Beating countries like China, which usually is the cheapest manufacturer of almost everything, India is now the forerunner in producing solar power at the lowest cost globally. We have also left behind the US, UK, Canada and France among many other major markets.
International Renewable Energy Agency (IRENA) reported that the global average of installing solar PV projects was $1210 for a kilowatt, the same was found to be as low as $793/kW in India in 2018.
“India was estimated to have the lowest total installed costs for new utility-scale solar PV projects that were commissioned in 2018 at USD 793/kW, 27% lower than for projects commissioned in 2017,” IRENA also added.
Additionally, India is the only country where the cost of setting up solar PV projects between 2010 and 2018 have dropped dramatically and at the fastest pace by 80% compared to other major markets including China’s.
Total Installed costs in 2018 by Component and Country
(Utility-Scale Solar Module)
Reasons for Such a Decrease in Price
In the past decade, governments, industry, financing institutions, investors and project developers have worked together to drive down costs and improve performance of renewable power generation. Solar power, once seen as an expensive way to address economic, environmental and social development goals, is now a cost-competitive way to meet energy demand.
More than half of the total cost of building a solar installation in India relates to hardware, like racking and mounting, while the remainder involves soft costs such as system design and financing.
Lower service and labour expenditures have contributed to a dramatic fall in the investment needed to set up large-scale solar power-generating projects. This has led to a tremendous cost reduction in overall solar cost. Small, medium and large, any kind of solar-sector based firms in India is booming.
The Way Forward
We must note that falling renewable technology costs as key to future energy decarbonisation. After a few years. It will be cheaper to build and operate solar farms than to run existing coal-fired power plants. There is already a market shift taking place in European countries where people are turning towards renewable energy sources.
However, countries in Asia still heavily reliant on fossil fuels. The lower cost of solar productions means that the dependency on conventional sources of energy is going to lessen and new solar technologies will come through.
The sudden reduction in solar production cost also means that the price of solar panel systems will soon attain a saturation point, from where there will be no further price drop. It is also expected that governments may soon withdraw its solar subsidy scheme and incentives. This plummeting of cost also makes the year 2020 the best time to go solar.
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