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The Economics Behind Solar Energy Generation

Solar Energy Generation

Context: Rajasthan stands as the frontrunner in solar power generation within the country, presenting a rapid but costly energy solution for a warming world.

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About the Solar Energy Transition:

The cost of solar energy has drastically declined in recent years, reaching a point where it competes favorably with coal and other fossil fuels in many regions. Despite significant technological advancements, sustainable energy hasn’t completely replaced traditional fossil fuels yet. Governments have incentivized renewable energy adoption by offering tax credits for solar and wind energy, historically more expensive than conventional options. However, due to increased production, government support, and growing environmental concerns, the direct costs of solar and wind energy for consumers have reduced significantly. In some markets, renewable energy production is cheaper for consumers compared to fossil fuels. While commercial usage of wind energy is prevalent, solar energy finds application in both commercial and residential settings.

Status in India:

According to Global Status Report 2023 & IRENA’s Renewable Capacity Statistics 2023, India stands 5th in solar PV deployment across the globe at the end of 2022. Solar power installed capacity has reached around 70.10 GW as on 30-06-2023.

Key Points:

  • Fossil fuels remain dominant in U.S. energy consumption, with solar accounting for 2.3% of total energy consumption.
  • Solar power comprises two types: Solar Thermal and Photovoltaic.
  • Solar thermal collectors harness the sun’s radiation for heating homes or water.
  • Photovoltaic devices utilize sunlight to supplement or replace electricity from the utility grid.
  • Governments provide subsidies or tax credits to incentivize solar installations.
  • Corporations are investing substantially in solar systems, boosting the positive economics of solar power.

Economics of Solar Power:

The cost of solar power diminishes annually, and in certain instances, it becomes more economical than fossil fuels, contingent on the sun exposure and weather conditions at the installation site. According to Popular Science, solar power is estimated to be the cheapest energy form in the United States, with prices as low as $0.70 per watt.

Fact Sheet:

  • Renewable energy sources boast a collective installed capacity exceeding 150 GW.
  • As of July 2023, including large hydropower, renewable energy sources possess an installed capacity of 179.322 GW.
  • Installed capacity for Renewables:
    • Wind power: 42.8 GW
    • Solar Power: 67.07 GW
    • Biomass/Cogeneration: 10.2 GW
    • Small Hydro Power: 4.94 GW
    • Waste To Energy: 0.55 GW
    • Large Hydro: 46.85 GW

Drawbacks to Solar Power:

  • Solar panels require minerals extracted from the earth during manufacturing, impacting local ecosystems similar to coal and copper mining.
  • Panels have a limited lifespan and become electronic waste upon obsolescence.
  • Solar power isn’t optimal for every location, as some areas have more reliable sun exposure than others.

Read Also: India’s First Hydrogen Bus Hits the Public Roads in Leh, Ladakh

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