Solar price may be 10% below coal power rates

Dec 04, 2015

Solar price may be 10% below coal power rates by 2020: report

A KPMG report predicts a solar generation price of Rs.4.2 per kWh by 2020 and as low as Rs.3.59 per kWh by 2025

New Delhi: Solar power prices could be 10% lower than coal power prices by 2020 and help revitalize India’s energy sector, said a report released on Monday by consulting firm KPMG.

With India making ambitious moves in the area of solar power, the report predicted a solar generation price of Rs.4.2 per kWh (kilowatt-hour) by 2020 and as low as Rs.3.59 per kWh by 2025.

India aims to reduce the emission intensity of its gross domestic product by 33-35% by 2030 from 2005, and solar power is likely to contribute 4% towards this target.

The report said the competitiveness of solar power could disrupt traditional generators and they should prepare for it.

The report titled The Rising Sun—Disruption on the Horizon, released by KPMG at its annual energy conclave called ENRich 2015, said solar power prices would become competitive with coal in the next few years.

“Solar power price declines have beaten the expectations of most analysts since the beginning of 2015. In the ongoing NTPC solar park tender, solar prices have breached the Rs.5 kilowatt-hour mark and this is a landmark for the energy sector. Today in India, solar prices are within 15% of the coal power prices on a levelised basis,” said the report.

“Our forecast is that by 2020, solar power prices could be up to 10% lower than coal power prices. By 2025, solar is expected to have scaled up significantly to be a major energy source. Coal would respond in order to be competitive and we may see an equilibrium emerging between solar and coal after considering the costs of integration,” the report added.

It also estimated that solar’s market penetration to be 5.7% (54 gigawatts, or GW) by 2020 and 12.5% (166GW) by 2025. It predicted that the solar rooftop market could reach 10GW by 2020 and 49GW by 2025. Along with wind power, renewable energy could constitute a significant 20% of India’s lower power mix in energy terms by 2025.

“We need to re-engineer our process to create energy efficiency and conservation to give India an affordable energy access. A holistic vision is the need of the hour in order to reach 200 million people at a faster rate. I am personally convinced that any amount of investment in this sector will have a quick pay back,” energy minister Piyush Goyal said after releasing the report.

Source: mint