NEW DELHI: Plunging solar power prices following aggressive bids at auctions may turn out to be a nightmare for sector as the government needs to responsibly balance tariffs with viability as it sets out to implement its ambitious targets for renewable energy.
Industry executives and experts said the government should review the auction process although companies that bid aggressively are confident that their projects are viable. The government said its aim was not to lower tariffs but to scale up solar electricity generation capacity.
“In India auctions may not be the most optimal way to develop a long term, vibrant and sustainable sector. Most countries around the world are following a mechanism of feedin tariffs,” Renew Power Ventures chief executive officer Sumant Sinha said at a conference organised by consultancy firm KPMG. ‘ Solar power tariff in India touched a record low early this month with US-based SunEdison’s winning bid of Rs 4.63 per unit for a contract to sell 500 mw of solar energy to state-run NTPCBSE 0.76 % Ltd. The tariff is about 15 per cent less than the industry average and 8 per cent below the previous low of Rs 5.05 per unit quoted by Canada’s SkyPower for a tender in Madhya Pradesh.
SunEdison President Asia-Pacific and Sub-Saharan Africa Pashupati Gopalan said, “We will make our desired returns in the 4.63/kWh bid. To increase the capacity, the government should consider bidding large volumes of 5-10 GW on a yearly basis and also cap each developer to 2-3 GW. This will allow more time plan these bids and also allow several developers to build their organisations in this nascent industry in India.”
KPMG partner and global chairman-ENR said sustainability is very important and the government needs to manage transition well.
Tarun Kapoor, joint secretary in the ministry of new and renewable energy, said, “Our aim is not to drag tariffs but to get large volumes. Some people say the tariffs are not viable, but since many companies bidding at that level we believe they are sustainable.”
KPMG has forecasted that solar power could be up to 10 per cent cheaper than
“Today, in India, solar prices are within 15 per cent of the coal power prices on a levelised basis. While this may not fully capture costs such as grid integration costs for solar, our analysis suggests that even after considering the same, solar prices would be competitive with coal,” KPMG said in a report released on Monday. “Our forecast is that by 2020, solar power prices could be up to 10 per cent lower than coal power prices,” it said.
Source :- http://economictimes.indiatimes.com/