The levelized cost of electricity (LCOE) for conventional
technologies—coal, gas, hydro, and nuclear is primarily driven
by capital costs, fuel prices, and utilization rates. Higher fuel
prices in the short term and higher weighted average cost of
capital results in increase of LCOE for coal and gas power projects
The LCOE of coal-fired projects across South Asia ranges between
$35/MWh to $90/MWh, primarily driven by the differences in costs of
domestic versus imported fuel, supporting infrastructure, and the
financing costs. India has the cheapest coal generation for a
supercritical project in the region at $53/MWh, whereas Bangladesh,
Pakistan and Sri Lanka have 33% to 50% higher cost of coal
generation for a similar plant.
On the other hand, cost of gas generation in South Asia ranges
between $80 to $100/MWh driven by LNG prices. India has the highest
LCOE for combined cycle gas turbine (CCGT) technology in comparison
to other markets in South Asia due to higher gas prices. While in
Bangladesh and Pakistan natural gas prices are subsidized making it
Solar PV is the cheapest source of electricity generation in
utility-scale applications in India and Pakistan in 2022 despite
the supply chain constraints and trade barriers which are resulting
in increase in the capex for solar and wind in the short term.
India and Sri Lanka have lowest onshore wind LCOE in the region
at about US$ 50/MWh. Divergence in onshore wind LCOE in South Asia
is mainly due to difference in resource type and competitive
maturity of markets. Onshore wind projects also facing cost
increase due to rising inflation post-pandemic resulting in a
reversal of the trend of falling costs.
Similarly, battery storage levelized costs are also higher by
more than 10% since 2021 due to a rise in raw material costs and
supply chain challenges. However, in the long-term it is expected
that an 8-hour battery will be competitive versus other flexible
sources of electricity, such as CCGT by the early 2030s. Meanwhile,
energy storage in collocated applications for peak as well as
round-the-clock (RTC) supply is already cost competitive with
To learn more about our Asia Pacific
energy market research, visit our
Asia Pacific Regional Integrated Service page.
Ankita Chauhan is an associate director at S&P
Global Commodity Insights, focuses on renewable energy research for
South Asian markets.
Rashika Gupta, Ph.D., is a Senior Director on the APAC
Climate & Sustainability team at S&P Global Commodity
Insights, responsible for Power & Renewables research and
analysis for the South Asian markets.
Posted on 31 August 2022
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.