India's Renewable Energy Secretary Foresees Solar Tariffs Dropping Below 2.50 Rupees per kWh

Santosh Kumar Sarangi, the Secretary of India's Ministry of New and Renewable Energy (MNRE), has expressed a strong conviction that the cost of solar power within the nation is poised to fall beneath the significant benchmark of 2.50 Indian Rupees per kilowatt-hour (kWh).

This optimistic outlook is largely fueled by substantial technological advancements occurring in the sector, particularly concerning the enhancement of solar cell efficiency. A key driver is the development of tandem cells, which are receiving MNRE funding—exceeding 200 crore rupees over 15 years—and being researched at institutions like IIT Bombay. These cutting-edge cells have demonstrated efficiencies surpassing 30 percent in laboratory settings, contrasting with the 27 percent achieved by conventional single-junction cells.

The trajectory of solar tariffs in India has already seen dramatic reductions over time. A historical low was established in 2017 at the Bhadla solar park, where the rate hit a record 2.44 rupees per kWh. This figure was notably lower than the prevailing minimum cost for coal-based power generation, which stood at 3.20 rupees per kWh at that juncture. Although the industry faces temporary headwinds in international trade, such as zero exports to the United States this year due to existing tariffs around 40 percent (with Section 201 duties scheduled to expire on February 6, 2026), robust domestic demand continues to serve as a powerful engine for expansion.

Secretary Sarangi highlighted that this vigorous internal demand is effectively offsetting any dip in export volumes, even as export figures for April through October showed a respectable aggregate increase of 31–32 percent compared to the preceding fiscal year. Furthermore, the government’s aggressive push for local manufacturing, notably through the Production Linked Incentive (PLI) scheme, is yielding significant results. By July 2025, the annual production capacity for solar modules is projected to approach 144 GW, with ambitions to reach 150 GW by June 2026. Similarly, solar cell manufacturing capacity is expected to surge from its current 27 GW to an estimated 65 GW by mid-2026. For context, the total module capacity listed on the government-approved Approved List of Models and Manufacturers (ALMM) stood at 109.5 GW as of mid-2025.

The rapid deployment of renewable energy sources (RES) is not without its infrastructural hurdles. A major challenge lies in the significant mismatch in project timelines: while RES projects can often be commissioned within 1.5 to 2 years, the necessary transmission infrastructure requires a much longer gestation period of five to seven years. This imbalance risks delaying the delivery of generated power to end-users. Moreover, to effectively integrate intermittent sources like solar and wind power, and to manage peak consumption periods between 7:00 PM and 11:00 PM, the deployment of Battery Energy Storage Systems (BESS) is absolutely essential.

Concurrently with its focus on solar power, the Indian government is reinvigorating its efforts to develop offshore wind energy as part of a broader strategy to meet the 2030 goal of achieving 500 GW of non-fossil fuel capacity. Following previous tenders that failed to attract sufficient bids, the MNRE is preparing to re-issue auctions, particularly in Tamil Nadu, where a 4 GW tender was previously announced. To bolster this nascent sector, a Viability Gap Funding (VGF) scheme has been sanctioned with a total outlay of approximately 891 million US dollars, intended to catalyze initial projects, including 500 MW of capacity planned for Tamil Nadu and Gujarat. These concerted actions underscore a multi-pronged approach to the energy transition, marrying technological breakthroughs in solar with the cultivation of other clean energy vectors to secure the nation's energy future.

As of the close of November 2024, the nation’s total installed solar power capacity stood robustly at 75.37 GW.