Solar power in India could cost the same as conventional electricity by 2019-20, a KPMG report says.
More aggressive policy could see solar power prices decline at a rate of 5-7 per cent annually over the next decade, ensuring “grid parity”, or the point when solar power costs the same as conventional power, as early as 2017-18, the report said.
Such targets are well in line with India’s plans to produce 20 gigawatts (GW) of solar power by 2022, though hurdles such as steep production costs, lack of data and trained manpower remain.
“The pace at which the gap between solar power tariffs and the landed cost of power will be bridged will determine the pace at which solar power will take off,” the report said.
“While we expect grid parity for these consumer categories - domestic and agriculture - in 2019-20, based on state-specific and end-use specific cost economics, the adoption of solar is likely to happen earlier.”
The report said certain states such as Rajasthan and Gujarat in the west and Tamil Nadu in the south could reach grid parity earlier than others because of more favourable policies and sunnier weather, thereby reducing costs. Also, conventional power costs are higher in these states as they are located far away from coal reserves.
Coal, available in abundance in India, provides power at about 2 rupees (4 cents) a unit, compared to a kilowatt-hour of solar power at a range of 11 to 12 rupees.
According to the Indian Solar Mission, introduced in 2009, solar power output by 2022 would be equivalent to one-eighth of India’s current installed power base, helping Asia’s third-largest economy limit its reliance on coal to power annual growth of 8-9 percent.
The KPMG report said solar energy could contribute to about 7 percent of India’s total power needs and displace about 16,900 megawatts (MW) of conventional power by 2022, and with additional solar capacity, could cut India’s total coal imports by 30 per cent by that year.
“Furthermore, solar power can save 95 million tonnes of CO2 equivalent per annum by 2022,” it said, which would mean a cut of about 2.6 percent of the country’s total emissions in that year.
In 2009, India set a goal for slowing the growth of its emissions, saying it will try to rein in its “carbon intensity” - the amount of carbon dioxide emitted per unit of economic output - by between 20 and 25 per cent by 2020, from 2005 levels.
India is now the world’s No. 3 greenhouse gas polluter after the United States and China, and rapid economic growth and consumption are driving up production of planet-warming carbon dioxide from coal-fired power plants, transport and industry.
Its current per-capita emissions stand at 1.8 tonnes, about a third of China’s and less than a tenth of the United States’.