Even as the UN Secretary General Ban Ki-moon has called on countries to agree at next year’s Earth Summit to raise the share of renewables to 30 percent of the energy mix by 2030, India seems to be going strong to achieving those targets. A year and a half ago, India released phase I of its solar guidelines, “Building Solar India.” Now that we are midway through the first phase, it is heartening to note that the guidelines have stimulated a nascent yet dynamic solar market. In addition to the announcement of several new solar energy projects including a 500 MW solar energy park in the state of Gujarat, the latest news is a recent KPMG-India report, “The Rising Sun,” which projects that solar power could achieve grid parity in the country as early as 2017.
While much of India’s solar energy market remains untapped, especially considering that India is almost a perennially sunny country, the KMPG report predicts that under an aggressive case of supportive government policies and private sector support, solar energy could achieve grid parity as early as 2017-18 and under a base case scenario as early as 2019-2020, as described in the chart below:
Highlights from the KPMG report include:
- Solar power generation capacity could reach 68 GW by 2022, well over the 20 GW target of the Solar Mission.
- Solar energy could contribute to 5-7 percent of the total power demand in India by 2022.
- Under both the aggressive and base cases for the next decade, solar power costs are projected to decline by 5-7 percent annually, while the landed cost of conventional electricity is projected to increase by 4-5.5 percent annual.
- High-end residential consumers represent an untapped market for early adopters of rooftop solar units; government incentives could also encourage wide-spread adoption by both residential and agricultural consumers.
- Telecom towers are an attractive market for off-grid solar installations and, in many instances, are cost competitive with alternatives, like dirty diesel gensets; these solar telecom towers could replace 30 percent of diesel consumption and create an industry of $12.5 billion by 2022.
The KPMG report also emphasizes among other things that solar energy, including solar water heating, could save 71 MT of coal annually, which is equivalent to more than 30 percent of India’s coal imports. Moreover, this amounts to a reduction of 95 million tons of CO2 annually until 2022, which is a significant contribution to a reduction in the GHG emissions intensity.
Although solar energy certainly holds great potential, several caveats on the path to achieving grid-parity by 2017-2020 remain. Both Indian government and industry must continue to actively support solar energy development, such as the $108 million fund to provide payment guarantee to solar power producers. Increased research and development, both in India and internationally, are also essential to lowering the costs of solar and creating breakthrough technologies. One such opportunity is the recent $50 million funding announcement by the US and the Indian governments through the Joint Clean Energy Research and Development Center. Successful implementation of India’s Solar Mission, as envisioned by the KMPG report and others, holds the promise to unleash clean energy innovation and deployment, and reduce dangerous GHG emissions thus helping India to meet its emissions intensity targets.
(Co-Authored by Sameer Kwatra, NRDC Speth Fellow)