How Solar Power plants are cheaper than coal-fired power plants

Today, the falling technology costs have pressed the price of renewable energy below coal in India, where coal was a major source of electricity generation. Many reports have showcased that the coal-fired power plants generate electricity that is costlier than the cost of solar energy.

The preference of solar energy over the conservative energy sources is not only a utility of the drive towards green energy and sustainability but also gets inclined by solar energy price, which further depends on the rooftop solar power plant cost.

Solar energy and fossil fuels

In terms of environmental effect, solar power is the most positive resource when compared to fossil fuels like coal. In terms of steadfast application, coal-fired power plants have some benefits. However, the eventual way to evaluate solar energy to fossil fuels is by cost-effectiveness, where solar has swiftly caught up all the attention with its non-renewable equivalents.

The support from the Government in terms of subsidies plays a significant role in shaping the development prospects for solar power generation with renewable sources of power. However, matching the exact cost of numerous energy sources is not straightforward.

Also, the newly launched solar and wind paired with 4-hour battery storage capacity systems are more cost-effective. They come without subsidy and are better when matched with new coal-fired plants.

The advantages of solar power generation over coal

Most of the people are already aware of the disadvantages which arise due to the use of coal. This scenario includes considerable pollution and the actuality that it is an insufficient resource that will ultimately run out with time.

Solar is installed on a rooftop surface or ground mount and harnesses an already accessible resource – the sunlight. Solar is a source of green power and a non-pollutant, which is a critical advantage for any mass-energy source at scale. Besides, renewable resources are precise for use as they replenish and are not limited resources. They even do not lead to price volatility.

By comparison, fossil fuel like coal needs the degradation of the earth in production. Many people may not be fully aware that fossil fuels not only generate greenhouse gas emissions but even the procedure of drilling further degrades and erodes the ground polluting the supply of water.

How India has become the cheapest producer of solar energy

India is becoming the most low-cost producer of solar energy through cost-effectively built solar power plants is a success story in itself. There are many significant reasons for making solar power plants cheaper than coal-fired power plants. The increasing growth of the sector can be credited to the following:

• Role of Indian Government

When the National Solar Mission was introduced in the year 2010, the price of solar power was INR 17 per unit in contrast to the newest bid of INR 2.44 per unit. This has been made achievable by cut-throat tariff-based bidding that Solar Energy Corporation of India (SECI), State and Central Government has embarked on via tenders. Even the Ministry of New and Renewable Energy (MNRE) has promoted solar energy through diverse public awareness events and campaigns, enabling fast growth.

• Policies and Incentives

Different subsidies and incentives provided by the Government and Jawaharlal Nehru National Solar Mission (JNNSM) since the year 2010 have been influential in the acceptance of solar energy. The top segments that have seen swift growth are the utility-scale and open access to solar farms coupled with the balanced growth of rooftop solar power plants in India. Government subsidies up to 30% for all rooftop solar projects played a critical role in expanding the rooftop solar market.

• Land Uncertainty

One of the apparent reasons for the record low solar power cost of INR 2.44 was the uncertainty coupled with land acquisition. The land costs were totally erased from the project cost of huge size solar projects making solar power plants cheaper in India.

• Low Labour Costs

India has the most economical cost of labor, enabling the solar sector to employ a large number of human resources resulting in rapid project completion at the lowest possible prices making solar power plants cheaper than coal-fired power plants.
Setting-up of a solar plant needs just 20% to 30% high skilled labour, and the remaining are unskilled or semi-skilled resources, straightforwardly obtainable, and at reasonably priced costs.

• Price Sensitivity

This price sensitivity has lent a hand to Indian solar power plants. The solar energy cost is determined by the overall evaluation of the rooftop solar power plant cost. The accessibility of vital components like solar panels, inverters, junction boxes is made at much lower prices than other countries, many times even from the same global vendors. So, the price sensitivity in India is one of the key reasons why India has achieved lower solar tariffs as matched to other nations.

The other way the price sensitivity has assisted solar power plants is that once solar tariffs reduced below the grid electricity tariffs, there has been super speedy acceptance, which has further the economies of scale, steering the prices of solar power plants components still lower.

Moving Forward

The solar power plants in India are now half the price of coal, even though the Government has made functional the new tariffs on solar equipment.

In the coming years, energy storage will play a vital role in making renewable energy a steady source of power and will trim down the landed cost of renewable power. With support in initiatives through the Indian Government, developers are getting the long-term vision in terms of the solar project pipeline and real value in taking on solar electricity. We can conclude that India is on edge to safeguard its renewable future.

Amplus Solar

November 21, 2019