What sets India apart in global power market

Two new reports that forecast trends on the global electricity sector expect India to stand apart on three different counts.

First is solar and wind power costs. The International Renewable Energy Agency (IRENA) forecasts that technology, competition, improvements in supply chains, economies of scale and right policies will reduce the cost of electricity from solar and wind power by at least 26% and perhaps as much as 59% between 2015 and 2025.

But some countries are expected to see lower cost reductions. Among them is India. Cost reductions are expected to be driven by a fall in balance of system (BoS) costs (BoS involves system design, finance costs, installation, grid connection, etc). But if one looks at BoS costs of various countries, India is already in the “low cost” basket, providing limited scope for cost reductions, especially when one compares to major countries like the US, Australia and Japan.

The story is similar in the wind sector, where installed costs are already low in India, partly due to usage of relatively smaller and cheaper turbines. “The total installed cost reduction potential remains significant for many markets, although markets with very competitive cost structures, such as China and India, or restrictive policies, will experience lower than average cost reductions,” IRENA said in its report.

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