50% Drop In Solar Cost In India Could Increase PV Growth 8X

• NITI Aayog's working paper on energy and emissions sector in India looks at the future energy development of India basis the steps it is taking now
• Coal is expected to continue to be the major source of energy in the country owing to its cost competitiveness
• Assesses India's energy dynamics through three scenarios, baseline, NDC and sensitivity analysis
• In most optimistic scenario, it says that penetration of solar can increase by more than 8 times than expected in the baseline scenario, provided cost of solar comes down 50%
• It suggests continued policy support to promote renewable energy so as to achieve the 175 GW of renewable energy target by 2022

Indian government's policy think tank, National Institution for Transforming India (NITI) Aayog has recommended continued policy support to promote renewable energy to achieve the target of 175 GW of installed renewable energy capacity by 2022.

In a working paper titled India's Energy and Emissions Outlook: Results from India Energy Model, the authors argue that coal will continue to be the major source of energy in the country owing to its cost competitiveness in select end-use sectors. Balancing this preference for coal will need appropriate policy intervention in green and clean technologies.

For this working paper, the authors have used a bottom-up energy systems model using a modelling-based approach to understand the future development of what they call as the country's complex energy system and how its commitments for climate change will affect its future energy and emissions scenarios.

Out of the three scenarios assessed in this paper,

1. the baseline scenario factors in the current policy framework of the government and assumes gradual improvement in end-use energy management due to  technology improvements. In the baseline scenario, without any significant improvement in cost of solar and wind power capacity, capacity addition is seen as limited.

2. The NDC scenario is based on India's Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) where the government is targeting 175 GW of renewable energy capacity by 2022, with solar contributing 100 GW.  A decrease in solar cost in the range of 10% to 20% will help in meeting the generation level met by the NDC scenario.

3. The third scenario is sensitivity analysis that accounts for the market uncertainties, on demand and supply sides. The sensitivity scenario shows that a decrease in solar cost by 50% can increase solar penetration by more than 8 times compared to baseline scenario.

"When costs are decreased by 50% of the baseline, solar penetration increases to 896 TWh and the share of coal decreases to 1433 TWh by 2042. On the other hand, with a 10% decrease in cost, solar penetration increases only up to 114 TWh and share of coal decreases only up to 2216 TWh by 2042. This implies that the cost of renewables is an important factor in contributing towards cleaner generation mix," reads the paper.

The paper does mention in the footnote that views expressed are of the authors and do not necessarily represent the views of NITI Aayog.