Solar cheaper than diesel in India, for the first time

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A combination of factors are coming together in India to make solar cheaper than diesel for the first time. And that’s without subsidies.

India is using auctions to drive down the price of solar. Combined with rising diesel prices and cheap Chinese solar panels, solar costs are down 28 per cent since December 2010.

The average price of solar panels dropped 51 per cent last year as the world’s largest manufacturers doubled production capacity, reports Bloomberg New Energy Finance.

“Solar is going mainstream in India, helped by Chinese pricing,” says Ardeshir Contractor, founder of Kiran Energy Solar Power.

Demand for electricity is about 14 per cent higher than the country can supply during peak hours, and 400 million people have no access to power, according to the United Nations.

In its December auction, where utilities and developers compete on price, winners agreed to supply solar energy for an average rate of $0.17 per kilowatt-hour (kWh) by early 2013.

Coal still provides the least expensive energy at about $0.09 per kWh, but users have to be connected to the grid to access it.

Diesel accounts for four per cent of the energy that powers India’s 300,000 cell towers. This month, India’s Telecom Regulatory Authority recommended a minimum of 75 per cent of rural mobile towers and 33 per cent of urban towers run on a combination of solar, wind and diesel by 2020.

India’s National Solar Mission has set a target of producing 10 per cent of its energy, 20,000 MW – using solar by 2022, equivalent to 18 nuclear  reactors.

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