India’s Solar Journey: From Feed-in Tariff to Reverse Bidding

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Competition is the catalyst for progress, and the Indian solar industry is a perfect example of how moving from a monopolistic market to a competitive market has led to significant advancements and achievements.

India’s solar journey has been marked by significant progress and achievements over the past decade. The Jawaharlal Nehru National Solar Mission (JNNSM) launched in 2010 aimed to add 20 GW of solar power by 2022. The initial feed-in tariff of Rs 17.91/kWh provided a boost to the solar industry, but it did not result in significant capacity addition. Therefore, subsequent bids were adopted based on a reverse bid mechanism that introduced competition among solar developers.

The falling equipment prices and increased competition led to a reduction in tariffs by over 30% in solar bids. The reverse bidding process, which allowed for competition, has resulted in the lowest solar tariffs ever in the world. In 2017, solar tariffs fell to Rs 2.44/kWh, and in 2020, it reached an all-time low of Rs 1.99/kWh.

Increased competition and falling equipment prices have enabled the government of India to achieve its targets of NSM. The data shows a significant increase in the total capacity addition of solar power in India from 35 MW in 2010 to 5,513 MW in 2020, despite a dip in 2020 due to the COVID-19 pandemic.

The success of the reverse bidding process can be attributed to the falling prices of solar panels, which have decreased by almost 80% in the past decade. The government has also played a significant role in supporting the solar industry through various policies and incentives.

While India has achieved its 100 GW RE capacity, increasing the penetration of renewables in India’s grid poses significant challenges. One of the major challenges is grid stability, as solar and wind energy are intermittent sources of power. The government has introduced energy storage technologies such as batteries and pumped hydro storage to address the issue of grid stability.

In conclusion, India’s solar journey has been remarkable over the past decade. The shift from the initial feed-in tariff regime of Rs 17.91/kWh to the reverse bidding process that resulted in tariffs as low as Rs 1.99/kWh has been enabled by increased competition and falling equipment prices. While challenges remain in increasing the penetration of renewables in India’s grid, the government is taking steps to address them and is well on its way to achieving its 450 GW solar targets by 2030.

Categories: Solar Market