Did you hear about this? Solar cost is now cheaper than diesel in India. French solar power company, Solairedirect made has a bid to supply solar power to India’s national power grid at Rs 7.49 (US$0.14) per unit (kWh). This rate is now better than the average cost of power generated by diesel generators, which is about Rs 13 (US$0.25) per unit.
The cost competitiveness of solar with respect to any other energy depends on location, installation costs, and what kind of power solar is competing against. In Africa, solar power has already become cheaper than kerosene.
The situation in India is now changing at a particularly crucial time for the diesel generator market as it places larger bets on opportunities from India’s ever-growing power demand-supply gap.
Some analysts question the logic behind the Solairedirect price and its profitability. The lowest bid, though, does not appear to be a dangerous figure when compared to other successful bids in the Rs 8.00 – Rs 8.28 range.
Four companies offered these bids for seven projects, totalling a proposed capacity of 115 MW, under Batch 2, Phase 1 of the Jawaharlal Nehru National Solar Mission (JNNSM). The JNNSM consists of two bidding batches for 1,000 MW of solar power capacity. It seeks to make allocations for a total of 20,000 MW over the next 10 years.
These new benchmarks are expected to make solar power cheaper than all other forms of power in the next two years.
To add to the scepticism, mixed reactions kept pouring in over the availability of land, locally manufactured modules and other technological issues.
Even if solar rates reach Rs 10 per unit, the higher rate would still appear cheaper compared to the rising high cost of diesel and the incremental maintenance costs associated with diesel generators.
And, the diesel industry is not the only sector facing this problem – this trend threatens all scheduled mega thermal projects.
What is your take on this development?
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