SOLAR TARIFF FALLS 80% IN 6 YEARS

LOW SOLAR POWER RATES TO BOOST EQUIPMENT IMPORT

In two days, solar tariff has fallen to ~2.44 a unit from ~2.62 a unit, and by 80 per cent in the past six years. Such a massive fall is unprecedented in the history of solar power across the world. In a bidding held for the 500-Mw Bhadla solar power park in Rajasthan, domestic company ACME won the top slot by quoting ~2.44 a unit for 200 Mw. It was closely followed by SoftBank Energy with ~2.45 for 500 Mw. As the tender followed a bucket-filling method, ACME will build 200 Mw and SBG Energy 300 Mw. The park is being developed by IL&FS.

In two days, solar tariff has fallen to ~2.44 a unit from ~2.62 a unit, and by 80 per cent in the past six years. Such a massive fall is unprecedented in the history of solar power across the world.

In a bidding held for the 500-Mw Bhadla solar power park in Rajasthan, domestic company ACME won the top slot by quoting ~2.44 a unit for 200 Mw. It was closely followed by SoftBank Energy with ~2.45 for 500 Mw. As the tender followed a bucketfilling method, ACME will build 200 Mw and SBG Energy 300 Mw. The park is being developed by IL&FS.

Government officials pointed out this rate was lower than the average coal-based price and the grid parity price for solar to match with coal. This rate was closer to spot power price as well.

Two days ago, for a 250-Mw segment of the park developed by Adani Power, South African company Phelgan Energy Group and Avaada Power Group, promoted by Vineet Mittal’s Welspun Energy, quoted ~2.62 a unit. Japan’s SoftBank Energy was a tad below at ~2.63 a unit.

The tariff in Bhadla has been fixed for 25 years with no escalation and the bidders have sought no viability gap funding from the government, officials said.

“Some of the main contributing factors are the 7-8 per cent higher yield in Rajasthan due to better solar radiation conditions, a drop in module prices in the international market, and strengthening of the rupee against the US dollar," said Ashwini Kumar, managing director at Solar Energy Corporation of India (SECI). SECI is a wholly owned public sector undertaking under the ministry of new and renewable energy (MNRE) that executes solar bidding.

Lack of any mega tenders, the large size of the park capacity, and an influx of cheap financing and capital options were also cited as the reasons for such low bids.

A senior MNRE official said: "Hereafter, there are hardly any mega projects which would be tendered for the medium term. Most of the companies that have participated in the bidding have access to surplus capacity. Unlike earlier, there are more players than projects. So these companies had to deploy it somehow."