Rs 15 vs. Rs 7.5 = Diesel vs. Solar

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If you are a follower of the solar scene in India, unless you had been in a cave, you would have heard about the celebrity (or notoriety)  status achieved by Solairedirect – with their audacious (or atrocious) bidding of Rs 7.49 per kWh in the Batch II of Phase I NSM.

Now, let’s for a moment forget the controversy. If not today, such a bid means that Rs 7.5 will be a reality soon enough. That makes me compare solar power with a fuel we all know so well – diesel.

Diesel power costs in the range Rs 13-15 per kWh, that is, if you are lucky (In the Andamans, it could cost as high as Rs 25 per kWh owing to the difficulty in transporting diesel to islands and its general scarcity in such areas). I will stick to Rs 15 per kWh.

The math now is tantalising. Rs 7.5 per kWh for solar vs double that for diesel. Two years back, I used to pitch to industries that solar was becoming competitive with diesel. A year back, that pitch changed to “solar is competitive with diesel”. Today, there is no comparison whatever, these two exist in two different leagues all together!

That said, yes, comparing diesel to solar is not comparing apples to apples as solar cannot completely replace diesel, as I have so annoyingly repeated in so many posts before. Yet, to the extent that diesel could be replaced by solar (the workings at EAI suggest that an average 25% of consumption could be so replaced under the present setup), it means that corporates could save as much Rs 7.5 for the power they get from solar. Not a bad deal for a sector that was known as a high cost sector until not so long ago!