REGIONAL ANALYSIS I INDIA
compliment the Government of India for taking this far sighted and strategic initiative with full earnest. In addition, some states, notably Gujarat, have taken visionary steps to support the program at the State level. Furthermore, the Renewable Energy Certificate (REC) mechanism which is already operational can play a catalytic role in the development of the solar power market in India. We believe the seeds have been sown for a rapidly scalable and a very large solar energy sector in the near future. As we will explain later, we believe that the potential of this sector and its impact on our strategic considerations of energy security and GHG mitigation can be far greater than is generally believed.
Global growth markers Globally, the solar power industry has been growing rapidly in recent years. In 2010, an estimated total capacity of 17,000 MW was installed globally. Germany leads the race with more than 40[2] percent of the total global market. The exponential growth is expected to continue and projected to be in excess of 40 percent annually in the coming years. This growth rate has been accompanied by rapidly declining cost curves. The main drivers for this cost reduction are achievement of economies of scale, technological advancements and emergence of low cost manufacturing locations.
These trends are definitely very encouraging and have positive implications for our energy security and future energy requirements. Solar energy potential is virtually infinite and if cost economics work out favourably, it can be tapped to meet a significant part of our needs. Here is an interesting statistic – a square piece of land in the Rajasthan desert with each side of 55 km can be tapped to generate enough solar power to equal the existing power generation quantum in India. A ground breaking initiative called the Desertec initiative actually targets to meet 17
Aggressive Case Base-Case Grid Parity – All India Table 1 46
www.solar-pv-management.com I Issue VIII 2011 2017-18 2019-20
percent[3] of Europe’s power requirements by large scale solar plants in the North African region with power transported across the Mediterranean. Such is the potential of this vast energy source.
The key driver of the growth of this sector is grid parity, the point when the cost of solar power equals the cost of conventional power. In the recent round of reverse auctioning process for the solar projects National Solar Mission, the price discovery for levelized tariff was in the range of INR 10.49 /kWh to INR 12.24 /kWh for solar-thermal and between INR 10.95 /kWh and INR 12.76 /kWh for solar PV projects.
As against discovered solar prices, the conventional power at grid level, including the interregional transmission charges and losses, is available at INR 4.00 /kWh[4]on a levelized tariff basis. Moreover, the average landed cost of power at consumer end in 2010-11 is estimated to be as high as INR 5.42 /kWh[5], which factors the costs of the transmission and distribution network and includes the transmission and distribution losses. The pace at which the gap between solar power tariffs and the landed cost of power will be bridged will determine the pace at which solar power will take off. The point at which grid parity occurs is a function of two variables, the rate of increase in conventional power prices and the rate of decrease in solar power prices.
Based on data from external sources and KPMG’s own analysis, we believe the following could be the key trends: We expect landed cost of conventional electricity to consumers to increase over the next decade at the rate of 4 percent per annum in the base case and 5.5 percent per annum in an aggressive case. This factors in an increasing proportion of raw material imports, cost of greenfield generation and network assets and improvements in operational efficiencies of utilities.
We expect solar power prices to be below the decline at the rate of 5 to 7 percent per annum over the next decade. This is after factoring in ever increasing economies of scale in equipment manufacturing and advancements in product technology thereby these improving solar-to-electricity conversion efficiencies. Emergence of low cost manufacturing locations are expected to aid this trend.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56