India to Emerge as a Hot Spot for Cheap, Sustainable Solar Energy: KPMG

KPMG expects solar power to disrupt the traditional power generation ecosystem as early as 2017

November 16, 2015

The government’s renewable energy mission is set for a big lift as prices for solar energy are set to fall. KPMG expects solar power to disrupt the traditional power generation ecosystem as early as 2017 and expects India to emerge as a hot spot for investors as long as the government puts in a fair framework for risks and rewards.

Solar power could be 10 percent cheaper than coal-based power by 2020, according to a report published by KPMG. This forecast comes at a time when the government-led National Solar Mission has seen aggressive bidding with the winning biding closing at Rs 4.63/ unit, the lowest so far for solar. The government is hoping to attract international investors to realise its massive solar target of 100 GW in the next 15 years.

Michiel Soeting, global head — energy and natural resources, KPMG, says: “India is on the brink of high energy supply. India currently is a hot ticket in town with 25 percent future growth. India has an aggressive target of 100 GW solar and 40 percent renewable mix by 2030.”

KPMG also expects solar power to disrupt the traditional generating ecosystem as early as 2017. Manish Agarwal, head — energy and natural resources, KPMG India, says: “Scaling up of solar could bring disruption to other stakeholders. But with 175 GW renewable target, India has space for other fuels too.”

With energy demand declining globally, especially in Europe and Japan, India is poised to be an investment favourite if the framework for risk and returns are in place. Soeting adds: “Key areas of concern for investors are pre-regulation, tax regime and currency stability. Last half year saw USD 35 billion commitment in India for investment. More investment to follow, energy outlook to decline in Europe and Japan.”

With an aggressive target of 175 GW of renewable energy by 2022 and energy demand seen at 25 percent, experts believe India will need a massive investment of USD 2.8 trillion by 2040 for power sector.