Can India Expect Solar Tariffs Below Rs 2/Unit? MNRE Secretary Responds

India’s energy demand is set to increase exponentially, making a balanced energy mix essential—one that brings together Renewable Energy (RE), nuclear, and coal power to ensure baseload management and continuous capacity addition. Santosh Kumar Sarangi, Secretary, Ministry of New and Renewable Energy, highlighted this while citing India’s targets of 500 GW of RE capacity by 2030 and a projected 1,800 GW by 2047, with solar expected to dominate.

Key Points from MNRE Secretary Santosh Kumar Sarangi

While addressing the 98th Annual General Meeting and Annual Convention, Sarangi outlined the government’s perspective on the evolving energy mix and grid challenges.

• He noted that MNRE is in regular discussions with the Ministry of Finance on new schemes to support renewable energy expansion, particularly floating solar and agrivoltaic solutions that avoid large land requirements.
• Sarangi acknowledged that transmission remains a major bottleneck, with high-voltage lines taking 4 to 5.5 years to build compared to 1 to 2 years for RE projects.
• To address this grid lag, he pointed to initiatives such as new CERC regulations, splitting NIA, and a push for distributed RE—including agri-photovoltaics in agriculturally rich states and floating solar projects in the Northeast.
• He added that the Green Energy Corridor scheme continues to expand circuit kilometres to strengthen state evacuation infrastructure.

Tariff Sustainability and Domestic Manufacturing

On tariff sustainability, Sarangi explained that India’s slightly higher solar tariffs (around ₹2.50) are a deliberate policy choice—linked to the domestic content requirement (DCR) and the broader goal of self-reliance (Atmanirbhar) as India aims for 1,800 GW of capacity by 2047.

He expressed strong confidence in technological breakthroughs such as perovskite solar cells, which could potentially bring electricity costs down to ₹1.00 per unit if 25-year durability is achieved.

Sarangi also stressed the crucial role of states in allocating land, facilitating evacuation, and signing Power Purchase Agreements (PPAs). He cited the catalytic impact of schemes like PM-KUSUM in helping states reduce discom losses from agricultural feeders and rural households.

Solar Price Gap Between India, the ME & China

Vipul Tuli, Chair of the FICCI RE CEOs Committee and President & CEO – Renewables West, Sembcorp Industries, underscored that India’s demand growth remains virtually unsatiated due to its large population, rising cooling needs, and the expansion of data centres.

He contrasted India’s annual RE additions—around 42 GW—with China’s 421 GW, and highlighted the tariff gap between India’s solar power (₹2.50) and the Middle East’s (₹1.00).

Calling India’s national grid an outstanding global asset, Tuli warned that it is “not expanding fast enough.” He urged that grid developers be granted “special powers” to accelerate land acquisition and rights-of-way approvals.

Looking ahead, he identified green fuels and carbon capture (CCUS) as the “next horizon,” noting that global carbon-capture costs have fallen from $30–$40 per ton and could decline further to $10–$20. He added that CCUS, combined with green chemicals and biomaterials such as biomethane and bioethanol, could create an industry potentially larger than renewables, with 80%–90% local content and substantial opportunities for CapEx and economic growth.

Price Competitiveness and Circular Economy

Naina Lal Kidwai, Past President of FICCI and Chairman, Rothschild & Co India, focused on how sustainability has evolved from a compliance requirement to a core business strategy. She noted that for listed companies, RE adoption is driven primarily by price competitiveness rather than environmental motivations.

She highlighted that top Indian companies perform strongly in global sustainability indices and are addressing critical areas such as water efficiency in a water-scarce country and responsible community engagement.

Discussing MSMEs, Kidwai acknowledged the challenge of high upfront capital expenditure and suggested that industrial parks with strong sustainability standards could offer shared solutions, as companies are willing to pay a unit cost for such services.

Advocating for circularity and waste-to-wealth models, she cited Holcim’s use of sewage waste, plastic, and tree trimmings for energy in cement plants. She stressed the need to streamline logistics, legal frameworks, and pricing so municipalities can supply plastic waste and sewage for industrial energy. She also pointed to the opportunity to use construction rubble (30%) as a cement raw material, reducing dependence on mining and limestone.

Kidwai emphasised that water management cannot be overlooked. She proposed industry-led initiatives such as water audits, real-time monitoring, mandatory minimum treated wastewater reuse, and potentially a star rating system for water-use efficiency—aligned with the nation’s goal of achieving zero-liquid discharge (ZLD) by 2030, similar to the energy rating system for air conditioners.