The Sun is shining brightly on the Indian Solar Energy Markets. It is now for the developers to tap this Market. The developers have a keen eye for potential profits and their astute commercial instincts assess the market situation. Thus the commercial lens of the Developers views the Affordability, Reliability and Sustainability of the Solar Plants.
Government of India extends 30 per cent subsidy against initial capital investment through the Ministry of New and Renewable Energy. Solar Plants are highly capital intensive, being most capital intensive of all power Plants. Establishing these ‘Plants’ requires borrowed funds. Thus, the rate of interest is a major component of the operational Solar Costs. While the government extends 30% subsidy on the capital investment, the potential developers interested in setting up a Solar (Photovoltaic) may not seek this subsidy due to the bureaucratic problems, delays and uncertainty in pay-outs.
As regards Affordability of Solar Power, the explicit Tariffs for Solar Energy are on a decline. Recently, the Tariffs have fallen from Rs 2.62 a unit to Rs 2.44 per unit and further fall to Rs 1.5 is on the horizon. Solar energy is becoming more affordable. The fall in the cost of Solar Energy is partly because of subsidies of cheap land and accelerated depreciation. However, there are implicit costs to be accounted for while comparing the Solar Tariffs with the Tariffs from Thermal Power. As Solar energy needs to be stored for the period when Sunshine is absent, costs of storage are to be added. Technological developments in storage of Solar Energy will enable day-time surpluses to be stored and released after Sunset. About Rs 2 to Rs 5 per unit of storage costs may be added to the Solar cost for comparison with costs from Thermal Power.
The cost of storage arises on account of intermittent nature of Solar Energy. The associated cost of keeping Thermal Plants idle when the Sun shines also needs to be factored in. The Central Government owned Plants get paid for available capacity even when they do not generate power. However, such costs for idle capacity are not absorbed by private sector Thermal Plants selling at low, fixed rates or depressed open market rates. Thus, the availability–based rates are not an offer for private sector plants. The costs of storage, including the costs borne by the Thermal Power Plants, and additional transmission facilities are to be added in the developers’ estimates.
Reliability of Solar power hinges on its efficient storage and transmission for enabling a regular supply. These add to the costs. Research Development and Demonstration (RDD) under the National Solar Mission may take up this aspect of Solar Energy so as to introduce cost effective innovations. Smart grid innovations will enable solving Solar Powers’ current Transmission problems.
A sustained growth profile of the Indian economy at 7% or more rate of growth seems realistic. Thus, the demand for Power would continue to increase. With the Tariffs for Solar Power on the decline, demand for Solar Power may be assumed as sustainable. As regards supply, the Developers are expanding the supply of Solar Energy. So, sustainable growth of Solar Energy in the Indian market conditions seems probable.
The sustainability of Solar Energy will facilitate its long term staying power in the Indian Market. India is committed to achieving a Target of 100 GW of Renewable Energy by 2022 under the Paris Agreement (2015). From a level of 12 GW of Solar Power at present to 100 GW in 2022, is an eight time increase over 5 yeaRs This is a fast pace to grow Solar Energy. A more sustainable pace is advisable that gives time for thermal plants and banks to adjust while future cost effective Technologies come up.
Article Source: Economic Times