Earlier this month, when Madhya Pradesh accepted the bid of Himgiri Energ y Ventures to supply solar power to the state grid at Rs 6.5 a unit, it was a figure to note even by the industry’s standards of smashing records by the season. This contract award shaved off 13 per cent from the lowest price at which Indian industry was willing to supply solar power; over three years, the drop is a steep 61 per cent.
More importantly, the MP tender brought the price of solar power closer to the price of thermal power — produced from coal or gas, and India’s largest source. For 2012-13, Delhi’s power utilities were projecting to buy conventional power at an average unit price of Rs 5.71.
In other words, at Rs 6.5, solar is just 14 per cent above thermal. Its price prognosis is also better. Even as coal and natural gas become costlier, solar plants bask in free and ample sunshine and falling equipment prices. All this is taking the energy sector towards a game-changing milestone: grid parity, or the situation where solar costs the same as conventional sources.
“Price bids in conventional power have been up to Rs 5 per unit,” says Sanjay Chakrabarti, partner (clean energy), Ernst & Young. “Keeping that as the grid parity price, wind power has already achieved grid parity and solar is quite close.” The ministry of new and renewable energy is projecting grid parity by 2017 — five years ahead of its initial projection of 2022.