Coal contributes 60 percent to India’s power mix today; solar is less than 1 percent. But what was a factor-of-seven difference between the cost of coal and solar two years ago shrank this summer to just a 1.8 x gap. Can solar catch up within the next ten years?
The answer to this lies in domestic solar power, both centralized and distributed, built relatively fast at any size and requiring less than 1 percent of the nation’s land. Four factors have to come into play, though, for solar to truly supplant coal in India in the next decade.
– Looking at longer-term costs: Getting solar costs down to INR 5/kWh in the next couple of years, and lower beyond that, will require improved materials, production, and efficiencies, but long-term solar costs are heading downward. Costs of non-replenishing fossil fuels including coal, meanwhile, will increasingly depend on foreign supply and demand markets.
– Costs of infrastructure and grid management: As an infirm power source, solar’s higher incorporation will require extra investments in a number of areas from storage to demand response. On the other hand, adding more coal plants and imports will mean more infrastructures in mining and a supply chain for imports. It’s still unclear how those all will compare.
– Measuring externalities: Beyond simple end market pricing, coal has several arguable cost-adders that should be factored in, most notably pollution and greenhouse gas emissions, water usage, soil degradation, etc. Factoring in all costs will increasingly be important.