Low auction bid prices show solar cheaper than coal in India
- 11 November 2014
NEW DELHI: India’s fast-expanding solar industry has received another shot in the arm with the news that a recent solar auction has resulted in remarkably low-price bids.
Bid prices for an auction of 500-MW grid-connected solar projects that took place in the Indian state of Andhra Pradesh last month reached new lows, signaling a shift in the energy market to solar.
An oversubscribed 63 bids totaling 1,291 MW were proposed in the auction. According to Indian newspaper Business Line, First Solar, a US-based solar module manufacturer, submitted the cheapest bids of all, quoting INR 5.25 (just over US$0.08) per kWh for 40 MW.
Low cost solar
These low bids show large-scale solar is slipping further down the price-ladder and is now below the price needed to make coal imports economically viable, which means power generation from solar plants in India is now cheaper than indigenous or imported coal.
Earlier this year, research from the Institute of Energy Economics and Financial Analysis (IEEFA) suggested it is cheaper to build solar facilities because they have lower PPAs (power purchase agreement), with zero fuel costs. This is in strong contrast to the cost of building a new coal-fired generation plant using imported coal, of which PPAs are nearly double the average sales price of electricity across India.
According to IEEFA analyst Tim Buckley, although there is a possibility of the price of thermal coal down-swinging in the future, developers cannot rely on imported coal given the uncertainty surrounding it, so solar is a better option.
Indian solar growth
The Indian government has picked up the pace of its solar efforts over the past few years, most notably with its plans to build some of the world’s largest solar PV parks across the country. Each park is expected to encompass a solar capacity as high as 20 GW, about ten times the existing energy capacity in India.
An auction of 1 GW of solar projects in Andhra Pradesh is in the pipeline that will form the first part of its national 15 GW roll-out of PV between now and 2019, according to the latest details from the Government of India. Earlier in March, the Solar Energy Corporation of India (SEIC) also announced plan to build a 1 GW solar factory in Andhra Pradesh.
The Climate Group's Bijli – Clean Energy for All program, which is principally funded by the Dutch Postcode Lottery, is also aiming to bring more solar to India. The project aims to reduce greenhouse gas emissions and enhance the lives of rural inhabitants in India, by deploying renewable energy technologies and improving infrastructure quality.
As part of Bijli, in collaboration with the World Bank Institute and the Dutch Postcode Lottery, last week The Climate Group awarded the winners of the Off-Grid Energy Challenge in a ceremony in New Delhi. Marieke van Schaik, Managing Director of the Dutch Postcode Lottery, commented: “The Dutch Postcode Lottery is a longtime partner of The Climate Group and a principal funder of the Access to Rural Energy in India program Bijli, bringing access to clean and affordable solar power to 50,000 people in India. We are excited with the developments in India in the field of clean energy."
By Shuvait Koul
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