India's FiT auctions driving solar costs down

Clare Saxon Ghauri
10 January 2012

NEW DELHI: The cost of solar power in India is continuing to plunge as project developers are forced into auctions, which is closing the gap between conventional and clean energy sources and driving grid parity faster than expected.

The lowest bid in India’s last national auction in December saw Solairedirect SA, France’s second-largest producer, offering to sell photovoltaic electricity at 7,490 rupees ($147) a megawatt-hour. This rate is 38% below the average price set in a December 2010 auction and about 30% cheaper than the global average for solar projects.

According to media reports quoting experts, the cost of commissioning solar projects in India is widely expected to continue to drop for years to come.

Aditi Dass, Director of Programmes in India, The Climate Group, says: “There are several healthy factors, including aggressive Government subsidies, innovation, technology advancement, growing competition among domestic investors and more, that are driving this positive growth story. It is heartening to see that India’s enormous solar potential is now finally finding an accelerated pace. The ambitious targets set up by the Government now certainly seem to be happening.”

Dr. Farooq Abdullah, Union Minister for New and Renewable Energy, was also recently quoted by the national media saying that the solar power cost dive from 18 rupees per unit in 2010 to 8 rupees per unit in 2012, has been an extremely encouraging development. The minister has also invited overseas Indians to invest and develop technology to take advantage of India’s strong potential.

Even though India is considered to be one of the best destinations for solar energy - boasting more than 300 days of sunlight a year - generation is currently less than 1% of the country's total power production.

However, under its Solar Mission plan which was issued in 2009, India will produce 1,300 megawatts (MW) of power by 2013 and 20 gigawatts by 2022, at an overall investment of about $70 billion.

As per the Jawaharlal Nehru Solar Mission, states are also mandated to purchase a minimum level of renewable energy, called RPOs, starting from 0.25% to 3% by 2022.

The recently witnessed cost decline will open up a huge off-grid market for solar power in India, helping increase international competition, encourage more competitive rates, and ensure India charges ahead in the global race for Clean Revolution leadership

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