar power will be on par with that of conventional thermal electricity by 2019-20, it adds in the report titled Rising Sun.
KPMG expects the tariff for solar power to decline 5-7% every year because of factors such as technological innovation, economies of scale, and the emergence of low-cost equipment production centres. It also predicts the cost of generating thermal energy will increase 4-5% every year due to increases in the cost of fuel such as coal and gas and for building greenfield projects.
India’s solar power generation capacity is currently around 40MW, compared with the total capacity of around 179,000MW.
Under the Jawaharlal Nehru National Solar Mission, India is aiming for a solar power generation capacity of 20,000MW by 2022. The per-unit cost of solar power generation is between Rs.12 and Rs.14 depending on the technology used and location. Conventional coal-based power costs around Rs.5 per unit.
According to the KPMG report, solar power capacity addition will help India avoid importing coal to the extent of 61 million tonnes a year by 2021-22, projected to be about 30% of the country’s total imports of the fuel that year.
India committed to reduce the energy intensity of its gross domestic product (GDP) at 2005 levels by 20-25% at the Copenhagen summit in 2009, and at least 10% of the reduction can come from capacity additions in solar power, KPMG said.
The consultancy firm also called for the Union and state governments to give a greater push to solar power through policy initiatives on rooftop solar and other off-grid applications such as solar water heating systems, solar-based agricultural power pumps and solar power-equipped telecom towers.
“The promotion of solar-based agricultural pumps and solar lighting will also help the government reduce its subsidy burden as it will reduce the consumption of diesel and kerosene,” said Santosh Kamath, executive director, renewable energy practice, KPMG.
“All these things mentioned in the report are possible, but lots of things need to fall in place, such as support from the government, the right kind of incentive packages, the creation of infrastructure for evacuation of power from solar power station to grid, improvement in the health of state electricity utilities,” said Anjan Ghosh, head of marketing at Tata BP Solar India Ltd.
“I am more optimistic than what (the) report says,” said Shaji John, head of solar initiatives at engineering conglomerate Larsen and Toubro Ltd. “I believe solar power, especially power generation from solar photovoltaic technology, will achieve parity with conventional power by 2016, considering the year-on-year falling cost of material, equipment and EPC (engineering, procurement and construction).”