Is Solar cheaper than Conventional Energy?
According to International Energy Agency World Energy Outlook 2020 The world’s best solar power schemes now offer the “cheapest electricity in history” with the technology cheaper than coal and gas in most major countries.
A joint study by TERI and the US based think tank Climate Policy Initiative (CPI) shows that by 2030, the cost of solar power generation in India will drop to Rs 1.9 per unit over the next ten years, and new technologies will increase efficiency levels as revealed by them
The data is enough to support the fact with conviction that Solar is cheaper than the conventional sources of energy. Although the initial cost of setting up the source at a glance might seem expensive and doesn’t affirm the conclusion but definitely the smart energy decision is sustainable and is long term investment delivering profits overtime. Sun is free but the energy isn’t. However the production can be made cost effective that can save enough in long term.
The cost of building a large scale solar power installation went down by 27% in 2018 leaving the remainder cost to be utilized in other areas. With fossil fuel energy prices rising by an average of 3% in the past 10 years, solar energy has rapidly reduced costs. In 2017, the cost of solar power was second only to wind power.
Solar energy is easier for people to obtain in terms of cost and practicality, so undoubtedly it is the best choice.
According to the International Renewable Energy Agency (IRENA), the country-wise average for the total installed costs of utility scale solar PV was $1210 for a kilowatt, while India brought it down to $793/kW, around Rs 5.5 crore per Megawatt in 2018.
During FY21, solar power tariffs declined to 2.36/kWh in June-July 2020 and later to 2.0/kWh in November 2020, and now to 1.99/kWh.
It is not only getting cheaper but reliable source too. “About 5,000 trillion kilowatt-hours of energy flow into India’s land every year, and most areas receive 47 kilowatt-hours per square meter per day. The Ministry of New Energy and Renewable Energy itself admits that optimized use of solar energy can meet all of India’s electricity needs. Solar energy can be used effectively and provides huge scalability in India. Theoretically, A small part of the total incident solar energy (if effectively captured) can meet the energy needs of the entire country,” the ministry stated on its website.
Now, the technological innovation and price drop of solar panels make solar power generation cheap enough to compete with other fuel sources in certain regions when new factories are built. Solar energy has entered a new global era. The industry has long relied on subsidies and regulatory promotions.
This may promote the growth of renewable energy in the global energy industry, especially in the fast-growing Asian market, where most of the expansion of the world’s energy infrastructure will occur.
The bigger question now is, how can falling solar energy prices benefit you, as a business owner? Or more precisely, no matter what your situation is, how you use solar energy to reap the benefits out of it.
Going solar is a long term investment that requires multiple parameters to be judged before selection and installation.
However post installation it may take couple of years to extract out the initial investment cost and after that you could enjoy the savings for the next 20-25 years nearly because that is the approximate warranty of the solar panels in your property.
Now let us see the bigger picture so as to why Solar is cheaper than other sources in India?
The fact that India is the cheapest producer of solar energy is not a coincidence, but a success story of an effective public-private partnership (PPP) model. The growth of the industry can be attributed to many factors. Even India’s national energy plan does not expect to build new coal-fired power plants for at least a few years. Even Coal of India, one of the world’s largest coal production companies controlled by the state, said in November that it is planning a pilot solar project while navigating with less coal in the future. So
let us map out the factors leading to growth in solar industry making it even more effective :-
The Specialized agencies formed by the Indian government, such as the Ministry of New and Renewable Energy (MNRE) and later Solar Energy Corporation of India (SECI), played a key role in helping India become one of the fastest adopters of solar energy. Through active goal setting and policy implementation, through streamlined efforts, the country’s journey to become the world’s fifth largest solar installer becomes possible.
When the national solar mission was launched in 2010, the cost of solar energy was 17 Indian rupees per unit, compared to the latest quotation of 2.44 Indian rupees per unit.
This is made possible due to the tariff-based competitive bidding conducted by SECI, the state and the central government through bidding. MNRE also strives to promote solar energy through various public awareness campaigns and events.
Since 2010, subsidies and incentives provided by the government and the Jawaharlal Nehru National Solar Energy Mission (JNNSM) have contributed to the adoption of solar energy. The main part of the rapid growth is the scale of utilities and open solar farms, as well as the constant growth of rooftop solar power plants.
the government’s subsidy of up to 30% for all rooftop solar projects initially played an important role in developing the rooftop solar market,
it is now limited to government and non-profit buildings. In order to promote the development of the industry, the government also allows consumption tax and tariff concessions to ensure the rapid growth of the industry.
The acquisition of land has always been an area of concern which is even marked historically. This is one of the main reasons for the rising cost of infrastructure projects. Given
that the cost of land accounts for about 7% of large-scale solar projects,
in 2016, MNRE’s solar park policy introduced guidelines to guide the state government to determine large areas of land suitable for using it for solar energy creation and prioritize the use of land to speed up the acquisition process to establish the solar parks. India is blessed with clear sunny days nearly 300 days that can be extensively used power generation.
India is a market which is very sensitive at prices, and they are important indicators to make a considerable installation area.
However this sensitivity has helped in the availability of important parts, such as solar panels, invertors, etc from the same international seller. As a result, India has achieved low solar tariff compared to other countries.
Solar power plant construction only requires 20-30% highly skilled labor, with the rest being semi-skilled or unskilled labor, which is easy to obtain and affordable.
A large solar plant for 500 MW capacities can be constructed within 18 months with the workforce of India. It has the lowest labor costs, allowing the solar industry to employ large numbers of people to complete projects quickly and at the lowest cost.
These were the key driving edges for the solar industry than can speed up the revolution and lead to ultimate saving of energy and resources of the country.
With the advent of transition towards the renewable energy sources now you can also make your journey profitable.
We might help you take the first step. We are the leading Solar EPC Company based out of Ahmedabad with global footprints. We help our clients take smart energy decisions and progress with a rapid pace that makes them stand out from others while saving considerably at the same time. Now even you could discover the cost efficiency of solar power throu.gh self-experience and build your asset at the same time. Let Soleos make it economical for you and provide you the services that outlasts.
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Now Solar is cheaper, with Soleos. So make your first move.