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India's panel price crash could spark solar revolution

• 02 February 2012 by Michael Marshall
• Magazine issue 2850. Subscribe and save
• For similar stories, visit the Energy and Fuels and Climate Change Topic Guides

SOLAR power has always had a reputation for being expensive, but not for much longer. In India, electricity from solar is now cheaper than that from diesel generators. The news - which will boost India's "Solar Mission" to install 20,000 megawatts of solar power by 2022 - could have implications for other developing nations too.

Recent figures from market analysts Bloomberg New Energy Finance (BNEF) show that the price of solar panels fell by almost 50 per cent in 2011. They are now just one-quarter of what they were in 2008. That makes them a cost-effective option for many people in developing countries.

A quarter of people in India do not have access to electricity, according to the International Energy Agency's 2011 World Energy Outlook report. Those who are connected to the national grid experience frequent blackouts. To cope, many homes and factories install diesel generators. But this comes at a cost. Not only does burning diesel produce carbon dioxide, contributing to climate change, the fumes produced have been linked to health problems from respiratory and heart disease to cancer.

Now the generators could be on their way out. In India, electricity from solar supplied to the grid has fallen to just 8.78 rupees per kilowatt-hour compared with 17 rupees for diesel. The drop has little to do with improvements in the notoriously poor efficiency of solar panels: industrial panels still only convert 15 to 18 per cent of the energy they receive into electricity. But they are now much cheaper to produce, so inefficiency is no longer a major sticking point.

It is all largely down to economies of scale, says Jenny Chase, head of solar analysis at BNEF. In 2011, enough solar panels were produced worldwide to generate 27 gigawatts, compared with 7.7 GW in 2009. Chase says solar power is now cheaper than diesel "anywhere as sunny as Spain". That means vast areas of Latin America, Africa and Asia could start adopting solar power. "We have been selling to Asia and the Middle East," says Björn Emde, European spokesman for Suntech, the world's largest producer of silicon panels. Over the next few years he expects to add South Africa and Nigeria to that list.

The one thing stopping households buying a solar panel is the initial cost, says Amit Kumar, director of energy-environment technology development at The Energy and Resources Institute in New Delhi, India. Buying a solar panel is more expensive than buying a diesel generator, but according to Chase's calculations solar becomes cheaper than diesel after seven years. The panels last 25 years.

Even in India, solar electricity remains twice as expensive as electricity from coal, but that may soon change. While the price drop in 2011 was exceptional, analysts agree that solar will keep getting cheaper. Suntech's in-house analysts predict that, by 2015, solar electricity will be as cheap as grid electricity in half of all countries. When that happens, expect to see solar panels wherever you go.