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Published on January 22nd, 2016 | by Giles Parkinson


Solar Power Now Cheaper Than Coal In India, Says Energy Minister

January 22nd, 2016 by  

Originally published on RenewEconomy.

The latest auction of solar energy capacity in India has achieved a new record low price of 4.34 rupees/kWh, prompting the country’s energy minister Piyush Goyal to say that solar tariffs are now cheaper than coal-fired generation.

The results of a reverse auction tender of 420MW of solar capacity conducted by the Rajasthan government revealed this week that Finnish group Fortum Energy bid the lowest price of 4.34 rupees/kWh for a 70MW solar PV plant.

It is the lowest price obtained so far in India, which aims to install more than 100GW of solar by 2022, and was hailed by Goyal as a sign that solar power is now cheaper than coal power.


“Through transparent auctions with a ready provision of land, transmission and the like, solar tariffs have come down below thermal power cost,” Goyal said in a tweet.

In a later tweet, Goyal said: “We are moving rapidly towards realising the clean energy vision of Prime Minister Narendra Modi.”

In a week in which it was revealed that China’s coal consumption for electricity had slumped 3.5 per cent last year, it is a further bad sign for Australia’s coal exporters.

The Fortum bid betters the previous low of 4.63 rupees/kWh made by the US-based SunEdison, the world’s biggest developer of renewable energy power plants, for a 500MW plant in Andra Pradesh last November.

Like many such auction results, the Sun-Edison bid was dismissed as irrational. But it was matched a month later in a different auction in December by SkyPower.

Fortum’s offer was also no outlier. The bid was nearly matched by Rising Sun Energy (which bid 4.35 rupees for two blocks), France’s Solairedirect (also two blocks for 4.35 rupees a unit) and Yarrow Infrastructure ( a 70MW plant for 4.36 rupees).

“This (Rs 4.34 a unit) is the lowest solar tariff so far in India. This has happened because of confidence in the balance sheet of NTPC and solar parks that come with all clearances and confidence in the market,” new and renewable energy joint secretary Tarun Kapoor said.

The bids are also not subject to price indexation. Tim Buckley, from the Institute for Energy Economics and Financial Analysis (IEEFA) wrote last month that this means a potential 5 per cent annual real price decline is contractually in place for the next 25 years, a significant long tail advantage of renewable energy.

Fossil fuels by comparison offer prohibitive price variability and currency devaluation risks.

“India currently has over 4.4GW of installed utility solar capacity, and solar consultancy Bridge to India estimates another 16GW of tenders have been allocated or are in the process of tendering, much which we expect to be operational by 2017 at the latest. Rooftop solar is also on a steep upward trajectory in 2016,” Buckley wrote.

“After only 1GW of solar installs in each of 2013/14 and 2014/15, IEEFA estimates 2015/16 installs will more than double to 2.5GW, double again in 2016/17 to 5-6GW and then 9GW by 2017/18. By 2021/22, we forecast cumulative installs of solar to exceed 80GW – close to the Indian Government’s target of 100GW set one year ago.”

Reprinted with permission.

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About the Author

is the founding editor of, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.

  • brian_in_arizona

    What happens at night when Indians need electricity from solar installations? Is there enough coal and gas fired thermal generation to pick up the loss?

    • Bob_Wallace

      Like everywhere else, over time we’ll see wind, hydro and storage fill in between the sunny times.

    • Calamity_Jean

      India is also installing lots of wind power that will work all night. The demand for power is greater in the daytime than at night, so solar comes at just the right time. The cost of batteries and other ways to store energy are also falling.

  • Carl Raymond S

    So, Malcolm Turnbull (PM, Australia), I assume this means we can cancel the Carmichael Central Queensland Adani coal mine? The touted rationale for the mine was to improve the lives of impoverished Indians by providing them with electricity. It now appears they are better off, both financially and in terms of water conservation and pollution reduction, by opting for solar. Cheers – one massive hole in the ground narrowly avoided.

    • dhm60

      The 306 million Indians who have no grid supply and no money to buy that supply will be considerably better off with PV nanogrids. So will India’s states who will be able to avoid the billion dollar cost of having to expand their already tottering and frequently unstable centralised grids.
      However, Carmicheal will proceed on political grounds with some eye-wateringly big injections of both Australian government money (Develop the North) and Queensland government money (disappearing jobs in the region). The tax-payer will be able to watch as we subsidise an almost guaranteed stranded asset.
      We will have our hole in the ground and a very expensive, multi-year job buying scheme as well. (Adani will use its 2 Indian PV panel factories to cash in on the 25% local PV content rule. And enjoy being paid out to try an export their 5% less ash Australian coal at 2.5->3X the local price.)

