Decrease in Cost of Solar by 50% can Increase Solar Penetration by Eight Times: NITI Aayog

Continued policy support to promote renewable energy is essential to achieve the target, the report stated


Solar penetration in India is highly cost sensitive, says a recent working paper released by the National Institute of Transforming India (NITI) Aayog.

The study is based on India’s energy and emissions outlook. By analyzing alternative renewable energy technology cost developments in the future, it was found that a decrease in solar cost by 50 percent can increase solar penetration by more than eight times as compared to the baseline scenario.

This shows that penetration of renewable energy is highly cost elastic in the Indian market and therefore continued policy support to promote renewable energy is essential to achieve the target.

The paper utilizes a bottom- up energy systems model and presents a modeling-based approach to understand the future development of India’s energy system and look at how India’s commitments on climate change will affect its future energy and emissions scenarios.

Per the paper, as far as solar and wind capacity is concerned, without any significant improvement in cost, capacity addition of these renewables in baseline scenario is limited. This is reflected in the renewable share of total electricity generation, as without improvement in technical efficiency capacity addition in solar and wind translates into a lesser than proportionate increase in generation from these sources.

Lower the cost of installing and maintaining the services, higher the chances of newer capacity addition of renewable energy in the system.

The paper points out that by achieving its targets for increasing renewable capacity as per the nationally determined contribution (NDC) commitments, India can increase the share of renewables in power generation to 22 percent in 2032 as compared to almost 16 percent in the baseline scenario. In this scenario (NDC scenario), the share of non-fossil sources in installed capacity is 45 percent in 2030, as compared to 35 percent in the baseline scenario.

The working paper also notes that by increasing the installed capacity of renewables to 175 GW by 2022, India will be able to surpass its target of achieving 40 percent non-fossil capacity by 2022. With a 45 percent installed capacity from non-fossil sources by 2030, power sector emissions will consequently decline by 11 percent from a business-as-usual development, depicted as a baseline scenario, and thermal generation will continue to be the major source of power supply in the country.”

Per Mercom’s India Solar Project Tracker, India currently has an installed solar capacity of over 25 GW. Per Mercom’s India Wind Tracker, India’s installed wind capacity is 34.5 GW.

NITI Aayog is an advisory body of the government of India. Recently, NITI Aayog issued a draft concession agreement for public private partnership (PPP) for operation and maintenance of electric buses in Indian cities.