Cost

Price history of silicon PV cells (not modules) since 1977. The great thing about solar
power is that it is a technology and not a fuel. It is unlimited and the more it is
deployed the cheaper it would be.[112] While the more limited fossil fuels are used,
the more expensive they become.

According to a Deutsche Bank report published in February 2015, the average residential price
of solar power in India was approximately 12 cents/kWh, while the cost of energy from coal was
around 10 cents/kWh.[113]

According to a Bloomberg report in December 2016, the cost of solar power in India, China,
Brazil and 55 other emerging market economies dropped to about one third of its price in 2010,
making solar the cheapest form of renewable energy and also cheaper than power generated from
fossil fuels such as coal and gas. The report also cited a $64 per megawatt-hour solar power
contract signed in India in early 2016, as proof of "remarkable falls in the price of electricity
from solar sources".[114]

In September 2016, the levelized tariff in US$ for solar electricity has fallen below 2.5
cents/kWh which is cheaper than the fuel cost incurred by pit head coal based power plants in
India.[115][116][117][118] The Indian government has recently reduced the solar power purchase price
from the maximum allowed levelized tariff of 4.43 Rs/KWh to 4.00 Rs/KWh to reflect the steep
fall in the cost of solar power generation equipment.[119][120][121] The applicable tariff is offered
after applying either viability gap funding (VGF) or accelerated depreciation (AD) incentives.[122]
[123]

Solar power generation cost has reduced close to Rs 3 per kWh for the 750 MW Rewa Ultra
Mega Solar power project which is cheaper than any other type of electricity generation in India.
[124][125]
Solar module prices have fallen so low and they are cheaper than an ordinary mirror by
unit area.[126]
Solar tariffs in India had fallen by 73% from 2010 to February 2017.[127] The average bid in
reverse auctions to be 12.16 per kWh in 2010, which fell to 3.15 per kWh in April 2017.[128]
Highly competitive reverse auctions, falling module and component prices, the introduction of
solar parks, lower borrowing costs, and the entry of large power conglomerates with strong
balance sheets and access to cheaper capital have all contributed to the dramatic fall in bid
prices.[129]

Challenges and opportunities

See also: Energy policy of India Solar energy

Land is a scarce resource in India and per capita land availability is low. Dedication of land area
for exclusive installation of solar arrays often must compete with other necessities that require
land. The amount of land required for utility-scale solar power plants currently approximately
1 km2 (250 acres) for every 4060 MW generated may pose a strain on India's available land
resources. One alternative is to use the water surface area available on canals, lakes, reservoirs,
farm ponds and the sea for locating large capacity solar power plants.[130][131] These water bodies
can also provide the water needed for periodic cleaning of the solar panels.[132] It is also possible
to use highways and railways to avoid the excessive cost of land nearer to load centres and to
minimise transmission line costs by installing solar power plants at a height of nearly 10 meters
above the roads or rail tracks. The solar power generated by using road area can also be used for
in-motion charging of electric vehicles to bring down fuel costs.[133] This practice would also
protect the highways from damage from rain and intense summer heat and offer additional
comfort to commuters.[134][135][136]

The architecture best suited to most of India would be a highly distributed set of individual
rooftop power generation systems, all connected via a local grid. However, erecting such an
infrastructure, which does not enjoy the economies of scale possible in mass, utility-scale, solar
panel deployment, needs the market price of solar technology deployment to substantially
decline, so that it attracts the individual and average family size household consumer. That might
be possible in the future, because photovoltaics is projected to continue its current cost
reductions and become able to compete with fossil fuel.[137][138]

Some noted think-tanks[15][139][140] recommend that India should adopt a policy of developing solar
power as a dominant component of the renewable energy mix, since its identity as a densely
populated region[141] in the sunny tropical belt[142][143] of the subcontinent has the ideal
combination of both high solar insolation[142] and a high potential consumer base density.[144][145]
[146][147]
In one of the analysed scenarios,[140] India could make renewable resources such as solar
the backbone of its economy by 2030, reining in its long-term carbon emissions without
compromising its economic growth potential.[148] A recent study has suggested that 100 GW of
solar power could be generated through a mix of utility-scale and rooftop solar, with the
realizable potential for rooftop solar between 57 GW to 76 GW by 2024.[149]
During the year 2015-16, NTPC with 110 MW solar power installations, generated 160.8 million
Kwh at a capacity utilisation of only 16.64% (i.e. 1458 Kwh/Kw) which is below the claimed
norms (>20%) by the solar power industry.[39]

