Piyush Goyal, the Minister of Power, Coal, New and Renewable Energy, is on an ambitious plan to electrify whole of India by 2019.
But the most important aspect of his ministry’s electrification drive is to ensure that a major part of the power generated in the country is solar. Why? Because solar energy is the future of India and the world.
Which is why the government aims at 100 gigawatts of solar power by 2022.
The good news is that India is on the right track despite hurdles erected by some foreign powers.
States in the south have been increasing their respective installed capacities. Most successful has been Tamil Nadu where the installed capacity was increased by 887.19 MW.
In fact, India almost doubled its solar energy power generation capacity in 2015-16 period. It now stands at 6753.38 MW.
While Rajasthan leads the states in installed capacity, other like Tamil Nadu, Andhra Pradesh, Madhya Pradesh and Telangana are catching up fast.
In January this year 420 megawatts of solar power in Rajasthan were auctioned at Rs.4.34 per kilowatt-hour. In comparison coal tariffs range between Rs.3-5 per kWh.
With this progressive state of solar power generation capacity, a competition with coal – the largest source of India’s energy needs – is imminent.
Goyal says that the way India is moving up in installed capacity of solar energy, it is likely that it will become cheaper than coal-based power.
That installing a solar energy plant is cheaper than installing a fossil-fuel power plant makes it possible to reduce the per-unit cost of electricity.
You can see an example of that from this graph which shows how, with time, there will be a huge gap between the price of coal-based energy and the price of solar energy.
And this difference is applicable to every economy of the world. The reason is simple economics.
Building a new coal-based power plant means raising the price of electricity, which means there will be a shift in demand.
Shift in demand of electricity from coal-based power plant will mean loss of revenue. To close the gap between costs and revenue, the electricity price generated from coal will be further raised. That’ll result in even more loss of revenue, and, eventually, the closure of the plant.
Solar energy easily fills in the demand that arises because of the rise in prices of coal-based energy. And increased production of such an energy will result in lower costs.
Recently, the power minister said that India will not have to import coal in the next 2-3 years. That would contribute to, perhaps, a stable line for coal-power tariffs but that might not help bring it down.