The Indian electricity sector is undergoing rapid changes, among which the most important is the progress of solar power in the country. While this is helping increase competition in the sector and to fulfil India’s obligations on climate change, it is also throwing up a lot of challenges like low and decreasing capacity utilisation of the thermal power generating projects; this will add to the financial stress of the power sector. However, the challenges that the Indian electricity sector faces is part of global trends, and India must prepare for it.
Solar tariffs, in the recently concluded solar auctions, have reached a low of Rs 2.36 per unit of power (as compared to Rs 6 per unit average cost of electricity supply for distribution utilities). The low cost of solar power means that it has reached grid-parity and more, which is the primary driver for its rapid growth. India currently has an installed capacity of 35 GW of solar capacity, which is about a tenth of the installed power generation capacity in the country.
Falling solar prices is helping the cause of open access in the power distribution sector (with consumers having a choice of electricity supplier just as in the telecom sector). Using open access, DMRC, for example