Solar thermal power generation in India: effect of potential incentives on unit cost of electricity

For large-scale dissemination of solar thermal power plants, in countries identified with huge potential, governments are offering various incentives. In an attempt towards studying the effectiveness of various incentives in reducing the levelised cost of electricity (LCOE) delivered by solar thermal power plants in India, this paper presents simple mathematical frameworks that facilitate the determination of the required level of an incentive so as to ensure that the LCOE is within a pre-specified limit. For example, for a 50?MW solar thermal power plant at Barmer (Rajasthan), LCOE of Rs. 9.75 per kWh can be achieved by providing 6.3% viability gap funding or an interest subsidy of 3% or provision of 32% investment tax credits to the equity investor or provision of production tax credits to the equity investor at the rate of Rs. 0.81 per kWh for first 10 years of operation of a plant.