India helps bring down costs of utility-scale solar PV globally, says International Energy Agency

India, which discovered an auction price of around ₹2,860 per megawatt hour (MWh), was instrumental in bringing down global utility-scale solar photovoltaic (PV) costs in H1 2024.

According to the International Energy Agency (IEA), the world’s fourth largest market for renewable energy achieved a 23 per cent decline y-o-y in prices of utility-scale solar PV in the current calendar year.

“Utility-scale solar PV costs decreased in all regions and settled at an average of $40 per MWh in the first half of 2024. This drop was instigated largely by India, which led the world in terms of volume of solar PV capacity awarded in auctions and achieved an auction price of $34 per MWh,” the IEA said in its latest commentary on the RE sector.

In comparison, Europe’s reduction was a more modest 11 per cent with an average price of $67 per MWh for projects awarded in auctions in 2024, it added.

Wind energy

However, in the case of on-shore wind, the sector is faced with inflationary pressures.

IEA pointed out that onshore wind technology price patterns in the first half of 2024 reveal a complex global picture with significant regional variations. While the global average price for onshore wind decreased only slightly by 2 per cent y-o-y this figure masks two divergent trends in Europe and India.

The international agency noted that in Europe the majority of global onshore wind capacity was awarded through tenders, with prices taking an upward trajectory that commenced in 2021.

In the first half of 2024, European onshore wind prices had reached an average of $81 per MWh, representing a 2 per cent y-o-y increase. Meanwhile, the average price for onshore wind projects in India had increased by 12 per cent, from $39 per MWh to $43.

• Also read: Gujarat looks to add another 20GW renewable energy capacity in Kutch and Banaskantha

On the other hand, the whole Asia Pacific region shows a decrease in onshore wind prices by 36 per cent; this is explained by the comparison of high prices ($90-102 per MWh) and volumes in Japan, Philippines and Thailand during 2023, with lower prices in the following year, at the range of $40-83 per MWh.

Capacity addition

India is expected to almost triple its 2022 renewable capacity by 2030, in line with the COP28 global tripling pledge. Adding 350 GW over 2024-2030, more than triple in the previous six-year period, it will maintain third place among the largest renewable energy markets, IEA’s Renewables 2024 report projected.

Utility-scale PV will lead growth with a 60 per cent share, followed by distributed PV at 20 per cent, it added.

“Competitive auctions continue to be the main driver for large-scale project development, awarding a record 33 GW of capacity in the first half of 2024 – almost 50 per cent more than in the whole of 2023,” it said.

This year, a 40 per cent share of capacity was awarded to hybrid systems, which combine PV, wind and storage technologies to reduce generation variability and facilitate system integration. India is a pioneer in supporting hybrid plants, providing a positive example for countries aiming to minimise Variable RE (VRE) impacts on power system operations, it added.

• Also read: Unlocking renewable energy from industrial waste: Biogas production from spent wash

Rapid auction expansion, the introduction of a new support scheme for rooftop PV and stronger financial indicators for many utility companies have led us to revise this year’s forecast upwards 22 per cent from last year.

India is also in the process of organising its inaugural auctions for offshore wind farms, with the first projects expected to come online after 2030, the IEA said.