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India’s Coal Industry: Persistent Mistakes Proving a Recipe for Solar Power
May 3, 2012 by prospectingjournal · Leave a Comment
COMMENTARY–ProspectingJournal.com–
The growth and development of India is often overshadowed by the ever-present raucous of China. But make no mistake, this is a country that boasts a middle class larger than that of the United States and with a growth rate that until recently posted double digits.
An overwhelming demand for energy has compelled India to become a mammoth-like producer of power, with coal accounting for about 50 percent of all electricity produced. With that being said, in recent years India has endured growing economic woes and uncertainties. Surprisingly, its massive coal industry has emerged as the primary culprit. In coal, it appears that a combination of undeveloped policies, poor management and growing environmental concerns have substantially contributed to a slowdown in economic growth. Simply put: when retail electricity prices are lower than the actual cost of producing power, you know there is a drastic problem. In fact, the coal industry has grown so backwards that whilst power plant capacity jumped 11 percent last year, coal production only increased by a mere 1 percent. It is a political, economical and social catastrophe that has cost millions of dollars. But perhaps it is also, just maybe, one of the greatest catastrophes of all time. In India we have a giant, one that leaves a far larger footprint on this planet than most. What if we could get it to leave a greener footprint instead of a carbon one? Thanks to the mismanagement of coal, coupled with a growing solar flair, there is now a chance of that happening.
With the temporary demise of coal we have seen somewhat of a flourishing in India’s solar industry. Inefficiencies in the provision of electricity have contributed to higher electricity prices, which in turn have acted as a catalyst for the growth of solar-generated power. The costs of producing solar energy have continued to decrease, and at the going rate the price of solar power is expected to reach grid parity in the not so distant future. It is somewhat telling that the cost of industry-specific equipment has dropped by almost a third since 2010, according to Alan Rosling, of American-based Kiran Energy. Similarly, the past two years have seen the price of solar energy drop to $0.15 per kilowatt hour (Kwh). To put that into perspective, power stations in India currently charge electricity boards roughly $0.07/kwh. That means that the price of solar power has decreased far in excess of what most analysts would have expected. India’s solar production is still reliant on subsidies, but the combination of cheaper solar power and more expensive conventional power is on course to alter that trend. V. Saibaba, Chief Executive Officer of Lanco Solar, believes solar costs could fall by 40 percent by 2015. He believes, at that point, companies will be able to exploit economies of scale, which in turn would thrust the solar boom into full throttle.
Thus far the majority of solar development has taken place in the Indian state of Gujarat. It is an easy place to 
do business and it boasts a climate and terrain that works in favor of installing solar panels. In fact, the state recently celebrated its commissioning of 600 MW of solar energy projects over the past year, attracting the interests of a number of American manufacturing firms along the way, companies such as First Solar and Kiran Energy. Anjali Jaiswal, Senior Attorney for the Natural Resources Defense Council’s India Initiative, noted, “as the world’s second fastest growing economy, India has sparked a powerful solar market in only two years…India has already made important strides to attract new domestic and international players into the market, and lower the price of solar energy faster than most anticipated”. It gives much cause for optimism, and it is somewhat impressive that India is potentially only three to four years away from seeing its solar industry reach grid parity, where prices will become naturally competitive with those provided by the likes of coal.
If that becomes the case it will result in a massive solar boom. Given the force and footprint of this massive economy, that isn’t such a bad thing. In fact, it will prove a massive achievement in our global progression towards sustainability. But until then, let us hope that those in the coal industry continue to err, because their failures are surely a blessing in disguise.
