India Is Now Producing The World's Cheapest Solar Power, Prices To Come Down Further

As global warming and its related environmental consequences peak, entities across the globe are working towards a cleaner form of energy. Solar being one of them, the renewable and clean source has seen a monumental growth in usage over the last few years. A recent survey by the International Renewable Energy Agency (IRENA) reveals the same, interestingly, also highlighting the fact that India is now the producer of the world's cheapest solar power.

Constant and large scale efforts towards employing solar power can be accredited to the falling prices. India, in this race, has managed to cut down on the installation of big solar energy plants by as much as 27% in 2018, year-on-year. This brings the cost to less than a third of Canada¡¯s as per the survey, the country topping the installation cost in the list.

Still declining cost

Several factors have led to this dramatic decrease in the installation cost of solar power plants in India. For starters, India imports low-priced solar panels from China, keeping the initial cost of the hardware low. Add that to the abundant land for such plants as well as the cheap labour required for the installation and the total comes out to be the lowest in the world.

It is worth noting that the costliest investment in a solar plant is the hardware needed in the first place, including the solar panels. The hardware plus its related activities like racking and mounting constitutes more than half of the total cost of installing a solar plant. The rest of the cost comprises of system design and financing, mostly considered to be soft costs.

With the advancement in the solar industry, such prices are only expected to drop further. Notably, the technology to make solar cells is expected to progress, thus bringing the component cost lower, even for a small scale installation. Till now, it has been the lower service and labour expenses that have contributed the most in the low investment needed in India¡¯s case. To put this into numbers, know that within the last eight years (2010 to 2018), setup costs for a solar plant in India fell by 80%.

Total installed costs in 2018 by component and country. (Source: IRENA)

The green impact!

The lower prices naturally push the demand up. So it is no wonder that as the costs of setting up renewable energy generation plants, including solar, decrease around the globe, clean energy generation becomes much more mainstream.

An earlier report by IRENA mentioned that by the end of 2018, the world has been gaining one third of its total power capacity from renewable sources - 2351 GW in numbers. In 2018, the world added a total of 171 GW of power capacity through renewable sources, close to half of India¡¯s total production. This means, two years of such production growth can power a country like India completely on renewable sources for the distinct future.

Solar capacity alone increased by 94 GW to a new total of 480 GW, constituting 55% of all new renewable power generating capacity, thanks to countries like China, India, Japan, Republic of Korea and the U.S. 44 gigawatts of these was added by China, five-times more than India which followed second.

Falling prices are a good indicator for countries across the globe that such wind and solar energy installations can now be opted for as a more cost-efficient option than the traditional coal or nuclear power plant. These traditional power generation ways have, as it is being seen a decline in use throughout Europe, North America and Oceania. Countries in Asia and Middle East still need to catch up though, discarding the currently used fossil fuels as the primary source of their energy generation.