Solar power overtakes wind in India

Solar power has emerged as the fastest growing segment within the renewable energy sector in India, overtaking the long-time favorite wind power.

According to data from the Ministry of New and Renewable Energy, wind power was the clear winner till about 2014, but has clearly got left behind since then.

The year 2014 was when the newly elected Modi government announced a five-fold increase in India’s solar power target.

As of June 2014, India had 21 GigaWatt (21,000 MW) of installed wind power capacity, while solar power capacity was just 2.63 GW.

However, this changed fast over the last four years. Between June 2014 and June 2016, India added 20.4 GW of solar power capacity, but only 13.25 GW of wind power (see chart).

As a result, as of last month, India had 23.03 GW of installed solar power and 34.29 GW of installed wind power.

The other sources of renewable energy, like biomass, are doing even worse.

In June 2014, India had 8.04 GW of biomass power generation capacity. Over the next four years, it added only 1.47 GW.

Part of the reason for the difference between solar and wind is the early incentives given for wind power projects.

About a decade ago, India introduced a system of giving ‘accelerated depreciation’ on money invested on wind projects.

In other words, if a company invested Rs 100 cr on wind power, it could deduct that amount from its taxable profit, thus bringing down the overall tax that it had to pay. Any return from the sale of electricity added to the benefits.

Over the last three years, that system has been discontinued, and a reverse-bidding process introduced. Under this system, the government will give contracts to set up large wind farms to those companies who promise to supply power at the lowest cost.

However, the auction-based allocation of wind projects is yet to achieve its full run-rate.

Secondly, solar equipment prices have crashed in the last 5 years due to the ramp up of large-scale production in China, while wind equipment has not seen anything comparable in terms of price reduction.

LONG WAY TO GO

According to India’s Solar Mission, the country is supposed to have 100 GW of power generation capacity under solar power by 2022 and 60 GW under wind.

Accordingly, India has already given out contracts for about 40 GW of solar projects, currently at various stages of planning and execution.

For the year ended March 2018, the total renewable power generation capacity in India was around 70 gigawatt, or about 25% of the total 280 GW power generation capacity in India.

However, in terms of actual power produced, the share of renewables was far lower as renewables rarely run at full load. In the year ended March, India produced about 102 bln units of power from renewable sources, or about 7.8% of the total.

Out of the 102 bln units of renewable power produced, nearly half, or 52.7 bln units, came from wind farms, 25.9 bln from solar, 11.8 from bagasse (sugarcane) and 7.7 bln units from small hydro power projects.

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