Solar Storage To Be The Next Wave

Solar Storage To Be The Next Wave

The current tariffs in solar and wind are unsustainable and unviable. Especially as the projected pricing of modules has worked the wrong way this time. After 6 years, the prices in the last 3-4 months have risen even in China by about 12-15 percent. In terms of tariffs, depending upon the location and provided the project gives a fair rate of return on investments, tariffs should be in the region of ₹3-4 per mega-watt in solar, H R Gupta, General Secretary, Indian Solar Manufacturers Association, tells Madhumita Mookerji. 

Solar tariffs recently dropped to a historic low of ₹2.44 per unit and wind power tariffs also fell in tandem to an all-time low of ₹2.64 per kWh in the second wind auctions of 1,000 MW. What are the reasons for the falling tariffs?

There are 2 reasons for rapidly declining tariffs. One is the shortage of tenders in the market – all the developers have a large appetite for any sort of volume that comes up, so they have a very aggressive need to acquire business. They have changed investment portfolios whose carrying cost is quite high if there is no work. There are other financial considerations too as they are heavily backed by private equity and other investors, and there is a pressure to have a pipeline of projects in hand. Some of them have upcoming initial public offerings (IPOs) and other financial instruments to be deployed in the market. Therefore, there is a lot of demand but very little supply.

Two, most of the developers are taking a speculative punt on the future pricing of the solar components which may or may not reflect the true cost of panels today but they are expecting the pricing to get reduced. Thus, this has also been the reason behind all these low rates.

What sort of ideal tariffs should the industry be able to command for its own sustainable development?