In 2011 big coal plants were signing PPAs with tariffs for INR 2.8/kWh while solar was as high as 18/kWh. Now large grid-connected solar can be had at INR 7/kWh, while imported coal, on the rise to help offset a ~10 percent power deficit (baseload) exacerbated by rapidly rising power demand, is pushing INR 4/kWh without taking into account subsidies or cost of externalities. And that doesn't begin to address the challenges of grid-connecting villages, much less the hundreds of millions of citizens who remain off-grid.
The answer to this lies in domestic solar power, both centralized and distributed, built relatively fast at any size and requiring less than 1 percent of the nation's land. Four factors have to come into play, though, for solar to truly supplant coal in India in the next decade, according to Tobias Engelmeier, managing director at Bridge to India:
- Looking at longer-term costs. Getting solar costs down to INR 5/kWh in the next couple of years, and lower beyond that, will require improved materials, production, and efficiencies, but long-term solar costs are heading downward. Costs of non-replenishing fossil fuels including coal, meanwhile, will increasingly depend on foreign supply and demand markets.
- Costs of infrastructure and grid management. As an infirm power source, solar's higher incorporation will require extra investments in a number of areas from storage to demand response. On the other hand, adding more coal plants and imports will mean more infrastructures in mining and a supply chain for imports. It's still unclear how those all will compare.