‘Grid parity’, or the decline of prices to the same level as conventional electricity has been achieved. Today, electricity produced by large solar power plants costs between Rs 4 and Rs 5 a kWhr if the company that owns the solar plant is in a position to avail itself of a tax benefit called ‘accelerated depreciation’; otherwise, it is around Rs 6.5 a kWhr — not bad, considering that these costs will stay fixed over 20 years, while the cost of conventional power will only go up.
This decline in prices has been possible due to the drop in the prices of ‘modules’— the blue-coloured panels that are kept facing the sun. Even in 2010, module prices cost about $1.8 a watt; today it costs between 60 and 80 cents . Though the fall was aided by technology, the principal reason was the intense competition caused by over capacity of module making.