It is prudent to encourage solar power plant installations up to a threshold limit (say 7000 MW)
by offering direct or indirect incentives.[150] Otherwise, dubious short sighted financial operators
from all over the world could take over the industry to encash the liberal Indian bank loans
offered by installing substandard and shorter life solar power plant equipment with overrated
nameplate capacity.[151][152] The solar power purchaser (DisComs, etc.), solar power transmission
agency (TransCos) and the Indian financial institutions should insist for annual penalty payment
from IPPs for not meeting minimum guaranteed capacity utilisation and long term performance
guarantee for the equipment backed by insurance coverage to ensure that the guarantee works
even after the OEM becomes bankrupt.[153][154][155]

Government support
Solar Radiation Resource Assessment stations in India

Solar Radiation Resource Assessment stations (51 nos) have been installed across India by the
Ministry of New and Renewable Energy (MNRE) to create a database of solar energy potential.
Data is collected and reported to the Centre for Wind Energy Technology (C-WET), in order to
create a Solar Atlas. In June 2015, India started a 40 crore (US$5.9 million) project to measure
solar radiation with a spatial resolution of 3 km x 3 km. This solar radiation measuring network
will provide the basis for the functioning of the Indian Solar Radiation Atlas. According to
officials at NIWE, the Solar Radiation Resource Assessment wing (SRRA) 121 ground stations
would measure the three parameters of solar radiation: Global Horizontal Irradiance (GHI),
Direct Normal Irradiance (DNI) and Diffuse Horizontal Irradiance (DHI) to give a highly
accurate measure of solar radiation in a particular region.[156][157]

The government of India is promoting the use of solar energy through various strategies. In the
latest budget for FY2010-11, the government has announced an allocation of 1,000 crore
(US$150 million) towards the Jawaharlal Nehru National Solar Mission and the establishment of
a clean energy fund. This is an increase of 380 crore (US$56 million) from the previous budget.
This new budget has also encouraged private solar companies by reducing customs duty on solar
panels by 5% and exempting excise duty on solar photovoltaic panels. This is expected to reduce
the cost of a rooftop solar panel installation by 1520%. The budget also proposed a coal tax of
US$1 per metric tonne on domestic and imported coal used for power generation.[158]
Additionally, the government has initiated a Renewable Energy Certificate (REC)[159] scheme,
which is designed to drive investment in low-carbon energy projects.

Timeline of the Jawaharlal Nehru National Solar Mission

The Ministry of New and Renewable Energy provides a 70% subsidy on the installation cost of a
solar photovoltaic power plant in North-East states and a 30% subsidy on other regions. The
detailed outlay of the National Solar Mission highlights various targets set by the government to
increase solar energy in the country's energy portfolio.

The Mysore City Corporation has decided to set up a mega solar power plant in Mysore with a
50% concession from the Government of India.[160]

The Maharashtra State Power Generation Company (Mahagenco) has made plans for setting up
more power plants in the state to increase total generation up to 200 MW.[161]

Delhi Metro Rail Corporation plans to install rooftop solar power plants at Anand Vihar and
Pragati Maidan Metro stations and its residential complex at Pushp Vihar.[162]

Reeling under an acute power crises, the Government of Tamil Nadu has recently unveiled its
new Solar Energy Policy which aims at increasing the installed solar capacity from the current
approximate of 20 MW to over 3000 MW by 2015. The policy aims at fixing a 6% solar energy
requirement on industries and residential buildings for which incentives in the form of tax
rebates and current tariff rebates of up to 1 (1.5 US)/unit will be applicable to those who
comply with the Solar Energy Policy. The policy also gives an option for those industries or
buildings who do not want to install rooftop solar photo-voltaic systems to invest in the
government's policy and be given the same incentives as explained above.[163]