Solar, Wind Cannot Go Beyond 40% Of Energy Mix

Solar, Wind Cannot Go Beyond 40% Of Energy Mix

Despite a ramp-up in renewables capacity in the country, both the solar and wind energy sectors are not likely to go beyond 40 percent of the energy mix. The Indian solar industry has witnessed new entrants backed by foreign investors who are coming up with innovative business models to cut down project costs and also help achieve record-low tariffs. However, the time to celebrate the tariff reduction would come only when the majority of the projects get financed, start injecting power into the grid and report stable cash flows, Sunil Rathi, Director, Sales and Marketing, Waaree Energies Limited, a leading solar panel manufacturer in India, tells Madhumita Mookerji. Excerpts from an interview.

Have the tariffs in wind and solar fallen too swiftly and too early?

The constant movement of renewable tariffs to grid parity and beyond is something every renewable power professional works towards. When the policy-making acumen of a proactive government combines with the market forces and an eager and capable group of technocrats, operational experts and investors, this is bound to happen.

Having said that, I must add, when tariffs fall too suddenly, ie, the tariff difference in commissioned projects and allocated projects (PPAs won) is too high, it may merit a second look.

A few valid reasons for the reduction in tariffs may be (a) a sharp fall in module prices; (b) economies of scale due to shift from megawatt (MW) to giga-watt (GW) level projects; (c) risk mitigation through shovel-ready solar park infrastructure; and (d) reduction in the cost of capital through innovative structuring as well as entry of strong players.