India Solar, Wind, Biomass, Biofuels – EAI

The Captive Solar Industry

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It is a well known fact that India’s electricity generation is insufficient relative to the demand the country has. In 2009-10, India’s electricity deficit was approximately 10% (84 TWh) and the corresponding peak load deficit is 12.7% (over 15 GW). India’s frequent electricity shortages are estimated to have cost the Indian economy 6% of gross domestic product (GDP) in financial year 2007–2008. To power the economic growth currently being targeted, it is estimated that India will need more than double its installed generating capacity to over 300 GW by 2017.

Another report states that there is an approximately 7% decrease in the turnovers of Indian companies due to power cuts. As a consequence, many factories, businesses, and private customers have set up their own power generation capacities in the form of captive power plants or diesel generators in order to ensure their power supply. This provides an attractive opportunity for renewable energy solutions; they compete not with power produced relatively cheaply by large coal plants but with much more expensive diesel back-up generators.

The reason why they compete more effectively with diesel generators is that while the cost of grid based power is in the range of Rs 4-5 per kWh, the cost of diesel based power generation is about Rs. 12 per kWh. With the levelized cost of electricity production from small scale, captive solar PV being about Rs 10 per kWh (including batteries, and after subsidies and incentives have been factored in, and including cost of capital in the calculations), it is easy to see why solar PV competes well against diesel but not against grid power.


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