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Can Solar Power Beat Nuclear Energy Costs?

By Author: Nikhil Mehra
Total Articles: 33

With the Indian Government setting an ambitious goal of tripling nuclear power over the next decade, the country is well poised to double its nuclear power generation capacity to more than 10,000 mega watts (MW) over the next five years.

According to a recent analysis by indiaspend.org, a data-driven non-profit, domestic nuclear power generation has doubled in the last five years and is likely to repeat this performance over the coming five years given the new capacity addition under construction.

With more fuel available, capacity utilisation of nuclear power plants has improved from 50% in 2008-09 to more than 80% now. 

The ongoing surge in nuclear power is a direct payoff of the India-US Civil Nuclear Agreement, which has already delivered clear, tangible gains for India, and will continue to do so in the coming years.

Compared to power plants using fossil fuels, such as coal or gas, nuclear power has high initial costs with the cost of the imported fuel needed to power these reactors pegged at approx INR 330 crore per annum. 

However, fuel costs are a relatively small expense in the course of a nuclear plant’s lifecycle, compared to the significantly lower lifetime costs for nuclear power vis-a-vis conventional sources like coal or gas. The Nuclear Power Corporation in India (NPCIL) supplies electricity at a lower cost per unit than any other public or private energy utility in the country today.

Nuclear power plants currently account for an estimated 3.5% of India’s power generation capacity with its share in India’s future electricity generation likely to less than 10%, even if the existing installed nuclear generation capacity levels are tripled.

However, along with other sources of energy such as hydropower and solar power generation, it will play a role in reducing India’s reliance on fossil fuels like coal for generating electricity.

On the solar energy front, the government has set itself an ambitious target of increasing its solar power generation capacity five-fold to 100 GW by 2020.

Already the prices of solar photovoltaic panels in India has declined by a whopping 80% (from their 2008 levels) even as the efficiency of solar modules has pegged a annual hike in the region of approx 4.5%.

Driven by the growing demand, declining costs and capacity additions by solar IPPs in India, the cost of solar power is expected to equal those of conventional energy tariffs or go even lower to touch an per unit average price in the range of INR 4.00-4.50 over the next two years.

Already there has been a significant reduction in solar power tariffs over the last couple of years with the feed-in-tariffs (FITs), largely due to supportive trends like the improved absorption of fixed costs, declining costs of solar components and lower return expectations fuelled by market maturity, by solar IPPs in India.

Welspun Renewables is guided by its vision to power a Green India and is working towards becoming a fully-integrated power company by setting up renewable energy based power plants.

India is well-placed to achieve its target of 100GW of solar energy by 2022 if it strengthens its transmission grid, lowers financing costs and follows a consistent policy with regard to

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