Solar power’s moment of reckoning arrives in Andhra Pradesh, 

The union minister for new and renewable energy, Piyush Goyal, expressed his delight that “solar tariffs have broken the Rs 5 per unit level” in a tweet. At the conference on solar energy organised by Inersolar India in Mumbai a few days ago, this had fired the imagination of the participants. Speaker after speaker waxed eloquent on the reasons for the fall and the consequences.KPMG in a recent report says that solar power prices are now within 15 per cent of thermal power, and by 2020, the prices will be approximately 10 per cent lower. Rooftop solar power is already competitive compared to grid power for many consumers, and could be cheaper for a large section of the consumers by 2022. A “solar house” that is self-sufficient in energy could be a reality within the coming decade.”Solar energy is at an early stage both on the panel side and on balance of plant, and will see continued cost reduction for a while,” says PwC Partner Kameswara Rao. KPMG Partner and Head (energy and natural resources) Manish Aggarwal estimates that solar tariff will settle at Rs 4.20 a unit by 2020, and thermal power generators may have to respond by reducing their costs.

According to Jayant Deo, a former member of the Maharashtra Electricity Regulatory Commission, the price of solar electricity has reduced to one-fourth in the last five years because costs have tumbled worldwide. It is estimated that by the end of 2017, there will be grid parity in 80 per cent of the world. “The fall is due to the shift of solar cell production to Asia which has lower costs. It is also because of the improved efficiency of the cells and the reduced weight of the materials used,” he says.With greater adoption, production of solar equipment has reached a virtuous cycle: falling prices lead to more purchase, which in turn generates further economies of scale. Agencies