India solar power costs could fall by 40 percent by 2015

SINGAPORE Wed Nov 2, 2011 5:22am EDT

SINGAPORE (Reuters) - India's solar power costs could fall by more than 40 percent by 2015, allowing the industry to compete against domestic oil and gas firms without the help of state subsidies, the head of Lanco Solar told Reuters on Wednesday.

Solar technology could provide a kilowatt hour of power at about 7 to 8 rupees a unit in the next few years, down from the current 11 to 12 rupees, due to surging global capacity, said Lanco Solar CEO V. Saibaba.

That would enable solar power to become a more viable option to coal, which costs around 2 rupees a unit, in fueling Asia's third largest economy and the world's third-worst carbon polluter.

"The most important thing is the economics of scale are coming," Saibaba said on the sidelines of an industry conference. "In the next three to four years, I see the solar power costs coming down to 7 to 8 rupees a unit."

Under its Solar Mission plan issued in 2009, India is to produce 1,300 megawatts (MW) of power by 2013 and 20 gigawatts by 2022 at an overall investment of about $70 billion.

Lanco Solar, a unit of Lanco Infratech, is one of 37 companies selected by India last year to build solar power projects, as the country looks to boost production from near zero.

"Given the current scenario with the way it is growing and the way costs are coming down, our industry will probably not require any financial support from the state going forward in maybe three to four years," Saibaba said.

Lanco Solar has secured several state projects, including a PV module-producing plant in Chhattisgarh and solar power generation plants in Punjab. It hopes to boost its solar capacity to 500 MW in three years.

(Editing by Michael Urquhart)