GS3 2015 Q9 12 marks 200 words Solar Energy

UPSC Mains 2015 GS3 Q9 — Solar Energy

To what factors can the recent dramatic fall in equipment costs and tariff of solar energy be attributed ? What implications does the trend have for the thermal power producers and the related industry ? (Answer in 200 words)

Question Decoded — examiner's intent

Directive verbs
attributedWhat implications
Scope keywords
recent dramatic fallequipment coststariff of solar energythermal power producersrelated industry
Implicit sub-parts
  • Technological and global manufacturing drivers (economies of scale in China, improved PV efficiency).
  • Policy and financial drivers (competitive bidding, REWA model, plug-and-play parks, low interest rates).
  • Financial health and stranded asset risks for coal-based plants.
  • Impact on the coal supply chain, logistics (Railways), and banking sector exposure to thermal NPAs.
Common pitfalls
  • Focusing only on technological reasons while ignoring the impact of reverse auctions and aggressive bidding on tariffs.
  • Neglecting the 'related industry' aspect, such as the impact on Coal India Limited or the thermal equipment manufacturing sector (BHEL).
  • Failing to mention the integration challenges for the grid which actually adds 'hidden' costs despite low generation tariffs.
  • Treating the fall in solar prices as purely positive without discussing the stress it puts on existing Power Purchase Agreements (PPAs).
Dimensions required
Economic/FinancialTechnologicalPolicy/RegulatoryEnvironmental/SustainabilityInfrastructure/Logistics
Marks allocation hint

Allocate approximately 80-90 words to the factors of cost reduction, ensuring a balance between global supply chain factors and domestic policy. Devote the remaining 110-120 words to the implications for the thermal sector, specifically addressing the economic threat to coal plants and the ripple effects on the broader industrial ecosystem.

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