  • JamesWimberley

    Well, well . Some of us – I think Deutsche Bank were first – have been predicting the crossover for a while. It has come much sooner than anybody expected.

    When will Goyal revise his coal plans in line with the new reality? The plans for huge coal UMPPs have been gathering dust on the shelves or Adani, Reliance and Tata for several years. May the dust thicken.

  • Steve Grinwis

    Today India.

    Tomorrow, THE WORLD!

  • Shiggity

    Water consumption is a key issue in this fight.

    Coal uses egregious amounts of water, solar PV uses none. Coal also heavily pollutes the water sources it interacts with, again solar PV has none of these water issues.

    India cannot even get clean water to >75% of it’s population. Solar pv solves two issues at once.

    This water issue is present in all major countries with coal.

    • Steve Grinwis

      Isn’t there still some water requirements for PV to wash the panels? I guess that depends on the amount of rain the area gets.

      • Bob_Wallace

        There are panel cleaning robots that use almost zero water.

        • Steve Grinwis

          That’s awesome!

          • Bob_Wallace

            Here’s one –

          • Ronald Brakels

            This is the robot version of using a soft broom to clean off a solar panel after a duststorm. And now when ever I see a granny standing on a farm roof dusting off the solar panels I’m going to wonder if she’s actually a robot.

  • stephan011

    6.4c per kWh, still much higher than best prices in the US (5.5c) though financing costs are likely much higher in India.

    • Pawan Sharma

      And that’s because India has a local content clause in the tenders that forces bidders to use at least 25% of the panels from Indian manufacturers that are costlier than the chinese ones.

  • vensonata

    I’ll save you the trouble: 4.3 rupees is 6 cents kwh U.S.

    • Ross

      Sorry, already did that before I scrolled down this far. 😉

  • sault

    I already knew we were turning the corner in reducing fossil fuel consumption globally, but this will probably make the “kink” in the s-curve happen much sooner. China and India are the biggest drivers of future coal consumption and emissions, so seeing both economies stop their increasing consumption and fall into decline so rapidly is highly encouraging. Given the crazy-high temperatures we saw in 2015, we need lots more encouraging news for years to come.

    • Bristolboy

      2015 appeared to be the year when wind and solar finally became cheaper than fossil fuels across large parts of the world. Hopefully 2016 will just extend this, and it will also get into wider public consciousness that wind and solar are the economic choice.

      The only reason there hasn’t been an even bigger breakthrough is the corresponding fall in fossil fuel prices, however, these have fallen to levels where the miners lose money. It is now only a matter of time before either wholesale fossil fuel costs increase again (making wind and solar even more competitive) or fossil fuels companies stop producing (taking away the competition from wind and solar).

      And of course, with every passing day, week, month and year technological advancements are decreasing the cost of wind, solar and other renewables; as well as complimentary technologies like electric vehicles and battery storage.

      • dRanger

        And here we have what I think is the most important reason 195 countries were successful in reaching an agreement in Paris: they all realized that renewables were going to undercut fossil fuels on price and regular market forces were inevitably going to reduce emissions anyway. If it’s going to happen anyway, why not take the credit? Not exactly a profile in courage but I’m glad they did it. Who would expect 195 countries to all agree on anything, ever?

        • Frank

          Totally agree. But if any of them want to show a little guts, put a price on everything coming out of a smokestack, or tailpipe. That would help speed things up.

      • Frank

        I’ve been really waiting for this. India just needed to do enough installs to get the price down. The parts prices were already there.

      • Freddy D

        Yep, coal demand may be down a little, but fundamentally, it’s still heavily consumed and oil consumption continues to climb – for now. Natural gas may even be up too. Nonetheless, this is a huge milestone in the history of energy. For new electric generation, buying a coal plant would simply not make economic sense in this environment. Todays viable competitors for new generation are wind, PV, and natural gas.

        • Calamity_Jean

          And the bell will shortly toll for natural gas. Several gas well frackers in the US are quivering on the brink of bankruptcy. Fracking is expensive, and fracked wells run out in just a few years. Within five or six years I expect the price of gas to shoot up as older wells run dry and new ones have to be fracked. With the gas price up, wind and solar will look even more appealing.

    • Ross

      Certainly looks encouraging. If the big beasts of US,China,EU,& India all make good progress the rest of world is unlikely ever go through a heavy Fossil Fuel pollution stage.

    • Freddy D

      This is for comparing new generation facilities and to install a new coal plant today, anywhere, would not make economic sense with the current costs of PV. This is a huge milestone in the history of energy.

      For existing power plants, the economics are more complicated and PV prices have to fall further to render them uneconomical to continue operation. This is because of “sunk costs” – once a plant is built, the construction cost is sunk, whether it runs or not. So the decision as to whether to continue running it comes down to what does it cost for fuel and labor.

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