Reaching India’s Renewable Energy Targets Cost-Effectively

The report finds that wind power is already cost-competitive with imported coal, while solar power is expected to become competitive by 2019. It argues that the total cost of government support for solar energy can be reduced by 96% if the government shifts from accelerated depreciation to a policy of reduced cost, extended tenor debt. To further minimize costs, the report suggests accelerating wind deployment in the near term and ramping up solar deployment after 2019.

• India's Union Budget 2015-2016 set targets to install 100 GW of solar power capacity and 60 GW of wind power capacity by 2022, representing a significant increase from the then-installed capacities of approximately 3 GW and 22 GW, respectively.
• Imported coal is identified as the most likely fossil fuel to be replaced by renewable energy because it is the most expensive fossil fuel likely to be deployed at scale, with a projected generation share of 18%, which exceeds India's 2020 renewable energy generation target of 15%.
• Wind power is already cost-competitive with imported coal, meaning its levelized cost of electricity (LCOE) is equal to or lower than that of coal and requires no additional government support.
• Solar power was 11.79% more expensive than imported coal in 2015, but is forecasted to become competitive by 2019 due to learning effects reducing capital costs and inflation increasing fossil fuel costs.
• Under the existing federal policy of accelerated depreciation, the total cost of government support to achieve 20 GW of utility-scale solar by 2022 is estimated at INR 46.97 billion, or INR 2.71/W.
• A policy combining reduced cost and extended tenor debt can lower the total cost of government support for solar energy by over 96%, reducing it to INR 0.1/W (or INR 1.81 billion total).
• While reduced cost, extended tenor debt is more cost-effective over a project's life cycle, it requires significantly higher initial budget allocations; in 2015, the nominal cost would be INR 123.79 billion compared to INR 31.2 billion under accelerated depreciation.
• To minimize the total cost of government support, India should prioritize the rapid deployment of wind energy in the near term and schedule solar capacity additions so that a larger portion is met after 2019.

APA

Shrimali, G., Srinivasan, S., Goel, S., Trivedi, S., & Nelson, D. (2015). Reaching India’s Renewable Energy Targets Cost-Effectively. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2015/04/Reaching-Indias-Renewable-Energy-Targets-Cost-Effectively.pdf

Chicago

Shrimali, Gireesh, Sandhya Srinivasan, Shobhit Goel, Saurabh Trivedi, and David Nelson. Reaching India’s Renewable Energy Targets Cost-Effectively. Climate Policy Initiative, 2015. https://www.climatepolicyinitiative.org/wp-content/uploads/2015/04/Reaching-Indias-Renewable-Energy-Targets-Cost-Effectively.pdf.

Wikipedia

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BibTeX

@techreport{shrimali2015reaching, author = {Shrimali, Gireesh and Srinivasan, Sandhya and Goel, Shobhit and Trivedi, Saurabh and Nelson, David}, title = {{Reaching India’s Renewable Energy Targets Cost-Effectively}}, institution = {Climate Policy Initiative}, year = {2015}, month = apr, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2015/04/Reaching-Indias-Renewable-Energy-Targets-Cost-Effectively.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }