Record low bids for solar in India underscore vast commercial viability
This week as India was crossing the 50-gigawatt threshold for cumulative installed renewable energy capacity (excluding large hydro), the initial bids for its first major solar auction of 2017 were announced—and came in at a record low Rs3.59-3.64/kWh.
That’s down 16 percent year on year against the previous record low bid.
This trend is not occurring in a policy vacuum. India’s new draft National Electricity Plan, released in December, calls for a fivefold expansion to 258GW of renewable capacity by 2027, an expansion that would reduce thermal power capacity share to 43 percent of India’s total from 66 percent today.
The solar-auction results mean this target just got substantially easier and more cost effective to implement. Costs per unit of power to purchase are tumbling, and—of critical importance—it can now be shown that these prices are not only commercially viable but likely to beaten again in 2018, and again in 2019 as total solar costs continue to decline globally at a rate of 10 percent annually.
The implications for global renewable energy uptake, and the ongoing structural decline of seaborne thermal coal are clear.