Photo: Hemant Mishra/Mint
Mumbai: The price of solar power will be comparable to that derived from traditional fuels by fiscal 2018, according to a new report by KPMG India. The audit and consultancy firm had earlier predicted this grid parity to happen by 2020.
Grid parity is attained when the cost of solar energy equals the cost of utility power from sources such as coal, natural gas and nuclear plants.
The declining prices of solar PV (photo voltaic) modules coupled with the rising prices of traditional fuels such as coal and gas would advance the process by two years, it said in the report released on Thursday.
The report said prices of traditional fuels are going to increase by at least 4% over the next decade while prices of solar PV modules may fall by 5-7% over the next decade.
By fiscal 2018, the price of solar power will fall to Rs 6.22 per unit from the current Rs 8.34, while the cost of power from traditional sources will increase to Rs 5.79 per unit from the current Rs 4.20.
By fiscal 2019, the gap between traditional sources and solar power will be further narrowed to 20 paisa per unit.
Due to government initiatives such as the Jawharlal Nehru National Solar Mission (JNNSM), solar power generation capacity has shot up to 1,000 megawatts (MW) from 20 MW in the last two years, the report said, identifying telecom towers and agriculture water pumps as the next areas of growth for the industry.
With a growing number of towers in rural and semi-urban areas, the industry will have to increasingly depend on diesel generator sets to provide power to them towers as grid connectivity at such locations is poor.
With the consumption of diesel by the telecom industry set to increase from the current 2 billion litres to 3.5 billion litres in 2020, there’s a case for using rooftop solar panels for some 50,000 towers as of today, the report said.
Solar power can also be used to replace diesel in pump sets. India has an installed base of 25 million pump sets, with 18 million electric pump sets and around 7 million diesel pump sets.
Apart from promoting large-scale solar power plants, the report suggested that the central government and the state electricity regulators should encourage grid-connected solar power rooftops for self-consumption through a policy of net-metering which allows consumers to offset the use of costly electricity from the utility in proportion to their own solar generation.
“Rooftop solar PV is increasingly becoming an affordable option for commercial and residential consumers (with consumption more than 300 units per month) since energy charges are in the range of Rs 8-9 per unit which is quite commensurate with present solar costs,” said Ashwin Gambhir, member of Pune-based think tank Prayas Energy Group, which carries out research on policy related issues regarding energy sector.
