Has solar really reached to grid parity?

If we compare the cost of power from new coal-based plants, it will be at par with that of solar. If one takes into account the total duration of the power purchasing agreement, which is 25 years, grid-parity is already there.

Solar power needs only a one-time investment in the form of land and PV panels. Its fuel, which is sunshine, is free unlike coal where price will head only northwards.

Solairedirect, a solar power producer, was the lowest bidder at Rs 7.49 per unit for a 5MW plant auctioned under JNNSM in December, 2011 while the average tariff bid for 350MW under the mission was Rs 8.8 per unit.
Three years ago, the cost of generating a unit of solar energy was around Rs 18. In fact, solar has already taken over diesel as a cheaper form of energy and a lot of telecom towers are now being run on solar power.
In recent years, there has been a sharp decline in capital costs for solar PV plants. PV module prices have fallen a sharp 80% in the last five years and 30% during last year alone. Reports released a few weeks ago said, “Capital costs fell by 30% from a year ago to Rs 10 crore per MW (megawatt) by the end of 2011. The fall was driven by 50% drop in prices of solar PV modules, which account for almost half the capital costs of a PV project. The sharp fall in capital costs has improved the returns from the projects that were commissioned in FY12.”
Heavy subsidies by China to its domestic manufacturers have been a major factor in driving down module prices. The recent reduction of subsidy to the sector by Germany, the largest solar power generator in the world, has also pushed down prices further.
While the solar power generators are basking in the sunshine with optimism, the module makers are fighting to stay afloat. The nascent solar equipment industry in India is facing the heat and looking for ways to survive the Chinese subsidy onslaught that has already consumed many leading global manufacturers as per the market news says, such as Solyndra (US), Q Cells and Solar Millennium (both in Germany) and 5 others which have filed for bankruptcy. Many have halted production and further expansion plans.
Funding to the sector has also seen an uptick, even though banks are still cagey about rock-bottom tariffs and higher debt levels. Banks are keen to assist solar projects as they are pollution free but would prefer a lower debt-equity ratio in the range of 60:40. Given its green energy status, it’s also not surprising that agencies such as US EXIM bank, ADB and IFC have also been active in the space.


The information about the executed Solar Project experience is spread across which are subject to various assumptions & considerations thus a challenge to have it consolidated, authentic and accurate.


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