India’s push for solar power is attracting foreign companies to bid aggressively for projects here, and this is among several factors that have led to generation costs spiralling downward. In 2010, the year the Jawaharlal Nehru National Solar Mission was launched, generation cost for solar power was roughly Rs 17 per unit, which has now fallen to an unprecedented Rs 4.34 per unit.

The recent e-auctions of solar power project by NTPC’s Bhadla Solar Park tender in Rajasthan saw solar power costs in India reach “grid parity”. “Grid parity” occurs when “an alternative energy source can generate power at a “levelised” cost of energy that is less than or equal to the price of purchasing power from the electricity grid”.

The unprecedented low rates were quoted for various reasons. According to a senior official at the Solar Energy Corporation of India (SECI), “The drop in solar tariffs may be attributed to several factors, mainly availability of cheaper financing options, reduction in the risk-perception of solar projects, ease of doing business by way of policy clarity, etc., along with the gradual fall in module prices.”

“Another factor may be the development of solar parks, where the entire hassle of land acquisition, clearances and power evacuation is off-loaded from the developer,” the official added.

The prices of “modules”—the blue panels that are kept facing the sun—are going down not only due to improvements in cell efficiency, but also because of intense competition that is forcing wafer (panel) makers to sell at lower costs, according to S.K. Baswal, general manager of the solar park at Bhadla and wind/biomass projects of the Rajasthan Renewable Energy Corporation.

At the auctions in Rajasthan, foreign companies emerged as the most successful and aggressive bidders. Out of the four firms that have bagged 420 megawatts of solar capacity on offer, Fortum Finnsurya Energy Pvt Ltd, a subsidiary of Finnish utility Fortum OYJ, took 70 megawatts at Rs 4.34 a kilowatt-hour.

Two companies—Rising Sun Energy Pvt Ltd and Solairedirect Energy India Pvt Ltd, a subsidiary of the Paris-based Solairedirect Group—won 140 megawatts each at Rs 4.35 a kilowatt-hour. Yarrow Infrastructure Ltd took the remaining 70 megawatts of capacity at a tariff of Rs 4.36 a kilowatt hour.

“It is true that foreign companies like Skypower, Sunedison, Fortum, Softbank etc., have bid quite low in recent times, but a number of domestic players are also equally competitive — Azure Power, Acme, IL&FS, Tata Power, Indiabulls, Welspun, Waaree Energies Ltd, etc., to name a few. As the solar sector expands and there is better clarity on policies, more participants are expected to enter the market,” the official at SECI said.

Before this, the lowest bid for solar projects was reached in November in the auction at Andhra Pradesh, where bids went down to Rs 4.63 per kilowatt hour, breaking the previous low of Rs 5 per kilowatt-hour in the state of Madhya Pradesh.

Why did the price fall by 29 paise a kwh in just two months? According to S.K. Baswal, higher solar radiation as well as intensity and lower cost of the park compared with Ghani in Andhra Pradesh are the reasons for the record low tariffs.

“The land at Bhadla is already in our possession and work is in progress,” he said. The government has set a target to achieve 100 GW of solar capacity by 2021-22, of which about 20 GW capacity is coming up through solar parks in several states, where all the necessary infrastructure for setting up projects would be provided in the park. Simultaneously, states are also pitching their solar plans and setting up projects. “The rooftop and decentralised segment is also getting a strong push through multiple government incentives and the government targets 40 GW in this segment,” the official at SECI said. “Several schemes for development of solar projects under the Jawaharlal Nehru

National Solar Mission are underway through bundling or VGF,” she added.

At present, India needs a total of 284,303 MW (284.303 GW) of energy per year, out of which 37,415 MW (37.415 GW) of energy is generated by renewable sources.

The installed capacity of solar power in India crossed 5 GW as on 14 January. It has been planned that around 18 GW tender for solar projects will be out by 31 March this year. The Cabinet, on 20 January, approved Rs 5,050 crore for solar projects.

On 25 January, Prime Minister Narendra Modi and French President Francois Hollande jointly lay the foundation stone of the International Solar Alliance (ISA) headquarters and inaugurated the interim Secretariat of ISA at the National Institute of Solar Energy (NISE) in Gurgaon. The ISA is an Indian initiative and it seeks to promote solar power through an alliance of 121 solar resource rich countries lying fully or partially between the Tropic of Cancer and Tropic of Capricorn, according to a press statement.

As of now, Rajasthan leads the states in terms of installed solar power capacity with 1,264 MW, followed by Gujarat (1024 MW), Madhya Pradesh (679 MW), Tamil Nadu (419 MW), Maharashtra (379 MW) and Andhra Pradesh (357 MW).

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