KPMG has released a new report which finds that rooftop solar photovoltaic (PV) generation could be less expensive than consumer retail electricity in some Indian market segments as early as 2014.

"The Rising Sun" also forecasts parity in the wholesale electricity market as early as 2017, the near end of the timeframe offered by a report released 16 months prior. Combined with the favorable economics of replacing diesel generation and renewable energy policies, the report estimates 12.5 GW of solar market potential in India by 2016-2017.

"In our last report released in May 2011, we anticipated utility-scale grid parity in the timeframe of 2017-2019 for India," notes KPMG India Partner and Head of Energy and Natural Resources Arvind Mahajan. "We now believe it is likely to occur at the earlier end of that range and therefore solar power presents a potential disruptive change in our energy scenario."

"This could help India leapfrog the energy technology space, and enable solar power to make a meaningful and substantive contribution to our energy scene by the end of this decade. Policy makers need to take a serious note of this potential."

Analysis based on rising electricity prices, falling PV prices

KPMG bases its analysis on an annual increase of 4-5.5% in retail electricity prices, and a 5-7% annual fall in PV prices.

Rising Sun notes that bids in the latest batch of the Jawaharlal Nehru National Solar Mission (JNNSM) reached between INR 9.44/kWh (USD 0.139/kWh) and INR 7.49/kWh (USD 0.175/kWh).

The low end of those bids was equal to the highest marginal retail electricity rates, between INR 5.5/KWh and INR 7.5/kWh (USD 0.102/kWh to USD 0.139/kWh). Some states, such as Maharashtra, have seen retail electricity rates between INR 6.45/kWh and INR 8.14/KWh (USD 0.120/kWh to 0.151/kWh) in the commercial sector.

Multiple market drivers add up to 12.5 GW by 2016-2017

KPMG also notes India's furious need for additional generation, citing a power deficit of 9% in the nation, as well as a gap between power purchase costs and retail electricity prices, which is causing big losses for state utilities.

All told, KPMG estimates that by 2016-2017, the rooftop PV market could reach 4 GW, with another 4 GW of utility-scale PV supported by government and state programs. These would add to the 2 GW in the diesel replacement market, and 2.5 GW from the "captive" market, driven by renewable purchase obligations.

Policy stability stressed

The report also stresses the role of supportive policies from the Indian government, and provides a series of recommendations. Foremost among these is not to withdraw current policy supports, citing investors' need for stable policy frameworks.

Finally, Rising Sun recommends that the central government compensate states to encourage PV markets, including using National Clean Energy Funds. Regulatory changes are also mentioned, including the importance of net metering policies.

2012-09-19 | Courtesy: KPMG | solarserver.com © Heindl Server GmbH

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