We have estimated the capacity creation of solar power based on the total capacity addition needs of the power sector and the share of the incremental capacity that solar could take as follows:
The solar power potential has been estimated considering demand from three segments: utility scale, rooftop and agriculture. For estimating the rooftop potential, an incremental adoption rate has been considered based on the grid parity economics. We expect that the adoption rate will keep increasing with the rising wedge between the solar rooftop costs and the average utility tariffs. Demand from agricultural pumpsets has been made considering an increasing share of solar powered pumpsets being deployed to meet the demand for new connections, driven by economic as well as social considerations. Post 2019, we believe that the replacement market from existing pumpsets to a solar powered efficient pumpset will pick up as well.
For estimating the grid scale potential, the residual electricity requirement after deducting the total contribution from solar rooftop systems and agriculture pump sets from the total electricity requirement has been estimated. The total solar power potential in India could reach around 54 GW by 2020 and accelerate rapidly to reach around 166 GW by 2024-25.
Key assumptions: Incremental annual energy requirement in India: 95,783 MU (Avg. for the next five years); Growth in energy demand: 7 per cent (2016-25); EPS projections of electricity requirement have been used; Share of solar in meeting the incremental electricity needs is 20 per cent (2015-2020) and 25 per cent (2020-25).
Solar power is expected to increasingly displace the additional power requirements in a phased manner. Today, the contribution of solar power capacity is around 0.6 per cent in the total electricity consumption of India. By 2019- 20, we expect the solar energy contribution to be around per cent of the total electricity generation and is likely to be around 12.5 per cent by 2024-25.
Source: KPMG, The Rising Sun: Disruption on the Horizon, ENRich 2015