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The Cost of Solar Power in India Just Keeps Falling

It's now much cheaper than coal.
India One Solar thermal power plant. Image: Brahma Kumaris

There's a solar power race raging in India right now that's brought prices tumbling to a record low in the country.

At an energy auction earlier this week, two power companies both offered to supply electricity for just 2.62 rupees (or 4 cents) per kilowatt hour (kWh). Phelan Energy and Avaada Power plan to build their new 250 MW solar farm in the state of Rajasthan.

It's the latest in a series of highly competitive prices offered by solar energy firms in the country. In April, a French firm bid 3.15 rupees per kWh, which was already a big drop from the 4.34 rupees per kWh bid at an auction early in 2016.


Another auction for a 500 MW farm will be held today, according to local reports, which could mean an even lower price is reached.

The 2.62 rupee figure is well below the current average price for coal energy per kWh—but coal remains by far the dominant slice of India's energy mix at 61 percent. At the moment, renewables account for 14 percent of the total mix, and solar is just 16 percent of that.

India's plans for coal are currently up in the air. A recent report said the country is on track to build 370 coal power plants in the coming years—a project that could threaten its place in the Paris Climate Agreement thanks to the accompanying carbon emissions. But soon after, the government said it wouldn't require new coal plants for at least a decade, and the country intends to expand its renewables sector.

According to a draft plan by India's Central Electrical Authority, a renewable capacity target of 175 GW has been set for 2022—it's at 42.8 GW today. And that might even rise to 275 GW by 2027. If the draft plan comes to fruition, renewables' share of the mix will leap from 14 percent to more than 24 percent.

"You could say having an ambitious target is giving people the confidence to make low bids and drive down the cost of financing," Simon Evans, policy editor at Carbon Brief, told Motherboard over Skype. "Another way of looking at it is that some people are arguing the bids are unsustainably low."


Read more: So We Signed the Paris Agreement. Now What?

Evans added that there appears to be growing acknowledgement in India that a huge expansion of the coal sector might not be required. That's because capacity utilisation of coal plants has actually been dropping and is now around 60 percent.

The news from India coincides with the revelation that Elon Musk's solar panel tiles for US homeowners will cost a few dollars less than expected—at $21.85 per sq. ft. once energy savings are taken into consideration.

There certainly seems to be a rush on right now to catch those rays—direct from the nuclear fusion power source that is our Sun.

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