Trade Analytics

Case study: Solar Energy

A Brighter Outlook with Solar Energy

September 8, 2018


The Government of India is taking timely steps to boost India's solar energy capacity in mission mode, which are expected to usher in a robust clean energy future.


solar-energyIndia regained the position of the fastest growing major economy in the world with a growth of 7.4% in 2017-18 (IMF). With its rapid pace of growth, the country will naturally garner an increasing share of global electricity consumption in the coming years. To illustrate, as per World Bank data, India had a per capita power consumption of 806 kWh in 2014, over eight times the corresponding value of 98 kWh in 19711.


Energy requirement has progressively increased from 830,594 MU (mega units)* in 2009-10 to 1,212,134 MU in 2017-182. However, India has also managed to meet most of this excess demand to bring down the energy deficit from 83,950 MU in 2009-10 to 8,567 MU in 2017-18. More significantly, clean or renewable energy is forming an increasingly important component of the new capacity that India is adding to meet its growing energy needs. Total renewable energy capacity has increased from 35,500 MW in 2013-14 to 70,000 MW in 2017- 184. In 2017-18, India's capacity addition in renewable (11,788 MW) exceeded the capacity addition in conventional energy (9,505 MW) for the first time5.




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Source: CARE Ratings

Solar energy capacity in particular has seen a phenomenal growth in India, growing by 8 times since 2013-14 to reach 22,000 MW in 2017-186. The Government of India has targeted renewable energy capacity of 175 GW by 2022, out of which solar alone is expected to contribute 100 GW. In all, 41 solar parks have been sanctioned in 21 states with total capacity of 26,144 MW7. According to a report by the Ministry of New & Renewable Energy, India has a total solar power potential of around 748 GW. To put that in perspective, India's total installed capacity as on June 31, 2018, was 343.9 GW8.


The key driver of the growing propensity towards solar power is declining costs. Solar power costs have successively declined from Rs 6.17 per unit in 2014 to Rs 2.44 per unit in 20189. Both solar and wind power projects are in fact consistently being won at lower prices compared to thermal power. For instance, 1.75 GW of tenders for solar power in June were completed at Rs2.71/kWh10. While there has been slight increase from last year's record lows of Rs 2.44 per kWh, for the auction carried out by Solar Energy Corporation of India for 500 MW capacity in the Bhadla Phase-III Solar Park, Rajasthan (see figure 1). However, they are currently at par with thermal, as per data on recent auctions by CEA11. On August 29, it was reported that Madhya Pradesh Urja Vikas Nigam Ltd (MPUVNL) closed a tender for 35+ MWp of solar rooftop power at Rs 1.58 per unit, the lowest so far for India12.



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According to Bloomberg New Energy Outlook 2018, it is projected that "wind and solar are set to surge to almost "50 by 50" - 50% of world generation by 2050 - on the back of precipitous reductions in cost, and the advent of cheaper and cheaper batteries that will enable electricity to be stored and discharged to meet shifts in demand and supply13." Given the commitment being displayed by the Government and the industry to ramp up solar capacities in mission mode, the long term scenario looks positive in terms of reducing India's dependence on coal for its energy needs. This has obvious environment benefits, apart from building sustainable capacities to meet India's energy needs over the long term.


*1 MU = 1 million units of electricity, where each unit = 1 kWh.


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