What is the issue?
- Solar power tariffs dropped to Rs 3.15 per unit in recent power auctions.
- In this level, solar energy seems roughly competitive with thermal power.
What is the present scenario?
- Lower solar power costs are now a global phenomenon. e.g California derives about 40% of its grid power from solar energy.
- This has led to wholesale electricity rates dropping to zero at noon, when solar power generation actually exceeds grid demand.
- India’s current solar power capacity is about 12 Gigawatt (GW) and if the Jawaharlal Nehru National Solar Mission targets are fulfilled, it will hit 100 GW by 2022.
- As solar power capacity increases and it becomes cheaper to boot and it could replace thermal power, which uses coal and gas.
What are the problems?
- Though solar energy much cleaner and does not involve dependence on imported fossil fuel building huge solar capacities at rapid speed also has its consequences.
- Subsidies - The industry still receives large subsidies thus make this form of energy deceptively cheap.
- Without the subsidies and generous tax holidays, solar power is still substantially more expensive than thermal power.
- Storage - Solar power is discontinuous, therefore expensive and hard to store.
- Hence, when solar power is available, it receives preference on grids, forcing thermal power plants to reduce production at such times.
- This affects the plant load factor and hence, profitability, of thermal power plants.
- Without alternate arrangements fast growth in the highly subsidised solar power industry could lead to economic distortions.
- Import dependence - Solar energy equipment needs rare earth metals and China is pretty much the only source of these at the moment.
- Hence in strategic terms, solar power could also lead to a critical import dependency on China.
- Research - With growing research, it is very likely that current state-of-the-art solar energy technology will be outmoded in a few years.
- A phased adoption will ensure that India’s solar energy industry is not locked into obsolete technology.
- It will also provide the thermal power industry a chance to review future investments, and grid managers breathing space to develop smarter grids that manage the energy mix better.
Source: Business Standard
