India suffers from frequent power shortages and blackouts, which have impeded the nation’s economic growth. This is mostly because India depends on coal for two-thirds of its power generation. Most of the coal in India is controlled by Coal India, a government-based group that struggles to meet electricity demand because of corruption and weak policies. In fact, the gap between electricity supply and demand is about 10%, according to a press report.
It is reported that India’s government hopes to combat these power failures by planning another 1 GW of solar projects – doubling it’s June 2012 capacity – this financial year, according to Bloomberg. The Indian government has already has a three-phase plan, called the Jawaharlal Nehru National Solar Mission, to install 1 to 2 GW of solar power by 2013, 4 to 10 GW between 2013 and 2017, and 20 GW by 2022. The National Solar Mission uses a reverse auction bidding process, which awards solar projects to companies with the lowest asking price.
Due to the persistent blackouts, India hopes to auction a third of the projects planned for 2017, or 1 GW of solar capacity, this financial year. According to Bloomberg, the first phase of the National Solar Mission used incentives, such as special tariffs, to promote solar installations. It’s considering using another incentive program in this second phase to expedite the process.
India’s National Solar Mission has proven successful so far. Not only did it beat its targets for solar installations in mid-2012, but its reverse auction bidding process has also decreased the price of solar power. The price decreased by 38% between 2010 and 2011. Between early 2010 and March 2012, the price of solar energy in India dropped to as little as Rs. 7.49 per kilowatt hour (kwh), or $0.15 USD/kWh. This price drop in Indian solar power means that solar could achieve price parity with coal or natural gas by 2016.