Solar power getting cheaper

Increasing cost of thermal power, especially those from private producers and discoms such as Tata Power, Reliance, Adani, and CESC, is becoming a growing concern for both consumers and the government which subsidises power tariff in a number of ways in a bid to keep the generators, suppliers, and consumers of all sorts – agricultural, industrial, and domestic – happy across the country. Discoms in Delhi have proved to be a pain for both the Aam Aadmi Party government and bulk suppliers like NTPC.  Lately, CESC came under severe criticism for high power tariff from industrial consumers in West Bengal at an FICCI meeting in Delhi.

Chief Minister Arvind Kejriwal recently made a very interesting and clever announcement offering a host of incentives to solar power producers, mainly rooftop, in the city-state basically using the existing sops provided by the Central government to partially check-mate discoms. However, the thermal power industry, which currently accounts for nearly 70 percent of the country’s power generation and supplies, is not shaken, at least as of now. But, it will as the country seriously gears up to tap its 100-gigawatt solar power potential and 60 GW wind power by 2022 to cut its dependence on thermal power and to substantially reduce carbon footprints.

It is only a matter of time before thermal power producers, using coal, gas, and diesel, find real competition from solar power, especially if the latter is equipped with technology that can save and supply power round the clock. The generation cost of solar power has fallen significantly in India. In Madhya Pradesh, it is already around Rs. 5 per unit. In two to three years' time, solar power cost in most parts of the country may come down to Rs. 4 per unit. The declining capital costs, shift towards larger solar photovoltaic projects and expectations of lower return from discrete developers will make it happen. The cost of solar power may actually fall further in the next five to ten years, making it well below the thermal power cost in real terms. And, if technology can solve the problem of shortage, solar power may unburden much pressure on thermal generation and, equally important, cut down carbon emission substantially.

Top technology developers and suppliers such as the US, Germany, France, and Japan are already working on these issues. And, they are closely cooperating with India, which can bank on such reliable partners. With proper policy back-up from the Centre and states, India is set to be one of the world's largest producers of solar power. It also gives the country a big incentive to emerge as a leading solar equipment manufacturer and become a large source of employment while drastically cutting imports from China and Taiwan.

Impressively, India’s No. 1 thermal power generator, NTPC Limited, has taken a major initiative to lead in the field of renewable power generation and, in the process, cut carbon footprints although the power major believes that thermal power will continue to retain its leadership position for the next 10-15 years in the country. NTPC plans to have 10,000 MW of solar power by 2022 and it will obtain another 15,000 MW from other developers to sell it to discoms. The public sector power behemoth is also looking at 1,000 MW of wind power. This is a very encouraging news for all concerned. NTPC is also using a policy that will help develop indigenous equipment manufacturing. A few years ago, it floated large tenders for solar projects on the condition that only equipment producers in India can participate. The result was highly encouraging.

India attracted large foreign investments in terms of funds and technology to manufacture solar equipment to participate in the projects. The follow-up of the NTPC-led procurement policy led to a number of foreign initiatives in India, including Japan's Toshiba factory in Chennai; Mitsubishi-Hitachi joining Larsen & Toubro to set up unit in Hazira; Alstom of France going with Bharat Forge, Siemens of Germany with BHEL, and Doosan of Korea putting up a 100 percent owned unit.

Foreign firms are now willing to “Make in India” to tap the massive solar equipment market, which, according to a government estimate, will be close to Rs. 6,00,000 crore in the next six to seven years. Until now, the Indian solar power industry has been mostly using foreign soft loans to import solar power equipment from China and Taiwan. Interest exhibited by well known US, Japanese and European firms to invest in India to produce equipment to help build solar power  -- from rooftop to industrial set ups -- is truly exemplary.

The government must stick to a policy that encourages domestic solar and also other non-conventional energy equipment manufacturing as the country progresses towards building a huge and affordable combination of energies, using solar photovoltaic (PV) power systems, wind, small hydro and bio-energy systems, having the potential of  producing close to 900 GW of power. Clean energy is no longer an unaffordable dream in India. It has already passed the experimental stage.

The country must take a strong policy resolution to reduce its overwhelming dependence on thermal power which is becoming increasingly expensive for its consumers and environment. Almost every state, including those coal-producing ones such as West Bengal, is encouraging solar energy generation. Lower solar energy cost will also ultimately act against tariff manipulation by thermal power producers and discoms, in due course.  (Views are personal)