Solar power will become an attractive option for consumers to buy after five years due to reduction in prices provided the government offers adequate fiscal incentives and streamlines policies relating to the the electricity market, says Tobias F Engelmeier, managing director, Bridge to India, a consultancy that provides market intelligence and other services to solar sector companies.
Since the launch of the national solar mission in 2010, generation costs for solar projects have fallen 60% to 6.5-7 a unit.
If this rate of price drop continues, solar power may soon compete with coal-generated power, which costs R5-6 a unit.
Encouraged by the dramatic fall in solar generation costs, the Centre has scaled up its initial solar generation target of 20 GW by 2022 to 100 GW, prompting global players to raise their bets on the Indian solar market. As of now, India has installed 3,000 MW solar generation capacity.
Of the 100 gw capacity addition envisaged by 2022, first 60 gw will be added through large-sized projects, of 200-1,000 MW each, over the next five years. After that, 40 GW capacity will be added with the help of smaller ( in kilowatt size), distribution generation projects.
Engelmeier told FE: “While the large projects, which are expected to help in reducing generation costs for the industry, will need fiscal incentives, electricity from smaller projects that are envisaged to come later will be competitive in the market without any subsidy.”
According to him, land acquisition transmission and financing are the three key problematic areas for the solar power sector where the government needs to look into.
Engelmeier said that the government’s decision of not imposing dumping duty on solar equipment has added to the positive sentiments.