India has finally bagged
the tag of the lowest cost producer of solar
The country-wise average for the total
installed costs of utility scale solar
PV in 2018 ranged from
a low of $793 per Kilowatt (Kw) – around Rs 5.5 crore per Megawatt -- in India
to a high of $2,427 per Kw in Canada, the International Renewable Energy Agency (IRENA) said 30 May 2019.
“India was estimated to have the lowest total installed costs for new
utility-scale solar PV projects that were commissioned in 2018 at $793 per Kw,
27 per cent lower than for projects commissioned in 2017,” IRENA said in a
detailed report titled “Renewable Power Generation Costs in 2018” released
Cost has dropped at the fastest pace –80%--in India between 2010-18
Further, IRENA conducted
an analysis of the decline in the cost of setting up solar PV projects between
2010 and 2018 across eight major markets including China, France, Germany,
India, Italy, Japan, UK and the US. The costs were found to have dropped at the
fastest pace – 80 per cent – in India.
Cost of hardware etc, more than 50% the total cost of solar PV project
Typically, the cost of hardware -- including modules, inverters and racking and
mounting -- account for more than a half of the total cost of setting up a
solar PV project in India while installation and soft costs like financing and
system design account for the rest.
In 2018, India added 9 GW; 94 GW globally
In 2018, 94 Gigawatt of
new solar PV capacity was added globally, accounting for 55 per cent of the
total new renewable power generation capacity additions. The largest markets
for new capacity additions in 2018 were China (44 GW), India (9 GW), the United
States (8 GW), Japan (6 GW), Australia and Germany (4 GW), and the Republic of
Korea, Mexico and Turkey (around 2 GW each).
The report said the sustained and dramatic decline in the cost
of electricity from utility-scale
solar PV continued in 2018, with a fall in the global weighted-average
Levelised Cost of Electricity (LCOE) of solar PV to $0.085 per Kilowatt Hour
(kWh) – 13 per cent lower than for projects commissioned in 2017.
The country-specific LCOE of utility-scale solar PV declined by between 62 per
cent in Japan and 80 per cent in Italy between 2010 and 2018. “The year-on-year
reduction in the LCOE in 2018 ranged from 21 per cent in India to a low of 1
per cent in Japan,” IRENA said.
The cost reductions in 2018 were supported by crystalline silicon module price
declines of between 26 per cent and 32 per cent, between December 2017 and
December 2018, after modest declines of between 1 per cent and 7 per cent for
the 12 months from December 2016 to December 2017.
Reasons for India being lowest-cost producer, cost of land and labour
cheaper, among other things
Experts attribute India’s
status of lowest-cost producer of solar power to multiple reasons including
high solar potential that leads to improved asset utilization and lower cost of
modules sourced from China. “Also, from a regulatory standpoint, utilities
solar PV procurement is price driven. That means developers bring in maximum
efficiency in procurement of equipment and financing costs. In addition, the
cost of land and labour is cheaper than rest of the world,” said Debasish
Mishra, Partner at consultancy firm Deloitte Touche Tohmatsu.