Solar vs Coal

Solar energy has always been criticized by fossil fuel proponents by saying that solar energy is intermittent and unpredictable and cannot ever replace fossil fuel energy sources which act as baseload power sources. Even though the prices of solar energy have come down to levels as low as 4 cents in India which is much lower than the 6 cents for thermal power prices, critics have said that the costs of integrating renewable energy in the grid so as to manage the reliability are quite high.

However, a recent government of India tender that invited bidders to provide round the clock solar power saw prices which were lower than that of recently discovered thermal power prices. The price which was quoted by large developers who coupled solar with storage was around INR 4/kWh which is lower than the INR 4.3/kWh level discovered in recent auctions in the Indian power sector. While the peak prices quoted by the developers at around INR 6-6.5/kWh was higher than the thermal power prices (mainly due to the usage of storage), the blended price of solar plus storage came lower than thermal power prices.

Solar Vs Fossil Fuel generation

This poses a huge threat to the entire coal supply chain as this means that developing new thermal power plants based on coal is not economical, even leaving out the climate change and pollution concerns due to fossil fuel power plants. Recent tenders and wins in developed countries such as the USA and Australia have already shown that large scale storage and solar energy can beat the prices of coal-based power hands down. Now India is also showing the way. The thermal power sector in India is already stressed with new plants finding it hard to secure long term contracts from buyers such as the state distribution utilities.

What is even worse for the sector is that solar and storage prices will keep coming down with coal prices expected to keep going up making the cost comparison between solar and coal energy worse every year.  This combined with the climate change concerns over rising carbon emissions due to coal mining means that you may face massive risks as a coal investor. Major global investment funds such as Blackrock have already announced that they will not make any new investments in coal and will also look to exit their existing investments in the next couple of years. These funds are doing this not only to show their commitment to climate change mitigation but also for hard fundamental reasons.