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Below 10c/Kwh solar price in India throws the cat amongst the pigeons

, August 14, 2013, 1 Comments

India’s solar power costs have declined dramatically and have become one of the lowest in the world.

The capital costs of building a 1 MW solar power plant in India is Rs 7 crore ($1.2/watt) which makes it amongst the lowest in the world. India’s state of Tamil Nadu has come at a price of just Rs 5.78 (9.5c/Kwh) to buy solar power from producers in India.

Note this price is less than 25% of the price being offered in Japan for solar power. Not only has India benefited from low solar panel prices imported from China, the country also has very low labor costs. This has made it possible to build a utility scale power plant at such a low cost. Note the costs are also very low in Germany but not as low as $1.2/watt.

These low prices are going to make solar energy grow exponentially in India, as the retail price is 10c/Kwh. While building rooftop solar plants is not as cheap, but neither does the costs of solar power escalate regularly nor is it totally unreliable. Companies such as Su-Kam are already offering a complete rooftop solar solution and I expect that solar systems are going to grow rapidly in India. Brownouts are common India and electricity prices have gone up by almost 100% in the last few years.

Solar-power will also not suffer from the massive inflation that is a regular feature in India. Once you build a system for your home, your costs are fixed unlike other costs which go up by 10% every year.

Issues with Solar power developers in India
Developers are not happy with such low prices but that cannot be helped. The fact is that a solar PV plant can be built at INR 7 crores in India today, whether they like it or not. Solar energy at this price will not allow them to make more than 10-15% IRR. They can live with it or leave.

About author
Sneha is a chartered accountant, having 7+ years of strong experience in Finance & Renewable Energy. Her area of interest & passion is clean tech - Solar & Wind and spends a considerable amount of time in writing about business and clean technology as a writer. She strongly believes in a sustainable and green living and writes in the blog green world investor. ...more
  • vivek sinha

    Thanks for your great information, the contents are quiet interesting.I will be waiting for your next post.