Solar power tariff in India has witnessed a drastic fall over the last few years.
In India, the total solar power generation capacity increased from 461 MW in 2011 to 6,763 MW in 2016. Over the last few years, the solar power generation capacity in the country has increased tremendously owing to favourable government initiatives coupled with development in manufacturing technology of solar panels.
Cumulative Capacity of Installed Solar Power Generation in India, 2011-2016 (MW)
Indian Solar Power Industry is anticipated to have double digit growth during next few years, due to the government’s policy to increase the share of solar power in the country’s energy mix and falling equipment (PV Module) costs globally. Moreover, solar power tariff in India has witnessed a drastic fall over the last few years.
The solar power tariffs in India have fallen in nominal terms from INR 15 /Kwh in 2009 to INR 2.44/ Kwh in 2017, due to decline in module prices and improvements in capacity utilization factor. This recent fall came in during the online bidding for a 750 MW solar power park being set up at Bhadla near Jodhpur with viability gap funding (VGF) from Solar energy corporation of India Limited. This comes after much brouhaha over tariffs falling to INR 3.25/ kWh (levelized) and INR 3.15/ kWh in Rewa, Madhya Pradesh and Kadapa, Andhra Pradesh respectively in the last three months.
However, the ever-declining solar power tariffs has encouraged good investments into the sector but have raised concerns over the long -term sustainability of the projects.
Trends of Indian Solar Power Tariff, 2011-2017
Improving manufacturing technology has led to the reduction in cost of solar panels which has resulted in reduction in cost of solar power generation. The reduction in the cost of solar power coupled with strategic policy of the government has resulted in increase in solar power into the energy mix of the country.
To boost the solar power generation in the country, the Government of India has announced various policies and regulations, such as, accelerated depreciation, capital subsidy, Renewable Energy Certificate(RECs), Net Metering Incentives, Assured Power Purchase agreement etc. The schemes formulated by the government intends to reduce the capital expenditure in building a solar power plant, and subsidize the power generation to make it economically viable for the stakeholders involved in the solar power business.
By Karan Chechi, Research Director, TechSci Research (with inputs from Samarth Gupta)
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