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Solar May Equal Cost of Producing Coal Power by 2017 in India, KPMG Says

The National Action Plan on Climate Change (NAPCC) announced in June 2008 by the Govt. of India proposes increasing the share of renewable energy in the total energy mix to 15% by 2020. In order to achieve this, NAPCC recommends pegging the minimum share of renewable energy in the national grid at 5%, starting from 2009-10, to be increased by 1% per annum in the following years so as to reach 15% by 2020. This requires a quantum jump in renewable energy generation across the country.

As one of the eight National Missions outlined in National Action Plan on Climate Change, the Jawaharlal Nehru National Solar Mission (JNNSM) specifically focuses on solar energy and its role in minimizing future emissions.

 The Government has launched JNNSM in January, 2010 with a target of 20,000 MW grid solar power (based on solar thermal power generating systems and solar photovoltaic (SPV) technologies), 2000 MW of off-grid capacity including 20 million solar lighting systems and 20 million sq.m. solar thermal collector area by 2022. The Mission will be implemented in three phases. The first phase will be of three years (upto March, 2013), the second till March 2017 and the third phase will continue till March, 2022.

 Government has also approved the implementation of the first phase of the Mission (upto March, 2013) and the target to set up 1,100 MW grid connected solar plants including 100 MW of roof-top and small solar plants and 200 MW capacity equivalent off-grid solar applications and 7 million sq.m. solar thermal collector area in the first phase of the Mission, till 2012-13.

The third phase is when major scale up is expected and it is projected that with prices going down the costs will be close to grid parity.

According to this report, India may install three times as much solar capacity as the government intends by 2022 if sun-powered electricity is able to match the cost of conventional power, a point referred to as grid parity, said KPMG’s Executive Director Santosh Kamath, lead author of a solar report to be released this week.

“We are heading for grid parity and it’s just a question of when,” Kamath, who heads the advisory firm’s India renewable energy practice, said in a phone interview. “In that scenario, the adoption of solar becomes entirely market-driven.”

Today, solar power costs more than twice as much as the 5.42 rupees per kilowatt-hour that it costs to deliver electricity to consumers, said KPMG which is advising Maharashtra State Power Generation Co. on a 125-megawatt solar power project.

The cost of fossil-fuel electricity may rise as much as 5.5 percent annually as India has to buy more expensive imported coal and replace aging plants, Kamath said.

Solar power prices are projected to decline by 7 percent a year in the next decade on more efficient technologies and lower manufacturing costs, the report said.

If solar power becomes competitive with other sources, India could add 39,070 megawatts of grid-connected solar projects from 2017 and 2022, including residential rooftop panels and 18,455 megawatts of solar-powered telecommunication towers and agricultural water pumps, according to the report.

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