Solar power can meet up to 7 percent of India's energy needs

"Solar power can help our country move closer to the targeted 20-25 percent reduction in carbon emission intensity of GDP (gross domestic product) by 2020, contributing as much as one-tenth of this target, besides playing an increasingly important role in securing India’s energy future,” said Arvind Mahajan, head of energy and natural resources, KPMG.

For this to happen, India needs to concentrate on installing decentralised applications -- small-scale power solutions at the consumer end.

Unlike centralised power generation systems where large power plants are typically set up near fuel sources or far away from load centres, decentralised power systems are situated close to where the demand is, said the report “The Rising Sun.”

“Decentralised systems benefit from lower network losses as power does not have to be transported over long distances. These include applications such as solar rooftop systems, solar-powered agriculture pump sets, solar lighting systems and solar-powered telecom towers,” said Santosh Kamath, executive director, KPMG.

The report cited the example of Germany, which has total solar installations of around 17 GW and more than 75 percent of the market share is contributed by solar rooftop systems. Solar power already contributes over two percent of Germany’s energy needs.

Currently in India the cost of conventional power delivered to households is estimated between Rs.5-Rs.5.50 per unit, much lower than the cost of solar power which is around Rs.11-13 per unit.

But at the same time, conventional power costs are expected to rise at between 4-5 percent per year over the next decade.

"While still high, the solar cost curves are declining rapidly due to technological innovation and supply chain economies of scale. The convergence between the cost of solar power and the conventional power cost, commonly referred to as grid parity is likely to happen during the period 2017-2019," said the report.  

KPMG also said that India stood to gain substantially by utilising solar power in various sectors like agriculture, where subsidised power eats into the state's and power utilities' finances.

According to the report, a cumulative potential of around 16,000 MW from agriculture category could be realised by 2022.  

The telecom sector would be another beneficiary once mobile phone towers switch from running on diesel to solar power. The report estimated that switch-over from diesel to solar power would save Indian telecom firms Rs.6,440 crore in operations cost.