Solar by CHANCE

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Rising cost of conventional power and the drop in the cost of solar power panels will bring in grid parity in green energy much before the deadline, making it a more attractive choice for users

The cost of solar power is likely to be at par with thermal power within few years, given the rising coal price and excess capacities for solar power equipment manufacture.

“Grid connected solar power, costing near Rs 9 a unit (kwh) two years back has already dropped to just over Rs 7. It could go down further in a few years,” Tarun Kapur, joint secretary for solar power in the ministry of new and renewable energy told Financial Chronicle.

“With India increasingly dependent on imported coal for thermal power generation, the cost will only escalate from present Rs 4.5-5 to over Rs 6 in the coming years,” he said add­ing, “In four to five years, we will achieve grid parity as far as solar power and coal-based thermal electricity are concerned.

Actually it was projected that grid parity for solar power would happen during 2017-19. However, recent trends in the solar power prices signalled that it would happen earlier. This could happen based on two factors – rate of increase in conventional power prices and the rate of decrease in solar power prices.

According to Arvind Mahajan, head Energy and Natural Resources, KPMG India, the landed cost of conventional electricity to consumers can increase at the rate of four per cent per annum in the base case and 5.5 per cent per annum in an aggressive case. This factors the increasing proportion of raw material imports, cost of greenfield gener­ation, and higher investme­nts in network assets to improve operational efficiencies of utilities. On the other hand, solar power prices are to decline at the rate of 5-7 per cent per annum. This is after factoring the increasing economies of scale in equipment manufacturing and advancements in product technology which imp-roves solar-to-electricity con­v­ersion efficiency. Eme­r­ge­nce of low cost manufacturing locations is expected to aid this trend.

With new capacity addition of 944 mw of during the first five months of this financial year, India’s cum­ul­ative grid-interactive ren­e­w­able energy installed capa­city was about 26,000 mw as on August 31. At about 26 gw, the renewable energy segment accounts for 12-13 per cent of India’s total installed generation capacity of about 206,000 mw.

Though wind remains the major contributor with 69 per cent share in total installed green power capacity, solar has been making good progress in the past couple of years. At present, solar acco­unts for about four per cent of clean power capacity at 1,044 mw. Thanks to National Solar Mission, the total grid connected solar capacity has increased to 1044 mw as of August from 2.5 mw in August 2011.

In its big plans to tap solar power, India set up the solar mission two years ago. Un­der solar mission plans, 1,100 mw of grid connected solar power is expected to be created by 2013. The solar programme actually aims at achieving 20,000 mw by 2022 when it will be one-tenth of India’s installed power base then. The overall investment may be about $40 billion for 20,000 mw of solar power projects.

India certainly has made a reasonably good beginning in the solar space and the Indian solar space has seen sharp decline in capital costs over the last two years, primarily driven by the market conditions. The government is targeting 10,000 mw solar power addition during the 12th five year Plan period, and the outlook for the sector is likely to remain robust,” Sanjay Chakrabarti, sector leader –– Cleantech, Ernst & Young India, said.

The total installed power capacity in India is likely to be over 400 gw by 2022. Installed solar capacity then would be one-twentieth of the then India’s total installed capacity. The share of renewable and particularly solar in country’s energy mix would keep increasing and is expected to help in limiting coal-fired power projects wh­ile easing the power deficit.

India is blessed with ample sunshine and most part of the country see 300 to 330 sunny days in a year. India receives solar energy equivalent to more than 5,000 trillion kwh per year; this is far more than its total annual energy consumption.

Abundant wasteland is available in Rajasthan, Tamil Nadu, Andhra Pradesh, Utt­ar Pradesh and many other states where solar power plants can be set up. Just a fourth of the Thar desert in Rajasthan is eno­ugh to generate solar power equivalent to the total thermal power generated in the country, that is, around 115,000 mw. India’s geogra­phical locat­ion, large popu­lation and government sup­­port are assisting it to beco­me one of the most rapidly emerging solar energy markets.

A big driver of increasing solar installations globally has been a sharp reduction in solar PV module prices. Post the crash in poly-silicon prices in 2008, large scale manufacturing of PV modules has picked-up in China taking advantage of the presence of local raw materials, experience in electronic man­ufacturing, low labour costs and Government incentive support, said a KPMG report.

Germany is the only country that has achieved grid parity in solar and thermal power, partly because of slightly higher cost of thermal power generation there.

The cost of solar power generation would remain the same over 25 years, Kapur said, adding that solar photovoltaic panels were still expensive. This makes the initial cost of installation slightly higher than that of thermal power. But with excess capacity in photovoltaic panel production in the world, the costs are falling. India now has the capacity to manufacture 1,800-1,900 mw of photovoltaic modules annually. This will only go up.

China has the capacity to manufacture for 50,000 mw worth of photovoltaic equipment a year. Taiwan too has a huge capacity; hence the tendency in India to go in for cheap imports of panels.

While different estimates are available on the extent of mismatch between supply and demand and on the timelines for reaching equilibrium, the general consensus is that the oversupply conditions will persist over the next 12 to 24 months, according to Mahajan.

Apart from grid connected solar power generation, there is abundant potential for off-grid solar power generation like on rooftops, according to Kapur. But the biggest problem now is storage of solar power. That’s why the government is working on a strategy wherein solar energy could be generated in daytime and wind energy at night when the wind speed is generally higher.

“The aim is to generate 15 per cent of India’s power through renewable sources like hydroelectric, wind and solar power," he said. Wind power has caught on and solar is picking up.

The day is not far when solar power is generated on every rooftop and the surplus power will be fed into the grid for which credit will be given to the owner through a system of net metering.

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