Renewable electricity generation in India could be 56% cheaper than coal-fired by 2030, according to a report published by Wood Mackenzie, a UK-based research and consultancy firm.
The report highlighted that the Asia-Pacific region could expect to see Levelized costs of electricity (LCOE) using renewables cheaper than coal by 2030. At present, India and Australia are the only Asia Pacific countries where renewable power generation already costs more economical than new-build coal. Rishab Shrestha, Senior Analyst at Wood Mackenzie stated that people could anticipate almost all markets in the region to have renewable power at a discount in contrast to the lowest-cost fossil fuel. He added that the stage was all set for the accelerated growth of subsidy-free renewables in the Asia Pacific.
The firm also explained that the costs for solar in Australia with its higher solar irradiation, while China with its lower capital expenditure (CAPEX) levels are similar. Moreover, as coal has a lower LCOE in China, renewable power is still sold at a premium. The report also highlighted that renewables are also expected to be about 47% cheaper than coal power in Australia by 2030.
In the context of other countries, such as South Korea, Vietnam, and Thailand, the firm expects renewables to become cheaper than coal by 2021. It suggested a $30/ton carbon tax in the region. The tax would support solar and wind power projects to become more economical than coal projects by 2023 and 2030, respectively.
According to the report, Northeast Asia has a high renewables premium of around 25%, with Japan (presently) leading the way in terms of renewable costs as of 2020. The firm also expects renewable power to be at least 1% lower than fossil-fuel based power by 2030. It explained that the currently high premium results from high labor costs, land restrictions, environmental permits, and a scarcity of renewable resources.
Furthermore, in South Korea and Taiwan, the cost of renewable power is expected to be 30% lower than energy from fossil fuels by 2030. On the other hand, renewable power in Southeast Asia has a 30% premium over coal, but that is only due to coal’s significantly lower LCOE. Vietnam is expected to become a leader in the region around 2021 as solar power gets more economical than coal.
Recently, the Solar Energy Corporation of India (SECI) discovered India’s lowest solar tariff ever of ₹2 (~$0.0270)/kWh in an auction. The tariff was over 15% lower than the previous lowest tariff in the country, which is a testament to how much the cost for renewable power has fallen over the years.