Solar power with storage is already available at half the cost, compared with power from diesel-run generators, according to industry watchers.
Vikram Kailas, Managing Director and CEO, Mytrah Energy, told BusinessLine: “We are probably going to hit the ₹5 kWh rate for solar power with storage in another five years.”
According to industry watchers, the biggest constraint to solar-and wind-powered projects is their inability to provide sustained power throughout the day. Even though solar-power tariffs have crashed to ₹4-6/kWh (from ₹16/kWh and above) in the past two years, the current technology of battery-linked storage pushes costs to ₹12-14/kWh for those seeking 24-hour solar power.
Explaining the rationale for the lowered tariffs, Kailas noted that the cost of storage-linked solar power is already near ₹8-10/kWh for housing societies in Gurgaon and Hyderabad. The industry is estimating a 3 per cent y-o-y decrease in costs for parts, and another 3 per cent y-o-y increase in efficiency. By those numbers, the industry estimates a 4-6 per cent y-o-y reduction in costs for both wind and solar.
The falling solar-panel costs have also been a factor in the lowering of tariffs. Commenting on projections that panel costs will continue to fall at the rate of 10 per cent per annum, Kailas said: “The solar-panel cost comprises 60 per cent of the overall project cost. So a 10 per cent reduction in the panel cost translates to a 6 per cent reduction in the project cost, and consequently, another 4-5 per cent reduction in tariffs.”
The government has also called for a tariff-based competitive bid for wind-power projects this year. Commenting on tariffs projections for the same, Kailas said: “We expect turbine costs also to come down. The turbine cost comprises nearly 80 per cent of the entire project cost. Even a 10 per cent reduction there will result in power tariffs coming down by 7 to 8 per cent. We expect the winning bids to remain ₹4.20-₹4.50/kWh in this round.”