Narendra Modi’s recent raise in the solar electric capacity target from 20,000MW to 100,000MW by 2022 appears to be a blunder, and a costly one at that. Potentially sabotaging his ‘Make in India’ ambitions, this $100 billion mistake could disrupt the entire electricity grid by raising the cost of electricity, which happens to be a critical manufacturing input.

With the highest interest rates among its Asian peers, India is uncompetitive on the electricity front too. Bulk power here costs one and a half times greater than in competing Asian nations. Solar power would be even more expensive, despite the huge subsidies involved, and ‘Make in India’ would take a hit.

While solar energy’s cost has halved in the last decade, it needs to go down further to make it competitive, especially in the face of 100,000MW of solar power by 2022, when it would constitute about a quarter of total power capacity. This could potentially upset the whole grid, since solar power would no longer be available on the setting of the sun, just when electricity demand would peak. Meeting such a huge peak in demand would require a massive cushion of idle thermal power, which is a significant hidden cost of solar power no one seems to notice yet.

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Source: The Hindu

Raising the target to 100,000MW of solar power by 2022 would only raise costs for manufacturers, which begs the question-Why must we hurry and not wait for solar prices to become competitive before going all out?

While solar power is highly subsidized, state levies, transmission and distribution costs make it an expensive deal at around INR9/unit when large captive power producing companies claim their costs hover at just around INR2/unit.

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