Renewables firms CEOs find low tariffs irrational

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New Delhi | Published: May 17, 2018 4:12:22 AM

Most of the leaders in the domestic renewable energy sector believe that developers have been irrationally aggressive while bidding for solar and wind power plants in the reverse auctions held by the central and state governments.

solar power tariff, solar power target, solar power capacity growth, solar power demandThe country’s renewable energy capacity stood at 69,685 MW at the end of FY18.

Most of the leaders in the domestic renewable energy sector believe that developers have been irrationally aggressive while bidding for solar and wind power plants in the reverse auctions held by the central and state governments. A survey conducted by renewable consultancy firm Bridge to India, which included inputs from 44 CEOs in the industry, found out threats from impending safeguard duty, poor policy environment and weak financial condition of discoms to be the biggest challenges the sector is facing at present. These were the primary factors which pushed India down by two spots to 4th rank in the global renewable energy country attractive index.

The lowest-ever solar tariff in India is Rs 2.44 per unit, discovered in May 2017 at the reverse auctions for solar plants in Rajasthan’s Bhadla. Currently, the lowest wind tariff is `2.43/unit for generating units in Gujarat. Most of the recent renewable auctions were won by companies with foreign-backed capital, and with interest rates rising and the end of quantitative easing by the US, experts anticipate costs to rise, potentially turning the low tariff quotes to become unsustainable.

The country’s renewable energy capacity stood at 69,685 MW at the end of FY18. The target is to achieve 175 GW by FY22, which would require about $125 billion – $87.5 billion debt and the remaining as equity. The 175 GW comprises 100 GW solar, 60 GW wind and the remaining from other resources. The survey found out that 66% of the solar capacity target would be achieved by the deadline, while wind installations would reach 87% of the target. Gujarat is the top choice for installing utility scale renewable energy plants, followed by Madhya Pradesh and Andhra Pradesh.

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