The Competitiveness of India’s Renewable Energy Production: A Comparative Analysis

The past decades have seen an impressive global shift towards renewable energy, with significant advancements in technology and reductions in costs. One country that has emerged as a key player in this space is India. But how does India’s renewable energy production cost fare when compared to other nations? Let’s delve deeper.

Wind Energy Production

From 1984 to 2021, the global average cost for onshore wind turbines plunged dramatically by 74%, decreasing from about 5,000 EUR/kW to approximately 1,400 EUR/kW. The main contributors to this cost reduction have been the evolving design of the turbines, the enlargement of production capacities, and increasing plant sizes.

However, not all countries have witnessed this decline uniformly. Taking India as an example, the Capital Expenditure (CAPEX) for constructing wind farms is a mere 1,200 EUR/kW, lower than Spain’s 1,500 EUR/kW. The Operating Expenditure (OPEX) of wind energy plants in India ranges between 0.014 EUR/kWh, which is also more competitive than Spain’s 0.017 EUR/kWh.

Solar Energy Production

Solar energy, particularly Photovoltaics (PV), has experienced an even more impressive cost degression. From 2010 to 2021, the global average CAPEX for PV plants nosedived by over 80%, dropping from about 4,500 EUR/kW in 2010 to around 800 EUR/kW in 2021. This reduction is primarily attributed to the expansion of global PV module production.

The country-specific investment costs for PV plants differ, with Brazil at the lower end (550 EUR/kW) and countries like Colombia on the higher side (650 EUR/kW). India’s PV CAPEX stands competitive at 600 EUR/kW.

Weighted Average Cost of Capital (WACC)

WACC plays a significant role in understanding the cost of sourcing capital, which can impact investment decisions in renewable energy. Factors influencing WACC include the economic landscape, creditworthiness, and a nation’s regulation and tax environment.

For clarity, here’s a comparative table of costs across various countries:

Conclusion

India, with its competitive costs in both wind and solar energy production, stands poised to play a leading role in the global renewable energy market. The nation’s cost advantages combined with a favorable policy environment and growing expertise make it an attractive destination for renewable energy investments. The comparative costs across nations further emphasize India’s strong position and potential in leading the green revolution.