Wholesale solar power prices have reached another record low in India, faster than analysts predicted and further undercutting the price of fossil fuel-generated power in the country.
The Role of India on the Global Stage
The tumbling price of solar energy increases the likelihood that India will meet its renewable energy targets. Those targets were set at the Paris climate accords in December of 2015. The likelihood of India actually exceeding their targets is becoming more likely by the day.
India is the world’s third-largest carbon polluter, with emissions forecast to at least double as it seeks to develop its economy and lift hundreds of millions of citizens out of poverty.
Ensuring it generates as much of that energy as possible from renewable sources remains crucial. India has become a leader in fight to against catastrophic global temperature increases.
Analysts called the 40% price drop “world historic”. They said cheaper finance drove the drop. Growing investor confidence in India’s pledge also helped drive prices down. India is truly showing their dedication to dramatically increase their renewable energy capacity.
It reduces the market price of solar tariffs well past the average charged by India’s largest thermal coal conglomerate. These tariffs are currently around 3.20 rupees per kWh . Wholesale price bids for wind energy also reached a record low of 3.46 rupees in February.
Renewable Energy Prices Continue to Plummet
At a reverse auction in Rajasthan on Tuesday, power companies Phelan Energy and Avaada Power each offered to charge 2.62 rupees per kilowatt-hour (kWh) of electricity generated from solar panels they hope to build at an energy park in the desert state. Last year’s previous record lowest bid was 4.34 rupees per kWh
Kanika Chawla, a senior programme lead at the Delhi-based Council for Energy, Environment and Water (CEEW), said it was encouraging. Rajasthan project bidders were “new players, not the same old market leaders”.
“It shows there is enough happening to attract investment, attract interest from companies who have otherwise been cautious,” she said.
Prices were likely to drop further if the cost of borrowing money continued to fall – which she said was one of the major drivers in the record low prices this year.
“Any future incremental gains in prices will not come from the decline in technology prices, they will come from declines in the cost of finance,” she said.
A recent move to make the state-backed Solar Energy Corporation of India a guarantor in agreements between energy developers and India’s debt-ridden power distribution companies likely also encouraged investors further.
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