India’s age of “solar house” dawns as falling solar + storage costs beat coal

A new report out of India has predicted that rooftop solar and battery storage will change the nation’s energy landscape, delivering electricity to households cheaper than coal-fired power from the grid as soon as 2023; while rooftop solar generation alone could be as much as 10 per cent cheaper than coal power by 2020.

The report, released on Tuesday by KPMG India analysts Arvind Mahajan and Manish Aggarwal, says that solar prices in India today are within 15 per cent of coal power prices on a levelised basis.

“While this may not fully capture costs such as grid integration costs for solar, our analysis suggests that even after considering the same, solar prices would be competitive with coal,” it says.

As you can see in the graph below – and as we have noted before on RenewEconomy – solar PV generation is already cheaper than imported coal in India; that happened this year. Solar prices are expected to breach domestic coal prices in mid-2018.

“Our forecast is that by 2020, solar power prices could be up to 10 per cent lower than coal power prices,” the report says

“Solar rooftop power combined with storage will be cheaper than grid power after 2022 for a large section of consumers, and at that time we may see a large shift towards rooftop power. We would like to call this transition, the arrival of the ‘Solar House’.”

According to the report, the arrival of the Solar House in India could see the sub-continent’s rooftop solar market reach a total installed capacity of 10GW by 2020 and 49GW by 2025, growth that would change the energy landscape.

The report forecasts a solar PV generation price of $A0.09/kWh (INR 4.20/kWh) by 2020 and $A0.08/kWh (INR3.59/kWh) by 2025 (at 2015 price levels).

Of course, as the report also notes, India’s ongoing NTPC solar park tender has already delivered prices at the INR 5/kwh mark ($A0.11/kWh) – which it describes as a landmark for the energy sector.

The report also estimates that the total market penetration of solar power in India could be 5.7 per cent – or 54GW – by 2020, and 12.5 per cent (166GW) in energy terms by 2025.

“Along with wind power, renewable energy could constitute a significant 20 per cent of our power mix in energy terms by 2025,” the KPMG report says.

“Solar rooftop power, today, is already competitive compared to grid power; however, it requires net metering support. …going forward, this will change due to the significant evolution that is expected in storage technologies.”

For coal, the report says it expects the sector to start coming under “significant pressure” from 2022 onwards, by which time solar would have achieved scale.

“To meet this challenge, the coal sector needs to focus on cost efficiency and flexibility to meet the various scenarios of demand. Apart from solar, various other factors such as slowing growth in China, emergence of energy efficiency on the demand side and fall in the commodities cycle, could lead to pressures on imported coal prices as well. This in turn
could put pressure on Coal India Limited (CIL)’s costs, as many users may find imports cheaper,” the report said.