Factors affecting solar levelized cost of electricity in India & policy recommendations

Over the last decade, a significant decline in global solar photovoltaic (PV) levelized cost of electricity (LCOE) has been noted, instrumental in the solar sector’s rapid growth while maintaining competitiveness with conventional resources. Similar trends in the decline of solar PV LCOE have been observed in India; however, despite importing major components required for solar PV plants, India’s solar LCOE not only declined but also stayed lower and competitive with major solar PV module manufacturing countries like China’s solar LCOE. This study attempts to identify the elements that contributed to the decline in solar PV LCOE in India and highlight why India’s solar LCOE continues to be the lowest compared to other nations. Further, this paper suggests policies for maintaining accelerated solar growth while ensuring competitive solar LCOE in the context of rising energy demand and economic development. The paper's findings are crucial for shaping India’s solar energy policies, ensuring sustainable growth, and achieving energy security, potentially serving as a model for other developing nations.