In the backdrop of capital cost reduction of solar projects, increasing economies of scale and improvement in rapidly maturing solar PV technology, the solar power is expected to reach grid parity by 2017, says a new report by Care Research.
A number of studies had even predicted the grid parity by 2014-2015, where electricity produced by solar plants will be sold at the same price as electricity from conventional sources, but CARE is of the opinion that it can be achieved by 2017.
According to Revati Kasture, head, Care Research, in the last few years, the solar capital costs have primarily reduced on account of cost reduction on account of capacity glut and the entry of Chinese players into solar cell manufacturing. “Resultantly, the solar capital costs have more than halved from Rs17 crore / MW in 2008 to Rs8-9 crore / MW now,” he said.
Despite the fall in prices of solar power equipments, CARE believes that grid parity can be achieved not before 2017, as there is possibility of a slowdown in the price-fall, mainly because the cost of ‘balance of systems’ has been going up. Care said that ‘balance of systems’ accounts for 40 per cent of total project cost, wherein the rising labour and land costs would also cap cost reduction.
The report says that the Jawaharlal Nehru National Solar Mission (JNNSM) has triggered the solar power growth in India, and solar capacity addition is expected to remain bright. The JNNSM has a target of installing 20,000 MW of solar power by 2022, which has to be achieved in the following three phases.