By 2030, solar tariffs in India could fall below Rs 2 per unit

Wind and solar are the cheapest sources of new electricity—cheaper than coal—and still have a way to fall.

By 2030, solar electricity in India could be as cheap as Rs 2.30/kWh. Even cheaper solar costs, of the order of Rs 1.90/kWh, are possible, if the widespread deployment of tracking technology raises the capacity utilization factor of new plants above current levels, says a report released by sustainable development thinktank The Energy and Resources Institute (TERI) in association with Climate Policy Initiative.

Likewise for wind, with mast heights increasing from the current level of 80 meters to 100 and even 120 meters, the levelized costs of wind could be as low as Rs 2.26 for projects with higher capacity utilization factors.

There would be dramatic costs reductions in storage technologies too. The levelized costs of solar plus three hours of storage could fall from Rs 13.6/kWh to Rs 6.34/kWh. The levelized costs of standalone storage could fall from around Rs 29.0/kWh to Rs 11.9/kWh by 2030. This decline in storage costs could drive high penetrations of cheap solar in the Indian grid.

In contrast to solar and wind, coal tariffs are projected to increase because of rising transport and capital costs. In fact, new non-pithead coal could be as expensive as Rs 6.98/kWh by 2030, while cheaper pithead coal would cost Rs 4.85/kWh.

The report, titled “Accelerating India’s transition to Renewables: Results from the ETC India Project,” further states in the high renewables scenario, the share of variable renewables including wind and solar will reach 30 per cent of total generation by 2030, at 390 GW of capacity. The capacity could reach 420 GW if small hydro and biomass based projects are also included.

The share of all zero-carbon technologies in generation, including large hydro and nuclear, will reach 45 per cent, representing a rapid decarbonization of Indian power production. The grid emissions factor would decline from 733 gCO2/kWh in 2018 to 555 gCO2/kWh in 2030, representing a reduction of 25 per cent.

“This would make India’s power sector as clean as that of Japan today, a tremendous achievement for a country of India’s level of income per capita,” the report said.