Indian Solar Companies see 40% decrease in Solar Electricity Price to Rs 7-10 unit from Rs 14-16/Kwh with Increasing Scale,Improving Technology and Domestic Substitution of Imports

Solar Power in India is set to be one of the biggest energy industries in the 21st century due to a unique set of favorable converging factors with declining cost the biggest one.The Indian government has recognized this fact and set a 20 GW of solar energy capacity target by 2022 and Indian states are boosting solar energy too through their own set of subsidies and solar supportive policies as well.However a number of problems have cropped up in the initial phases as solar electricity price is still high at Rs 14-16 unit compared to the retail electricity price of around Rs 4-5/unit.Though solar subsidies by the government should provide support till the prices come down.Major Indian solar companies like Moser Baer,Lanco are predicting that the solar electricity costs will fall by 40% or more in the next 3-5 years as technology improves,scale increases and more of the components like glass,solar inverters are manufactured domestically substituting expensive imports from countries like China and Taiwan.

A Solar Systems requires a number of different solar components like Solar Inverters,Glass for Solar Panels,Cabling and Solar Panels themselves.While Solar Panel costs are coming down rapidly,cost of other components are not coming down equally rapidly.Currently India has only a small manufacturing base with mainly solar panels being made .The lack of scale companies like Saint Gobain have not put up plants to manufacture glass made for solar panels.However as the solar capacity increases it is expected the companies with technology will put up more manufacturing plants thus bringing down the costs.Delta Electronics has already set up a plant to made solar inverters in India.Saint Gobain too plans to set up a glass making plant as capacity reaches around 1000 MW.

The solar companies see prices coming down to Rs 7-8 in the next 3-5 years which would make solar energy competitive with electricity prices from fossil fuels which are constantly increasing.This will usher in a massive boom as India suffers from a lack of  oil and gas.Coal too have become supply constrained as international prices continue to rise.Solar Energy will far exceed the 20 GW target by 2022 as it enters a phase of non-subsidized growth .

Companies see a realistic chance of bringing down cost of solar power

The only barrier to harnessing solar energy on a large scale has been the high costs involved. Solar power costs 14-16 a unit, against 4-6 for conventional generation. The good news, though, is that prices have been falling, from 50 per unit 15-20 years back. And they’re set to fall further in the next three to five years, thanks to a combination of business and technology factors. Says Rajiv Arya, CEO, Moser Baer Solar: “We see a clear path to under 10 per unit via technology improvements and a massive scale-up in volume.” V Saibaba, CEO, Lanco Solar, is even more specific and optimistic . “In a couple of years, we see solar power costs coming down to 7-8 per unit,” he says. PricewaterhouseCooper’s (PwC’s ) energy expert Kameswara Rao sees solar power at 9-10 per unit in below five years.